Income tax rules keep changing and taxpayers need to be aware of them to be on the right side of law. For income tax purposes, a financial year (FY) begins in April and ends on March 31 of the following year. Currently, we are in the financial year 2022-23 and there have been certain amendments in tax rules that will be applicable from this FY onwards. Let’s see some of them:
NPS contribution: For the central government employees, the government was already contributing 14% of employee’s wages towards employee’s NPS account. Starting this FY, state government employees will receive a 14% contribution into their NPS account from their respective state governments. Deduction for employer contribution to NPS has been increased from 10% to 14% for state government employees on par with central government employees. However, it has not been extended to non-govt employees.
EPF contribution: In EPF, 12% of wages is contributed by the employee but rules allow the employee to contribute a higher amount as a voluntary provident fund. Till now, the entire contribution earned tax-free interest income. Going forward, if your contribution towards EPF is more than Rs 2.5 lakh a year, the interest earned on the amount exceeding the threshold limit will be taxable. For the government employees, the limit will stand at Rs 5 lakh.
File an updated IT return: A new provision permitting taxpayers to file an updated return on payment of additional tax has been introduced. This updated return can be filed within two years from the end of the relevant assessment year. This new system of filing revised ITR will help taxpayers voluntarily declare any missed income and reduce litigation.
Virtual Digital Assets Tax: Virtual Digital Assets will include cryptos such as Bitcoin, Ethereum, etc., and other digital assets such as Non-fungible tokens (NFTs) and will be subject to taxation. Income from transfer of any virtual digital asset is to be taxed at the rate of 30% applicable from April 1, 2022; TDS of 1% to be charged on payments made for transfer of virtual assets applicable from July 1, 2022 and the gift of virtual digital assets will also be taxed in the hands of the recipient.
Post office schemes: The government has made it mandatory for the use of savings account for credit of monthly, quarterly, yearly interest in case of post office MIS, SCSS, time deposit accounts. If you are withdrawing interest income earned on post office MIS, SCSS and time deposit accounts in the form of cash, you may not be able to do so from April 1, 2022.
Taxpayers can now file an updated ITR within two years of the assessment year by paying additional tax