Budget 2022: Five Key Income Tax Changes Announced; Here Are The Details

The finance minister has announced that taxpayers, who have missed filing their income tax returns correctly, will be given a one-time window to correct any error

Though Nirmala Sitharaman said that there will be no change in income tax slabs, but some minor changes have been proposed under the I-T laws that may come handy for the taxpayers. Image: Getty

New Delhi: Finance Minister Nirmala Sitharaman during her Budget presentation in the Lok Sabha on Tuesday announced a new tax rule for the taxpayers.

Though the minister said that there will be no change in income tax slabs, but some minor changes have been proposed under the I-T laws that may come handy for the taxpayers.

In her Budget speech, she has announced that taxpayers, who have missed filing their income tax returns correctly, will be given a one-time window to correct any error.

Here are some of the relevant information regarding income tax:

Filing of ITR

Taxpayers can now file their returns within two years of the assessment year, according to the Budget announcement of Nirmala Sitharaman. Which means that the taxpayers have now got an opportunity to file their updated tax returns to report any income that was missed out. According to experts, this will be considered as a major tax reform and in the long run will help the taxpayers and will shield them from any litigation or penalties.

National Pension Scheme (NPS)

The finance minister has said that NPS deduction limit for state government employees have been raised to 14 per cent from the current 10 per cent. Under the I-T Act, 1961, investment in NPS offers tax benefit for the employees.

30% tax on digital assets

Nirmala Sitharaman has announced 30 per cent tax on proceeds of digital assets. She said the magnitude and frequency of these transactions made it important to provide for a specific tax regime. Besides, 30 per cent tax, 1 per cent TDS will be levied on payments made on the transfer of digital assets, as the minister wanted “to capture the transaction details” of the digital assets and currencies.

Tax relief to physically handicapped persons

In her Budget speech, the minister said Section 80 DD is proposed to be amended. Currently, the law provides for a deduction to the parent or guardian only if the lump-sum payment or annuity is available to the differently-abled person on the death of the parent or guardian. The tax benefits were reversed if any amount was paid while the parent or guardian was alive or the physically disabled person dies before the guardian or parent. “I propose to thus allow the payment of annuity and lump sum amount to the differently-abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of sixty years,” Sitharaman said.

Covid relief

Some relief has been provided to persons who have received monetary help towards expenses incurred for treatment of Covid 19, as well as any ex-gratia by family members from the employer as ex-gratia on death of an employee is fully tax-free. The money received by family members on the death of a person will also be exempt up to Rs 10 lakhs for family members.