Starting from 1 April 2022, there will be a host of changes in the income tax rules for the financial year 2022-2023, including income tax on digital assets, new tax rules for Provident Fund (PF), among other things.
What will change from 1 April? How will this impact you? Here's all you need to know.
30 Percent Tax on Profits Via Digital Assets
All forms of digital assets, including crypto currencies, will attract tax of 30 percent, as announced by Finance Minister Nirmala Sitharaman in the Union Budget.
This tax regime will effectively apply to cryptocurrencies like Bitcoin, Ether and Dogecoin, and non-fungible tokens (NFTs).
If you gift someone a virtual digital asset, the recipient will have to pay taxes.
Crypto Loses Set Off Against Gains
Any losses from selling virtual digital assets can only be set off against income from the sale of other such assets. Again, you won't be able to claim tax deductions on what you earn by selling virtual digital assets. A one percent TDS (tax deducted at source) will be charged on payments made using digital assets, to keep track of transactions.
Filing Updated ITRs
A new provision will allow income taxpayers to file updated returns within two years from the end of the relevant assessment year. However, this cannot be done to report additional loss or fall in the tax liability.
Tax on PF Account
Union Budget 2021 proposed to levy income tax on interest earned on employee’s contribution towards the Employee Provident Fund, or EPF, if the sum is above Rs 2.5 lakh a year, or roughly Rs 20,800 per month, starting 1 April 2021.
“In order to rationalise tax exemption for the income earned by high income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh,” Finance Minister Nirmala Sitharaman said on 1 February, during the Budget speech.
Tax Relief On COVID-19 Treatment Expenses
The government announced tax exemption on money received for COVID-19 treatment in June 2021. This will come to effect from 1 April. Money received by family members on the death of a person due to COVID will also be exempt up to Rs 10 lakh for family members. However, this is provided such payment is received within 12 months from the date of death.
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