New Income Tax Rules Will Be Effective From April 01, 2022

New Income Tax Rules

As the new financial year 2022-23 starting, there are certain income tax rules and other financial changes that come will into effect on April 1, 2022. Income tax on crypto assets, filing of updated returns, new tax rules on EPF interest, and NPS deduction are some of the major changes.

1. Crypto Tax/Other Virtual Digital Assets (VDA) Tax One of the biggest announcements of Budget 2022-23 was the taxation of crypto gains. The budget brought in clarity concerning the levy of income tax on crypto assets. The crypto asset tax regime in India will gradually roll out in the financial year (FY) starting April 01, 2022. Provisions on the 30% tax will also be effective at the start of the fiscal year 2022-23 while those related to the 1% TDS will come into effect from July 1, 2022. Furthermore, if you receive a present in the form of bitcoin or any virtual digital asset, it will be taxed as a gift.

2. VDA losses can't be offset by VDA gains While computing tax, losses experienced from one type of virtual digital asset (VDA) cannot be offset against gains from any transaction involving another VDA. This means that investors will have to pay a 30% tax on whatever gains they make, and losses will not be deducted from the final taxation amount if they trade various tokens. Ads by

3. Updated ITR filing after end of time limit to file ITR From April 1, an individual will get an additional opportunity to update his/her income tax return (ITR). A new subsection is introduced in the Income Tax Act, this provision will allow the taxpayers to file an updated return for errors or mistakes done in income tax returns. This new subsection is 139 (8A) which has been added to the Income-tax Act. Updated returns can be filed by an individual within three years from the end of the financial year. This tax return will be filed irrespective of whether an individual has filed an original/belated ITR or not.

4. Tax on PF If the employee's contribution to the Employees' Provident Fund (EPF) account exceeds Rs 2.5 lakh in the previous financial year 2021-22, then the interest earned on the excess contribution will be taxable in his/her hands. To calculate the interest that will be taxable in the hands of an employee, a new EPF account will be created. This new tax on interest was proposed by Finance Minister Nirmala Sitharaman in her budget address for 2021-22.

5. NPS deduction to State government employees Under section 80CCD(2) of Income Tax Act, 1961, state government workers would be able to deduct up to 14% of their base salary and dearness allowance for NPS payments made by their employers . This is the same as the deduction available to Central Government employees under the same section.

6.  Crypto losses cannot be set off against crypto gains or other assets

The Indian government has tightened norms for crypto by disallowing losses incurred in a particular digital asset to be set off against income from another version of a crypto holding. The government won’t allow tax breaks on infrastructure costs incurred while mining crypto assets as it won’t be treated as the cost of acquisition. For instance, if you make a 1000 gain on bitcoin and a 700 loss on Ethereum, you have to pay tax on 1000 and not on your net profit of 300. Similarly, you cannot set off gains and losses on cryptocurrency against gains and losses in other assets like stocks, mutual funds or real estate.


7. Crypto received as gifts will be taxable

Also, if you receive a gift in form of cryptocurrency or any other virtual digital asset, it would be liable for taxation as a gift.


New Income Tax Rules

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