New tax rules to kick in from April 1, 2022; here's all you need to know

The new financial year is set to bring a slew of changes in income tax rules. It is better to be prepared in advance so that you can plan your savings as well as spending, accordingly. Here are the key tax provisions that become applicable from April 1,2022.

Crypto Tax

The Finance Bill 2022, as passed by the Lok Sabha, has inserted a new section 115BBH to provide the method of computation and the tax rate for the income arising from the transfer of Virtual Digital Asset (VDA). Now, according to the new rules, gains from all virtual digital assets including cryptos will be taxable at 30 per cent, and it will apply even if your taxable income is below Rs 2,50,000.  

“From April 1, 2022, income from transfer of virtual digital assets is taxable at 30 per cent. Such income will be taxable even the taxpayers' total income is below the threshold limit of Rs 2,50,000. Further, no deduction other than cost of acquisition is allowed while computing the taxable amount,” said Neeraj Agarwala, Partner, Nangia Andersen LLP. 

Moreover, there will be no provision for setting off and carrying forward of unclaimed losses. This means that losses made from Dogecoin cannot be set off against profits earned from Bitcoin or any other VDA. The high tax provisions are likely wane off the interest in the crypto market which otherwise have given very high return over the last few years. 

Updated ITR

Taxpayers will now be able to file updated income tax return within two years from the end of the relevant assessment year. “In the event, a taxpayer has omitted to report certain income, such persons will now have an opportunity to voluntarily disclose such income by filing an updated tax return with additional tax calculated based on the delay,” said Agarwala. 

Relief on long term capital gains 

Earlier income from long term capital gains arising in the hands of individuals from the transfer of assets other than listed securities was subject to a surcharge at 37 per cent of income tax. “From April 1, 2022, surcharge on such gains has been brought at par with the surcharge applicable in case of other capital gains at 15 per cent and accordingly, marginal relief will be available in their hands,” said Agarwala. 

No additional deduction u/s 80EEA

The deduction under Section 80EEA is available only for houses purchased before March 31, 2022. So, if you are planning to buy a house in the next financial year do remember that the additional deduction of Rs. 1.5 lakh against the payment of interest on home loan will not be provided. Section 80EEA is available for first time home buyers where stamp duty value of the property does not exceed Rs 45 lakhs.  

The EMI on home loan comprises of principal and interest. You can avail tax benefit for both. Firstly, the principal component of EMI paid in the year can be claimed as deduction under section 80C of the Income Tax Act. The maximum limit is Rs 1.5 lakh. Secondly, you can avail interest deduction under section 24B of income tax act to the extent of Rs 2 lakh. This limit of Rs 2 lakh is for self-occupied property.  

Two EPF accounts

Now from April 1 your provident fund (PF) accounts will be divided into two parts taxable and non-taxable account. This is because in the Budget 2021 the finance minister said that contributions made in excess of Rs 2.5 lakh annually will be taxable.  

The income earned in the current year gets taxed in the hands of the employee next year. So, the interest earned in your EPF account will get taxed in 2022-23, only if the contribution is above Rs 2.5 lakh. Moreover, tax will be levied only on the interest earned on the amount exceeding Rs 2.5 lakh. The contribution amount does not become taxable.  

TDS on property

TDS of 1 per cent is applicable on transfer of immovable property above Rs 50 lakh. The TDS was deducted on consideration paid. “From April 1, 2022, TDS of 1 per cent shall be deducted on consideration or stamp duty value, whichever is higher. The said amendment is undertaken in line with the provisions of section 43CA and 50C which state that the consideration should not be less than the stamp duty value,” said Agarwala. 

80DD for differently-abled children 

Conditions for availing tax benefits on the insurance policy for differently-abled children have been relaxed. Previously, expenses incurred on premium payments could be claimed as deductions, under section 80DD of the Income Tax Act, only if the payout is made to a differently-abled child after the death of a parent or caregiver. Now, from April 1 this has been relaxed to extend the deduction even if the sum is received while the parent is still alive or when they attain 60 years of age.  

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