Indore (Madhya Pradesh): Those hoping that the new financial year, which begins on Friday, will ease their financial debts and benefit from certain exemptions, must think again. Exemptions will be removed or made conditional as in the case of home loans and, for the first time, FP contributions will be taxed under conditions.
PF earnings will become taxable
From the new financial year, interest earned on contributions of more than Rs 2.5 lakh in the employees’ PF account will attract income tax. Now, the calculation of tax in the accounts of employees who contribute more than Rs 2.5 lakh per annum will have to be split into two parts. One account will have an exempt contribution, while the other will have a contribution of more than Rs 2.5 lakh, which will be the taxable part. But, for government employees, this limit will be Rs 5 lakh in the Government Provident Fund (GPF).
The mortgage loan exemption is conditional
Now, interest paid for the purchase of an affordable home, for the first time, will not qualify for an additional deduction under section 80EEA. Under this section, if the value of a house is less than Rs 45 lakh, one can claim deductions of up to Rs 1.5 lakh in payment of interest on the home loan. This deduction or exemption is in addition to the Rs 2 lakh exemption available under Section 24B. This benefit was reserved for taxpayers who had taken out a loan from a financial institution such as a bank between April 1, 2019 and March 31, 2022 to buy their home. Now, when buying a house in the new fiscal year, the benefit of this additional deduction will no longer be available.
30% IT to be deducted from crypto currencies
From April 1, clear rules regarding the tax on virtual currency (crypto) will also apply. As of the new fiscal year, virtual or crypto digital assets will be taxed at 30%. In such a situation, if a person makes a profit on the sale of cryptocurrency, he will have to pay a tax to the government and 1% TDS will also be deducted according to the rules from July 1 on his sale.
Life-saving drugs will also be expensive
The government has given permission to increase the prices of life-saving drugs, thanks to which the prices of the drugs can increase by 10.7%. Therefore, the prices of many drugs will increase from the new fiscal year.
If PAN & Aadhaar are not linked yet, you have to pay a fine
From the new fiscal year, for taxpayers who have not linked their Permanent Account Number (PAN) to Aadhaar, their PAN will become inoperative and it will be treated as if they do not have a valid PAN. This will cause problems in their dematerialization accounts and mutual fund transactions. The PAN must be linked to Aadhaar before June 30, and a penalty of Rs 500 will be imposed for the link after that.
Electronic invoicing made compulsory for turnover above Rs 20 cr
Businessmen with a turnover of Rs 20 crore will also be subject to mandatory electronic invoicing from April 1. Thereafter, they will receive an electronic invoice for each business-to-business transaction. If the electronic invoice is not issued, action may be taken to seize the goods in transit while the goods are in transit under Section 129. If such reseller fails to issue the electronic invoice, the credit of input tax to the buyer will be at risk, assuming that the buyer does not have a valid invoice.
Companies will need to manage the audit trail
From now on, every company will have to maintain the audit trail function in the accounting software of its books. Later, if an accounting entry is modified, information about this change will be present in the new functionalities of the “audit trail” of the software. Arrangements will have to be made so that the audit trail is not closed from the accounting software and the audit trail will be available on request.
“A lot of changes on the anvil”
“The new financial year begins on April 1 and this new year will see many changes. Over the past few months, the central government and the state governments have made many such changes to laws, which will have a direct impact on the people’s income, expenses and investments. — CA Kirti Joshi, Past President of CA-Indore Branch of ICAI
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Posted: Wednesday, March 30, 2022, 11:22 p.m. IST