Individual taxpayers were hopeful that the finance minister (FM) would provide some tax relief by changing the tax slabs or offering higher deduction under Section 80C, 80D, or Section 24. None of those hopes materialised. However, there was some relief for taxpayers who make a mistake in filing income-tax. Investors in cryptos will also breathe easy. Now that the FM has clarified how cryptos will be taxed, the fear that these digital assets could be banned will no longer be there. State government employees also stand to gain by enjoying higher deduction on their employer's contribution.

Updated tax return

The Income-Tax Department will introduce a new updated return. This tax return will help those taxpayers who may realise they have committed omissions or mistakes in estimating their income-tax payment. They will get an opportunity to correct such errors by paying additional tax. This updated return can be filed within two years from the end of the relevant assessment year. This will help simplify the tax system, promote voluntary compliance by taxpayers, and reduce litigation.

Capping of LTCG

The FM announced the capping of the surcharge on the long-term capital gains (LTCG) payable on financial assets at 15 percent. This proposal will benefit taxpayers in high income tax slabs as well to investors in equity shares of start-ups. Earlier the surcharge on LTCG was capped at 15 percent in case of listed stocks and equity mutual fund. Now the same gets extended to all financial assets.

Clarity on taxation of cryptos

Those investing in virtual digital assets finally have clarity on their taxation. The FM has proposed that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent. No deduction will be available on income from this source, except the cost of acquisition. In case of loss from transfer, it can't be set off against any other income.

A 1 per cent tax will be deducted at source (TDS) on payments made for the transfer of digital assets. When a digital asset is gifted, that will be taxed in the hands of the recipient.

NPS: State government employees brought at par with central government employees

At present, the central government contributes 14 per cent of the salary of its employees to the National Pension System (NPS). This is allowed as a deduction in computing the income of the employee. However, such deduction is allowed only to the extent of 10 per cent of the salary in case of employees of state governments. To provide equal treatment to both central and state government employees, the FM has proposed to increase the tax deduction limit from 10 per cent to 14 per cent on employer's contribution to the NPS accounts of state government employees as well. This will enhance the Social Security benefits of state government employees and bring them at par with central government employees.

Relief to persons with disability

The parent or guardian of a differently abled person often take an insurance scheme for such person. The present law provides for 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 subscriber, i.e.,the parent or the guardian.

However, there could be situations where the differently-abled dependants may need payment of annuity or lump sum amount even during the lifetime of their parents/guardians. The FM has proposed to allow the payment of annuity and lump sum amount to the differently abled dependant during the lifetime of the parents/guardians, once they attain the age of sixty years.