The new financial year started on April 1, 2022, and with this, new rules regarding your income tax returns and cryptocurrency could affect your pocket.
With the beginning of the new fiscal year, FY 22-23 brings recent income tax rules changes. Finance Minister Nirmala Sitharaman announced them during the presentation of the Union Budget 2022.
Here are the rules starting in this fiscal year:
1. 30% Tax on crypto and other virtual digital assets
Over the last few years, the cryptocurrency topic is becoming one of the most talked-about things. This digital currency allows users to send money anywhere in the World, eliminating the middleman. In this case, it is the banks. So if you are one of the crypto enthusiasts, this new rule is definitely for you. The FM announced that there would be a tax of 30% on the income generated from cryptocurrencies with no deduction involved. Also, a new section has been added to the Income Tax Act, 1961, to charge tax on virtual digital assets.
Also, in this digital asset, in case of loss, one cannot set off against any other income, and nor shall such loss be allowed to be carried forward. However, there is still no clarity on how crypto transactions will be taxed before April 1, 2022.
2. KYC Update
If you have not linked your Aadhaar Card with your PAN by March 31, 2022, you will face a penalty of Rs 500 from April-June and Rs 1000 until March 2023. The RBI had given numerous extensions on the KYC update, but it continued extending due to the COVID-19 situation.
3. NO need of ITR for senior citizens above 75 years
In this Union Budget, the government also announced that it would provide relief to citizens aged 75 years and above. They do not need to file Income Tax Returns (ITR) subject to certain conditions, and one needs a prior declaration from a bank to avail of this benefit.
4. Tax on Employees Provident Fund (EPF)
In her budget speech, the finance minister also proposed that Provident Fund payments which exceed 2.5 Lakh in the FY 2021-2022, then the interest earned on it will be taxable in their hands.
5. NPS deduction for state government employees
The state government employees can now claim tax benefits of up to 14% of their salary on the National Pension System (NPS) made by their employer. This provision is made under Section 80CCD(2) of the Income Tax Act, 1961, and such deductions are already available for central government employees.
6. Updated ITR filing window to correct any errors or Omission
The government has also provided relief to taxpayers by proposing an “updated return”, which can be used to correct any unintentional errors and omissions while filing their tax returns. The finance minister announced that the revised tax filing window would remain open for two years, and the updated return can be filed within two years from the end of the financial year. A new subsection (139, (8A)) was added to the Income Tax Act to include this provision.