Union Budget 2022 – 8 Income Tax Rule that are in effect from 1ST April 2022

Introduction

The Income Tax Laws have changed significantly for the current FY (Financial Year). Some of the significant changes that are in effect from 1st April 2022 are Income Tax on Crypto Assets, submission of updated IT Returns, new tax rules on EPF Interest Rate, and Tax relief on Covid-19 treatment. In this article, we will look at all of the significant changes to the Income Tax Rule that will affect the taxpayer income.

New Income Tax Rule that are in Effect from 1ST April

• Tax on EPF (Employee Provident Fund) Account

The Employees Provident Fund (EPF) guidelines and tax-free ceiling contributions of up to 2.5 lakh have been changed by the Central Board of Direct Taxes (CBDT). The EPFO (Employee Provident Fund Organization) will have two separate accounts that is one for non-taxable income and another for taxable income. And any additional contributions (including principal, will be taxable and not just the interest).

• Tax on Crypto Assets

In India, the crypto asset tax regime will be phased in over the course of the fiscal year, beginning April 1, 2022. The provisions relating to the 30% tax will take effect at the start of the fiscal year, while those relating to the 1% TDS will take effect on July 1, 2022. The taxation criteria for Crypto Assets has been explained in Union Budget 2022-23. For designated persons, such as individuals/HUFs (Hindu Undivided Families) who are required to have their accounts audited under the Income Tax Act, the TDS threshold limit would be INR 50,000 per year.

• Filing of Updated IT Return

If a taxpayer’s Income Tax Filings contain errors or mistakes, a new option has been provided that allows them to file an updated return. Taxpayers now have two years time period to file an updated return after the end of the relevant assessment year.

• Information on LTCG (Long Term Capital Gain) Surcharge

Long-term capital gains on the sale of listed equities or mutual funds are currently subject to a 15 percent fee. This limit will be extended to long-term capital gains on all assets beginning April 1, 2022.

• Changes in the Section 80EEA

For first-time home purchasers, there was an additional deduction of up to INR 1.5 lakh on home loan interest on properties worth less than INR 45 lakh. This scheme will not be extended beyond March 31, 2022, according to FM (Finance Minister). As a result, beginning April 1, 2022, taxpayers will no longer be able to take advantage of the additional deduction of INR 1.5 lakh. Other existing deductions for house loan interest up to INR 2 lakh would be maintained under Section 24 of the Income Tax Act.

• Information on NPS (National Pension Scheme)

Under the National Pension Scheme (NPS), state government employees can now contribute and recover up to 14% of their base pay and Dearness Allowance (DA). This will now be the same as the deduction offered to employees of the Central Government.

• Interest rate reset for Pradhan Mantri Vaya Vandana Yojana

The interest rate for the Pradhan Mantri Vaya Vandana Yojana is reset every year. On April 1, the new rates are likely to be released. The rate was 7.4% per year in 2020-2021, and it has been constant since then.

• Tax on gifts received in form of Virtual Digital Assets

If an entity receives a present from a family member or from another party, whether it is in the form of Crypto Currency or Virtual Digital Assets, it will be regarded as a taxable gift and will not be exempt from Income Tax provision.

Conclusion

Nirmala Sitharaman, the Union Finance Minister, proposed a few adjustments in her Union Budget. The amendments are in effect from 1st April 2022. The EPF Income Tax Rate, LTCG Surcharges, and other factors have changed, this information will help taxpayer to plan out their investments.