The most anticipated part of any Budget, over the years, is taxes.
More so this year, as we come off a pandemic and citizens hoped to see some silver linings.
While the salaried individuals and professionals expected increased deductions, which the Budget failed to deliver on, there were more than a few winners.
Following amendments have been proposed under Income Tax Laws in the Finance Bill, 2022 which shall be effective from April 01, 2022:
- A new provision is introduced to allow taxpayers to update the past return and include omitted income by additional tax payment. The updated return can be filed within two years from the end of the relevant assessment year with penalty ranging from 25% to 50% on additional Income tax along with Interest.
- This new provision is expected to ensure voluntary tax filing and reduce litigation.
- Reduced AMT (Alternative Minimum Tax) rates for Co-operatives from 18.5% to 15%.
- Reduced surcharge for Co-operatives (with total income of 1cr to 10Cr) from 12% to 7%.
- Currently the deduction U/s 80 DD is available to the Individual or HUF contributing to the Insurance scheme of LIC or any other which pays the annuity or lump sum payment upon the death of the Individual or Member of HUF on whose name the policy is taken.
- As per proposed amendment in this union budget, the deduction towards Insurance premium under this section towards maintenance of persons with disability will be allowed in the insurance schemes which pays the annuity or lump sum payment upon death as well as during the lifetime of parent/guardian of the differently abled attaining 60 years of age.
- Tax deduction limit increased from 10 per cent to 14 percent on employer’s contribution to the NPS (National Pension Scheme) account of State Government employees.
- This brings them at par with central government employees and would help in enhancing social security benefits.
- Income from transfer of digital assets such as crypto to be taxed at 30%.
- No deductions will be allowed except the cost of acquisition of digital assets.
- Loss on sale of digital assets cannot be set off against any other income.
- TDS at 1% will be levied above the threshold.
- Gifting of digital assets will also be taxable in the hands of the receiver.
- Life becomes more difficult for tax evaders! No set off of any losses will be allowed against undisclosed income which is detected under any survey or search initiated by the tax department. This will further deter tax evasion.
- In the case of association of persons (AOPs) or a consortium, a graded surcharge of up to 37 percent would get attracted on the income of the AOP. The rate has now been capped at 15 percent.
- Surcharge on Long Term Capital Gains on any assets to be capped at 15%. This is especially beneficial for long-term capital assets that previously bore the brunt of graded surcharge rates that went as high as 37 percent. This is aimed at encouraging investments in start-ups and other companies.