The finance ministry of India introduces modifications to the prevalent tax system with every Union Budget intending to encourage more individuals to pay tax regularly and to boost the economy. Budget 2022, declared by the Finance Minister of India, announced several changes in the current taxation scenario. Amendments were introduced to increase efficiency and bring ease to the tax-paying and collecting process. As an individual taxpayer, you should be aware of these changes and pay your taxes and file your ITR accordingly. Individuals who are not sure of how much tax they owe can initiate the process with the help of an income tax calculator. Let’s briefly look at the amendments introduced.
Surcharge on all capital gains capped at 15%
While the surcharge on capital gains received from equity funds and listed stocks was already capped at 15%, Budget 2022 has expanded this surcharge to capital gains from all asset classes. So, the capital returns that you derive from assets such as unlisted shares, property, artefacts, and so on, would incur a surcharge of not more than 15%. This is especially beneficial for high-net-worth investors.
Virtual digital assets to be taxed
While there were no exact digital assets named by the finance minister, the explanation provided cleared that it was largely cryptocurrency transactions that would be taxed. Income gained from the transfers and sales of cryptocurrency will be taxed at a 30% rate. Gifting cryptocurrency with a value of over Rs 50,0000 to anyone other than close family members would also invite a similar rate of tax on the recipient’s end.
A TDS of 1% has also been proposed on the trading of virtual digital assets that are priced over Rs 10,000. If your tax liability for a year is over Rs 10,000, then you may have to consider paying advance tax throughout the financial year rather than at the end of the year.
The additional time proposed to rectify mistakes in ITR
If a taxpayer has not provided correct information in their ITR and has already submitted it, they can revise the same and file the updated ITR within two years from the end of the assessment year. This would mean three years after the end of the financial year in which the return was first filed. Earlier, if any mistakes were found or income/s were not mentioned correctly, the taxpayer had to undergo a lengthy process after the income tax department had pointed out the same in Form 26AS/Annual Information Sheet. However, note that the delay in filing the final ITR due to updating will incur charges, fees, and additional taxes.
Another important thing to keep in mind when filing the ITR is to opt for the right ITR form. Out of the seven types of ITR present, ITR-1, ITR-2, and ITR-3 are the most commonly used by individual taxpayers.
Increase in NPS deduction limit for state employees
The contribution made by the state government employees towards the National Pension Scheme would no longer be restricted to just a 10% deduction limit and has been increased to a 14% rate instead. So, when you are adding your NPS contribution under Section 80CCD in the income tax calculator, be prepared to receive slightly higher tax benefits than the previous year!
Non-filers to be taxed a higher TDS
Usually, a TDS of 10-30% is applied on the income from the interests from dividends, FDs, sale of property, rent received, and so on. The Union Budget 2022 has proposed a higher TDS for the above if the taxpayer has not filed the ITR for the previous assessment year.
Differently-abled individuals to receive tax benefits earlier
Previously, differently-abled persons or their guardians would receive tax benefits on their annuity-providing schemes only if the proposer/subscriber of the policy, i.e., the guardian, had passed away. However, with the proposal introduced in Budget 2022, the tax benefits would be applicable even when the parent/guardian is alive, provided that they have attained the age of 60 years.
This article covers the general information regarding personal tax proposals in the Union Budget of 2022-23. Thetax laws are subjected to changes which may apply to tax deductions and benefits. Advance tax payers may also have to work out their tax matters differently. It is recommended to take the advice of a tax expert to deal with in-depth tax matters.