The new Financial year is just around the corner and for those who might have missed out on major announcements, here is a reckoner of 10 rules that will come into effect from April 1st, 2022.
- Cryptos and NFT trades will now be taxed
All forms of VDA (Virtual Digital Assets), comprising cryptocurrencies such as bitcoin and non-fungible tokens (NFTs) will now be taxable at 30%. Finance minister, Nirmala Sitharaman announced this in her Budget speech this year.
Taxes will be applicable on the virtual asset only when the owner makes a profit on selling the asset and not on the entire investment. All crypto transactions will be subject to a 1% TDS (Tax Deducted at Source). Although, cumulative TDS can apply to the annual income tax owed. TDS will be deducted on the entire transaction in the event of losses incurred by someone.
2. Medicine prices will shoot up
More than 800 medicines, under the NLEM (National List of International Medicines), including antibiotics and painkillers will witness a price upsurge. The government has permitted a 10.7% price rise for a specific section of drugs that fall under the price control mechanism, viz. Azithromycin, Ciprofloxacin Hydrochloride, Metronidazole, Paracetamol, Phenytoin Sodium and Phenobarbitone to cite a few.
This indicates that prices for the medicines used to cure heart ailments, fever, skin diseases, infections, anaemia and hypertension will all soar
3. Tax concession on transactions for Covid-19 treatment or death
No-limit tax exemption has been extended to people who have received funds from employers or other benefactors for the medical treatment of Covid-19. Furthermore, in the case of covid-related deaths, the money received by the family members to survive financial challenges is also free from taxes. However, this is dependent upon who provided money to the taxpayer’s family. The ex-gratia payment is fully exempt if the amount is received from the taxpayer’s employer. The exemption is restricted to Rs. 10 lakh if the payment is obtained from some other person. This amendment will be effective upon consideration from April 1st, 2020.
4. Extension to file update ITR (Income Tax Return)
Taxpayers filing for ITRs will be granted a two year time period following the end of the relevant assessment year in case they have missed out on including any income when the return was first filed. Nevertheless, an additional 25-50% tax and interest due on the additional income shall be levied. Until now, the deadline to file a revised ITR of the relevant assessment year was December 31st.
5. Interest on PF contributions over Rs. 25. Lakhs will now be taxed
A CBDT (Central Board of Direct Taxes) notification suggests that any interest on contributions exceeding Rs. 2.5 lakhs in the EPF (Employee Provident Fund) and VFP (Voluntary Provident Fund) shall be taxed. The threshold moves up to Rs 5 lakh in cases where the employer does not contribute to the employee’s provident fund. Also, the same limit is applicable to all government employees. This amendment will apply only to employee contributions to the PF account; the employer’s contributions remain tax-free.
Subscribers need to maintain two separate accounts for the calculation of taxable interests. On PF account shall include all contributions made till March 31st, 2022 which will not be subject to taxes. Another PF account will be opened for each subscriber in the new financial year where contributions over Rs. 2.5 lakhs mad in the current and subsequent years shall be placed. Taxes will be levied on this account, implying that the interest earned on this contribution would be taxable.
6. Certain businesses will have to switch to GST E-invoices
E-invoicing will be mandated for all businesses with an annual turnover of Rs. 20 crores from FY22, as announced by CBDT. This suggests lowering the threshold for electronic billing from the earlier Rs 50 crores.
It will now be indispensable for taxpayers to generate invoices on their internal systems or billing software ahead of reporting them online to the invoice registration portal. This is essential to avail of the input tax credit, which refers to the tax paid by a business on a purchase and that can be later used to reduce its tax liability when making a sale.
However, in the absence of a valid invoice, the recipient will be unable to avail of inputs tax credits on the same in addition to facing other penalties.
7. No more tax benefits for first-time homebuyers
The additional tax deduction applicable to affordable housing under section 80EEA of the Income-tax Act will now cease to exist. An affordable house essentially implies that the stamp duty of the residential property should be no more than Rs. 45 lakhs. Previously, under this section of the IT Act, an individual was permitted to claim an additional deduction of Rs. 1.5 lakhs in addition to the Rs. 2 lakh deduction available under section 24 of the same Act for the interest paid on an affordable house loan.
8. Post Offices will no longer pay interest to certain accounts in cash
Post offices will discontinue paying interest to these accounts in cash – Senior Citizens Saving Scheme, Monthly Income Scheme and Term Deposit accounts. Instead, the account holders will have the interest credited to their post office savings accounts or bank accounts. In case the account holder is unable to link their savings bank account with the aforementioned accounts, the outstanding interest will be credited to the post office savings account or by cheque.
9. Linking of PAN and Aadhaar will be compulsory
Starting April 1st, it will be mandatory for all the tax-paying individuals to have their PAN and Aadhaar cards linked. If not linked, PAN will become non-functional and will be regarded as not furnished or intimated in situations where it is required by the law.
10. Re-registration of cars will become expensive
For the renewal of cars older than 15 years, vehicle owners will have to shell out Rs 5,000 with effect from April 1st. That is approximately eight times more than what one currently pays (Rs. 600). Safety concerns call for mandatory registration of cars after 15 years.
Meanwhile, re-registration of old bikes would be Rs. 1,000 against the existing fee of Rs. 300. For imported cars, the cost would be Rs. 40,000 compared to the present fee of Rs. 15,000.