By Sanjiv Bajaj
Income tax rules are constantly changing and taxpayers need to be aware of them in order to be on the right side of the law. For income tax purposes, a fiscal year (FY) begins in April and ends on March 31 of the following year. We are currently in fiscal year 2022-23 and there have been certain tax rule changes that will apply from this FY. Let’s look at some of them:
NPS Contribution: For central government employees, the government already contributed 14% of the employee’s wages to the employee’s NPS account. Beginning this fiscal year, state government employees will receive a 14% contribution to their NPS account from their respective state governments. The deduction for the employer’s contribution to the NPS has been increased from 10% to 14% for state government employees treated as equivalent to central government employees. However, it has not been extended to non-government employees.
EPF Contribution: In EPF, 12% of wages are contributed by the employee, but the rules allow the employee to contribute a higher amount as a voluntary provident fund. So far, tax-free interest income has been achieved with the entire deposit. If your future contribution to the EPF is more than Rs 2.5 lakh per annum, interest on the amount in excess of the threshold will be taxable. For the government employees the limit is Rs 5 lakh.
Submit an updated IT return: A new provision has been introduced to allow taxpayers to submit an updated return for the payment of additional taxes. This updated declaration can be submitted within two years of the end of the relevant year of assessment. This new system for filing revised ITRs will help taxpayers voluntarily report lost revenue and reduce litigation.
Virtual Digital Assets Tax: Virtual digital assets include cryptos like Bitcoin, Ethereum, etc. and other digital assets like non-fungible tokens (NFTs) and are subject to taxation. Income from the transfer of virtual digital assets is taxable at the 30% tax rate applicable from April 1, 2022; TDS of 1% levied on virtual asset transfer payments effective from July 1, 2022 and gift of virtual digital assets are also taxed in the hands of the recipient.
Postal systems: The government has made the use of a savings account for crediting monthly, quarterly and annual interest on postal MIS, SCSS and term deposit accounts mandatory. If you withdraw interest income from Post Office MIS, SCSS, and time deposit accounts in the form of cash, you may not be able to do so as of April 1, 2022.
The author is joint chairman and chief executive officer of Bajaj Capital
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