New ITR Rules and Regulations

The new fiscal year begins on April 1st. On April 1, 2022, various income tax rules and other financial adjustments will go into effect, as they do every new year. Here’s a look at the new rules that will take effect on April 1 and how they will affect your finances.

When EPF Contribution Exceeds Rs 2.5 lakhs

If an employee’s contribution to the Employees’ Provident Fund (EPF) account in the preceding financial year 2021-22 exceeded Rs 2.5 lakh, the interest generated on the excess contribution will be taxable in the employee’s hands. A new EPF account will be created to calculate the interest that will be taxable in the hands of an employee.

On August 31, 2021, the Central Board of Direct Taxes (CBDT) released a statement clarifying how interest on excess contributions will be taxed. According to the announcement, all contributions made by an employee before March 31, 2021, will be tax-free. Interest will be credited to the current EPF account for contributions up to Rs 2.5 lakh in FY 2021-22. The interest that is credited to this account is tax-free.

If EPF contributions in FY 2021-22 exceed Rs 2.5 lakh, a new EPF account would be formed. The employee would be taxed on the interest credited on the excess contribution (Rs X less Rs 2.5 lakh). The barrier is Rs 5 lakh for individuals who do not have an employer contribution to their EPF accounts, such as government employees.

Taxing Crypto and Virtual Digital Assets

The taxation of cryptocurrency earnings was one of the most significant statements in Budget 2022. Gains from various virtual digital assets (VDAs) such as bitcoin, dogecoin, and others will be taxed at a fixed rate of 30% beginning in FY 2022-23. Furthermore, no deductions will be allowed for any expenses (excluding acquisition costs).

There will be no set-off of losses from the purchase or sale of virtual digital assets against other incomes. Gains from one virtual digital asset will not be allowed to be offset against losses from other virtual digital assets, according to the government. The Income-tax Act of 1961 has been amended to include a new section 115BBH for the taxation of virtual digital assets.

Extended Time Limit to File ITR

Individuals will have an additional opportunity to update their tax returns beginning April 1st (ITR). If further information was missing when the ITR was filed, this revised return will be filed. The Income-tax Act has been amended to include a new subsection 139 (8A).

Individuals have three years from the end of the fiscal year to file an updated return. Regardless of whether a person has submitted an initial or late ITR, this tax return will be filed. An individual will be required to pay an additional tax of 25 percent to 50 percent on the tax and interest owed when filing an updated ITR.

Relaxations for Differently-Abled People

Budget 2022 modified some rules under section 80DD, which provides a tax benefit for disabled people’s care. If an individual buys a life insurance policy for a disabled person, the individual can claim a tax credit even if the policy benefits (such as annuity payments) begin while the individual is still living, according to the flexibility allowed.

Previously, a deduction under section 80DD was allowed when a disabled person received an annuity from a life insurance policy after the individual’s death (i.e., the person who has purchased the insurance cover). From FY 2022-23 onwards, the new law will apply to life insurance policies purchased. Such policies will be claimed as a deduction in the following year’s ITR filing (i.e., AY 2023-24).

New Regulations on Sale of Immovable Property

From April 1, 2022, new TDS rules for buying and selling immovable property will take effect. According to the new TDS rules, a buyer of immovable property will deduct tax at a rate of 1% on the amount paid to the seller or the property’s stamp duty value, whichever is higher. If the sale price of an immovable property or the stamp duty on the property exceeds Rs 50 lakh, TDS is applied. Previously, tax was taken from the buyer’s payment to the seller.

No Extra Tax For Buying Affordable House

If you plan to purchase a low-cost home in FY 2022-23, keep in mind that the additional deduction of up to Rs 1.5 lakh under section 80EEA would no longer be available. Because the government did not prolong this tax break in Budget 2022, this is the case.

If an individual meets the requirements indicated under section 80EEA and a house loan is approved on or before March 31, 2022, he or she will be eligible to claim an additional deduction of up to Rs 1.5 lakh on the home loan EMI paid in future financial years until FY 2021-22. On the interest paid on a home loan acquired to buy a property, an individual can claim a deduction of up to Rs 3.5 under section 80EEA and section 24. Individuals can continue to claim deductions under section 24 up to a limit of Rs 2 lakh.

Higher TDS in Case of Failure of ITR FY 2020-21 Filing

Budget 2021 announced a provision imposing greater TDS and TCS if ITRs for the previous two years were not filed. The adjustment, however, was announced in Budget 2022. According to the announcement made in the most recent Budget, if an ITR for a given year is not filed, increased TDS and TCS will be applied in the following fiscal year.

The decision was made to broaden the tax base and urge taxpayers to file tax forms, according to the Memorandum to the Budget 2022. However, if the source of income is salary or provident fund, the greater TDS will not apply. However, as defined by the Income-tax Act, larger TDS will be deducted from interest income, dividend income, and other types of income.

Senior Citizens Get Relief from Filing ITR

Senior people aged 75 and up will be excluded from filing income tax returns from April 1, 2022. (ITR). This exemption from filing ITR is available, however, only if specific conditions are met by senior individuals. In addition, the older citizen must make a declaration to the bank.

KYC Compliance Necessary

If your bank account does not comply with KYC requirements by April 1, 2022, you will be unable to use it. Due to the bank account’s non-KYC compliance, limits will be put on cash deposits, cash withdrawals, and other transactions.

Due to the new coronavirus epidemic, the Reserve Bank of India (RBI) extended the deadline for periodic KYC updates in one’s bank account until December 31, 2021, in May 2021. Due to the omicron version of the coronavirus, the deadline was extended to March 31, 2022. The central bank, on the other hand, has provided no more extensions for periodic KYC updates.

 

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