New income tax rules: Top 10 new income tax rules effective this month

With the start of the new financial year, there are several changes in regard to income tax rules that are to be effective from April 1, 2022. Let’s take a look at the new income tax rules that have been introduced for this fiscal year:

1) The interest earned on the employee’s contribution to the provident fund (PF) account will be taxed if the contribution amount in a financial year exceeds ₹2.5 lakh.

“The very first one is the Tax on interest on PF accounts in which CBDT ( Central Board of Direct Taxes) has come up with an implementation where a cap of tax-free contribution up to ₹2.5 lakh is foisted in the Employee Provident Fund (EPF ) account under Income-tax ( 25th Amendment) Rule,” said Amit Gupta, MD, SAG Infotech

2) Any income from the transfer of a virtual digital asset will be taxed at a flat rate of 30%. 

“The new regime of flat 30% taxation on income from crypto assets from April 1, 2022, will ebb the sentiments for the new age asset class. Though, we hope that the crypto investors will back their investment thesis and stay in with the investment for longer periods,” said Kunal Jagdale, Founder, BitsAir Exchange


3) Any loss incurred during the transfer of a virtual asset would not be allowed to be set off against any income (including gain from a sale of another virtual digital asset) under any provision of the act. Only the cost of acquiring such an asset can be claimed in this computation.

“This makes the government’s stance very clear with respect to the taxation of a virtual digital asset. The law also clears the ambiguity to say that digital assets will also be included along with capital assets for the purpose of the term “transfer”. Therefore the same definition of transfer will apply to the virtual digital assets as applicable to capital assets,” said Sridhar R, Partner- Tax, Grant Thornton Bharat.

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

5) A new provision is inserted that allows the taxpayers to file an updated return for errors or mistakes done in income tax returns. 

“The introduction of a new ‘Updated return’ will be a booster for voluntary tax compliance. The time limit for filing such an updated tax return would be two years from the end of the relevant assessment year,” said Lokesh Acharya, Director & Co-Founder, Fincorpit Consulting Private Limited

6) The State government employees will now be able to claim deduction under Section 80CCD(2) for NPS contribution by the employer up to 14% of their basic salary and dearness allowance.

“Employees of state governments across the country will now get tax breaks on employers’ contributions to their National Pension Scheme up to 14% – higher than the 10%,” said Lokesh Acharya.

7) Presently, there is a cap of 15% surcharge on long term capital gain on the sale of listed equity or mutual funds. From 1st April 2022, this cap will be extended to long term capital gain on all assets.

8)The additional deduction of ₹1.5 Lakh on house properties valued at less than ₹45 lakh for the first time home buyers won’t be available to taxpayers from 1st April 2022.

9) The tax exemption has been provided to persons who have received money for expenses incurred on treatment of Covid 19. Likewise, money received by family members on the death of a person will be exempt up to 10 lakhs for family members.

10) Budget 2022 has introduced a new tax benefit for the parent/guardian of a disabled person. If the parent/guardian of a disabled person buys a savings life insurance policy with the latter as the beneficiary then the parent/guardian would be eligible for deduction from gross income before tax subject to certain conditions.

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