Crypto Tax: New Income Tax Rules and Other Silver-Related Changes Effective April 1, 2022
- Two ETH accounts if contribution exceeds Rs 2.5 lakh
If the employee’s contribution to the Employees Provident Fund (EPF) account exceeds Rs 2.5 lakh in the previous financial year 2021-22, the interest earned on the excess contribution will be taxable in his hands. To calculate the interest that will be taxable in the hands of an employee, a new EPF account will be created.
The Central Direct Tax Commission (CBDT) issued a notification on August 31, 2021 to clarify how interest on excess contributions will be taxed. In accordance with the notification, any contribution made by an employee until March 31, 2021 will be considered tax-exempt. For contributions up to Rs 2.5 lakh in the financial year 2021-22, interest will be credited to the existing EPF account. Interest credited to this account will remain tax exempt.
The new EPF account will be opened if the EPF contributions for the financial year 2021-22 exceed Rs 2.5 lakh. Interest credited on the excess contribution (Rs X minus Rs 2.5 lakh) will be taxable to the employee.
For people with no employer contribution to their EPF accounts, such as government employees, the threshold is Rs 5 lakh.
Read also: You will have 2 ETH accounts if the contribution exceeds Rs 2.5 lakh
- Tax on cryptos and other virtual digital assets
One of the biggest announcements of the 2022 budget was the taxation of crypto gains. As of FY 2022-23, earnings from various Virtual Digital Assets (VDAs) such as bitcoin, dogecoin, etc. will be taxed at a flat rate of 30%. In addition, no deduction in respect of any expense (except the cost of acquisition) will be permitted. No compensation for loss of purchase/sale of virtual digital assets from other income will be permitted. Recently, the government clarified that gains from one virtual digital asset cannot be offset by losses from other virtual digital assets. A new section 115BBH was inserted into the Income Tax Act 1961 for the taxation of virtual digital assets.
- Filing of updated ITR after the end of the deadline for filing the ITR
From April 1, a person will have an additional option to update their income tax return (ITR). This updated statement will be filed if additional information was missing at the time of ITR filing. A new subsection 139(8A) has been added to the Income Tax Act.
An updated declaration can be filed by an individual within three years from the end of the financial year. This tax return will be filed regardless of whether a person filed an original/late ITR or not. When filing an updated ITR, an individual will be required to pay an amount equal to 25% to 50% as additional tax on the tax and interest owing.
Also read: Pay a 25% to 50% penalty to file updated returns
Also read: Who cannot file an updated RTI?
- Relaxation in the collection of an annuity per disabled person
Budget 2022 relaxed some provisions of Section 80DD – a section providing tax relief for disability care. Under the planned relaxation, if a person takes out a life insurance policy for a disabled person, they can claim a tax deduction even if policy benefits (such as annuity payments) begin while they are still alive.
Previously, the deduction under Section 80DD was allowed where the life insurance policy annuity was received by the disabled person after the death of the person (i.e. the person who purchased the insurance cover).
The new law will apply to life insurance policies taken out from the 2022-23 financial year. The deduction on these policies will be claimed when filing next year’s ITR (i.e., AY 2023-24).
Read also :
New tax relief for parents of disabled people
- New TDS rules on the sale of real estate
The new TDS rules on the purchase and sale of real estate will come into effect from April 1, 2022. In accordance with the new TDS rules, the buyer of real estate will deduct tax at the rate of 1% from the sum paid to the seller or the stamp duty value of the property, whichever is greater. TDS on sale of immovable property is applicable if the sale value of the immovable property / stamp duty of the property exceeds Rs 50 lakh.
Previously, the tax was deducted from the money paid by the buyer to the seller.
Also read: New TDS rule on sale of goods from April 1
- No additional tax deduction for buying an affordable home under Section 80EEA
If you are planning to buy an affordable house in the financial year 2022-23, note that the additional deduction of up to Rs 1.5 lakh under Section 80EEA will no longer be available. This is because the government did not extend this tax relief in Budget 2022. Until fiscal year 2021-22, if a person meets the criteria specified in Section 80EEA and the home loan is sanctioned on March 31, 2022, then he/she will be eligible to claim an additional deduction of up to Rs 1.5 lakh in future years on the home loan paid by EMI. An individual can claim a deduction of up to Rs 3.5 using Section 80EEA and Section 24 on interest paid on a home loan taken out for the purchase of an affordable home.
Note that individuals can continue to claim deduction under Section 24 for up to Rs 2 lakh.
Read also: You must obtain this mortgage before March 31
- Higher TDS from April 1 if ITR for FY 2020-21 not filed
The rule of TDS, higher TCS if the ITR for two previous years has not been filed was announced in the 2021 budget. However, the change was announced in the 2022 budget. As per the announcement made in the last budget, if the ITR for one year is not filed, then higher TDS, TCS will be applicable to the next fiscal year. In accordance with the 2022 budget memorandum, the decision was taken to broaden the tax base and encourage taxpayers to provide their tax returns. However, note that a higher TDS will not be applicable if the source of income is salary, provident fund. However, higher TDS will be deducted from interest income, dividend income, etc., as specified in the Income Tax Act.
Read also: Higher TDS, TCS may be applicable if ITR is not filed
- Seniors aged 75 and over exempt from RTI deposit
Since April 1, 2022, seniors aged 75 and over are exempt from tax declaration (RTI). However, this RTI deposit waiver is available under certain conditions met by senior citizens. In addition, a statement must be made by the elderly person to the bank.
- Linking the savings account with different postal schemes
If you have invested in postal schemes such as monthly income schemes, senior citizens savings scheme, postal term deposits, etc., ensure that your postal savings account or bank account savings is linked to these schemes. As of April 1, interest earned on PEAs will be credited to the postal savings account or to the bank account linked to the investor’s PEA. Payment of interest in cash will no longer be authorized from 1 April 2022.
Also, if the savings account or post office is not linked, interest will be credited to the various accounts in the office. Interest due in the future will be payable either by crediting a postal savings account or by cheque.
Also Read: Last Date to Link Savings Account to Post Office Schemes to Receive Interest
In accordance with the modified version of Pradhan Mantri Vaya Vandana Yojana, the interest rate on the program is reset every year. According to a press release issued on May 20, 2020, the plan’s interest rate was announced at 7.4% per annum for the 2020-21 financial year. The interest rate has not changed since.
The press release further indicates that the annual reset of the assured rate of return commencing April 1 of a fiscal year will be in line with the revised rate of return of the Savings Scheme for the Elderly (SCSS) up to a cap of 7.75% with a new plan valuation if this threshold is exceeded at any time.
Also Read: This Important Feature of Government. pension plan needs to be reset
- Restrictions on your bank accounts
From April 1, 2022, if your bank account is not KYC compliant, you will no longer be able to operate your bank account. Restrictions will be placed on cash deposits, cash withdrawals, etc., as the bank account is not KYC compliant.
In May 2021, the Reserve Bank of India (RBI) extended the deadline for periodic KYC updates on its bank account until December 31, 2021 due to the novel coronavirus pandemic. This deadline has been further extended to March 31, 2022 due to the omicron variant of the coronavirus.
However, no further extension has been granted by the central bank for the periodic KYC update.