MM TAX CLUB

UNION BUDGET 2022-23

PART-B

The Union Minister for Finance and Corporate Affairs Smt Nirmala Sitharaman presenting the Union Budget in Parliament today on 1^st February 2022.

Here are the highlights of changes proposed in Union Budget 2022-23

1. New Updated Return

• Income Tax Department to provide updated Return forms which can be rectify within 2 years on payment of additional fees from end of the Assessment for which return has been filed.

• The initiative has take to reduce hurdles of income tax assessment with assessing office, with extended time the taxpayer can rectify their mistake and can escape from litigation with the income tax department.

2. Reduced Alternate Minimum Tax and surcharge  

• It has been proposed in budget to reduce Alternate Minimum Tax for Co-operative Housing societies to 15%, which is currently levied at 18.5% rate.

• Also surcharge which is currently levied at 12% proposed to reduce to 7% for those co-operative  housing societies whose income is between Rs.1 crore to Rs.10 crore.

3. Tax relief to persons with disability

• Payment of annuity and lump sum amount from insurance scheme to be allowed to differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardian attaining the age of 60 years.

4. Parity between employee of Central and State Government.

• TDS limit for employer contribution in NPS account increased from 10% to 14% for the employee of state government.

• Initiative has taken to eliminate different rate of tds between central and state government employee.

5. Incentive to startups

• In view of the covid pandemic, benefit of tax incentive extended by one year for the startups.

• Earlier eligible startups incorporated till 31-03-2022 was eligible for tax incentive now its proposed to increase startup incorporation date for eligible tax incentive by one year from 31-03-2022 to 31-03-2023.

6. Concessional Tax Regime for newly incorporated manufacturing entities

• Last date for commencement of manufacturing or production under section 115BAB extended by one year i.e. from 31st March, 2023 to 31st March, 2024.

7. Scheme for Taxation of virtual Digital Assets

• Any transaction in Virtual Digital Assets shall be taxed at the rate 30% and no any expenditure will be allowed for deduction except purchase cost of virtual digital assets.

• To track transaction of Virtual Digital Assets, TDS at the rate on 1% will be charged on such transactions.

• Gift of Virtual Digital Assets also to be taxed in hand of recipient and losses can not be allowed to setoff against any other income.

8. Litigation management to avoid repeatable appeals by department.

• In cases where question of law is identical to the one pending in High Court or Supreme Court, the filing of appeal by the department shall be deferred till such question of law is decided by the court.

• To greatly help in reducing repeated litigation between taxpayers and the department

9. Tax Incentive for IFSC

• Following shall be exempted from tax

1. ncome of a non-resident from offshore derivative instruments.
2. Income from over the counter derivatives issued by an offshore banking unit.
3. Income from royalty and interest on account of lease of ship.
4. Income received from portfolio management services in IFSC.

10. Rationalization of surcharge

• Surcharge on AOPs (consortium formed to execute a contract) capped at 15 per cent.
• Initiative take to reduce the disparity in surcharge between individual companies and AOPs.
• Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent.
• To give a boost to the start up community.

11. Clarification on health education cess

• Any surcharge or cess on income and profits not allowable as business expenditure.

12. Deterrence against tax-evasion

•  No setoff of any losses will be allowed for undisclosed income or suppression of income found during search and survey operations.

13. Rationalizing TDS Provisions

• Benefits passed on to agents as business promotion strategy taxable in hands of agents.
• Tax deduction provided to person giving benefits, if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.