Finance minister Nirmala Sitharaman announced a new tax rule for taxpayers where a taxpayer can file an updated return on payment of taxes within two years from the end of the relevant assessment year during her Union Budget 2022 speech.
ITR filing
Taxpayers can file updated ITR within two years of the relevant assessment year, says FM. This is a new provision that will ensure voluntary tax filing and reduce litigation, the FM said.
Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co., said: “Giving taxpayers an opportunity to file an updated tax return to report any income that was erroneously missed out or to correct errors is a much awaited tax reform. Hitherto, if a taxpayer missed the due date to file a revised return, there was no mechanism in law to self-report any income that was not offered to tax. This left the taxpayer vulnerable to litigation, interest and penalties even when there was an intent to disclose income. This reform should go a long way in reducing tax disputes and building trust between the taxpayer and the Government. “
Tax Deduction Limit on Employer’s Contribution for NPS Increased
Finance minister Nirmala Sitharaman said NPS deduction for employer contributions for state govt employees raised from 10 per cent to 14 per cent, to bring them on par with central government employees. Investment in National Pension System (NPS) is offers tax benefit under three different sections of the Income-tax Act, 1961.
1 per cent TDS will be levied on payments made on the transfer of digital assets
TDS will be imposed on payments for the transfer of crypto assets at a rate of 1% for transactions over a certain threshold. Furthermore, gifts of crypto assets will be taxed in the recipient’s hands.
Long term capital gains to be subject to surcharge only at 15 per cent for all assets “Long term capital gains to be subject to surcharge only at 15 per cent for all assets as against graded surcharge. Currently, this is available only for listed shares and units of mutual funds.”
Tax on proceeds of digital assets
Finance minister Nirmala Sitharaman announces 30% tax on proceeds of virtual/digital assets. “Taxation of virtual digital assets – at 30%. No deductions are other than cost of acquisition. No set off permitted against other income. Tax withholding to be triggered on sale at 1% beyond a certain threshold. Deduction for employer contribution to NPS increased from 10 % to 14% for state govt employees on par with central govt employees. Not extended to non-govt employees,” said Saraswathi Kasturirangan, Partner, Deloitte India.