2022-2023 Union Budget | Direct Tax Overview
Written by Ayushi Shakya & Amanpreet Singh Dt. February 10th, 2022
The Union Budget 2022 has been declared by the Honorable Finance Minister on 1st Feb. 2022, which acts as a point of discussion to cope-up with the changes that has been made in Direct tax through proper strategies and growth plans and ultimately crystallizing the long term goals.
She in her speech quoted the SHANTI PARVAADHYAYA. 72. SHLOK 11 OF MAHABHARAT which says
The king must make arrangements for Yogakshema (welfare) of the populace by way of abandoning any laxity and by governing the state in line with Dharma, along with collecting taxes which are in consonance with the Dharma.
This budget intends to bring more reforms than earlier that will take ahead the vision to establish a principled tax regime. This will help to simplify the tax system, promote voluntary compliance by taxpayers, and reduce litigation.
This budget also seeks to lay the foundation and give a layout to drive the economy over the Amrit Kaal of the next 25 years. Its fundamental principle is to bring transparency of financial position and fiscal position which will continue to guide us in long-term.
AMENDMENTS TO THE EXISTING LAW
- Alternative Minimum Tax reduced from 18.5% to 15% and surcharge from 12% to 7% for Co-operative societies.
- Surcharge on income of Association of Persons reduced from 37% to 15%.
- Maximum surcharge on Long Term Capital Gain is 15%.
- Any surcharge or cess is disallowed as business expenditure.
- Employer Contribution of NPS raised to 14% in case of State government employee.
- TDS @ 1% in case of agency transaction exceeding Rs 20000.
- No set off of brought forward loss from undisclosed income.
- Updated return can be filed within period of 2 years from the end of relevant A.Y.
- If any payment received in the form of annuity or lump sum amount for the benefit of a dependant, being a person with disability as per the scheme stated under Section 80DD is exempted provided the parent/guardian has attained the age of 60 years or more.
- Eligibilty to avail section 115BAB extended to 31-03-2024.
- Tax benefits for start-ups increased for 1 more year due to pandemic.
- Amount received from any person for the purpose of medical expenditure of COVID-19 is exempted subject to some conditions.
INTRODUCTION TO VIRTUAL DIGITAL ASSET
A New clause (47A) under section 2 has been inserted defining VIRTUAL DIGITAL ASSET as
- Any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme and can be transferred, stored or traded electronically.
- A non-fungible token or any other token of similar nature, by whatever name called.
- Any other digital asset, as the Central Government may, by notification in the Official Gazette specify.
Provided that the Central Government may, by notification in the Official Gazette, exclude any digital asset from the definition of virtual digital asset subject to such conditions as may be specified therein.
- It would be taxed at the flat rate of 30%.
- No deduction would be allowed except cost of acquisition.
- No loss would be set off against any other income.
- TDS would be deducted @ 1%.
- Gift of the same would be taxed in the hands of recepient.
Ayushi Shakya & Amanpreet Singh