New Tax Rules in India with effect from April 1 2022

 

Taxation on Virtual Digital Assets (Cryptocurrency)

The Government has introduced a new term ‘Virtual Digital Assets’ in the budget speech. Transactions in virtual digital assets will be subject to a 30 percent tax. Beginning April 1^st 2022, When paying for the transfer of virtual digital assets, keep in mind that TDS will be deducted at 1% of the value of the transferred virtual digital assets. In the hands of the receiver, cryptocurrency gifts are also taxable. Furthermore, losses incurred from the sale of cryptocurrencies cannot be deducted from other sources of income. For eg if you make a profit of Rs 1000 on Bitcoin but you incur a loss of Rs 600 on Ethereum, your tax liability will be on the earning of Rs 1000 and not on your net profit of Rs 400.

Finance Minister Nirmala Sitharaman in her Budget speech in February said, "There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent."

 

Tax on Provident Fund

PF contributions of more than Rs 2.5 lakh per year will be taxed. If an employee's contribution to a Provident Fund account during a financial year exceeds Rs 2.5 lakh, the interest received on the excess contribution is taxable in the employee's hands year after year.

 

NPS Tax Deduction for State Government Employees

Employees of the state government will now be eligible to claim a 14 percent tax benefit on their employer's contributions to the National Pension System (NPS) under Section 80CCD(2). The deduction will be equivalent to that of employees of the central government under the same section.

 

Fine on Non-KYC

According to the Central Board of Direct Taxes, if you haven't linked your PAN and Aadhaar yet, you could risk a fine of up to R.S. 1,000. Furthermore, supplying an invalid PAN can result in fines of up to R.S. 10,000.

 

Removal of Additional Tax Benefit on Home Loans

From April 1, 2022, new homebuyers would no longer be eligible for an additional tax deduction of up to Rs 1.5 lakh on interest paid on house loans under Section 80EEA. This benefit was announced in Budget 2019 to encourage purchase of affordable housing units.

 

 Fine on Non-ITR Filing

You will be subject to a penalty if you do not file your income tax return by March 31, 2022. If you have a yearly income of more than 5 lakh rupees, you will be fined 5000 rupees (on taxable income) if you do not file your tax returns on time. The penalties will be $1,000 for people with an annual income of less than 5 lakh rupees.

Also the Finance minister has announced that the revised tax filing window will remain open for two years from the year of assessment in case of less filing of tax.