Budget Highlights 2022 – Direct Taxes

Budget Highlights 2022 – Direct Taxes

Here is the highlights of Union budget 2022 presented in Loksabha on February 1, 2022 by our hon’able Finance Minister Smt. Nirmala Sitharaman.

Provision for filing ‘Updated Income tax return’

  • Facility to file an Updated Income Tax Return (ITR) on payment of additional tax.
  • This will enable the assessee to declare the income missed out earlier.
  • Updated return can be filed within two years from the end of the relevant assessment year.

AMT for Cooperative societies reduced

  • Alternate Minimum Tax paid by cooperative societies reduced from 18.5% to 15%
  • To provide a level playing field between cooperative societies and companies.

Budget 2022- Important Changes in Direct Taxes

Surcharge on Cooperative societies reduced

  • Surcharge on cooperative societies reduced from 12% to 7% for those having total income of more than Rs 1 crore and up to Rs 10 crores.

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.

Changes in NPS Contribution limit

  • Tax deduction limit increased from 10% to 14% on employer’s contribution to the NPS account of State Government employees.
  • This will bring them at par with central government employees.
  • Would help in enhancing social security benefits.

Period of incorporation for Start-ups extended

  • Period of incorporation extended by one year, up to 31.03.2023 for eligible start-ups to avail tax benefit.
  • Previously the period of incorporation was valid up to 31.03.2022.

Incentives under concessional tax regime

  • 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.

Scheme for taxation of virtual digital assets (e.g., Cryptocurrency)

  • Introduction of Specific tax  for virtual digital assets
  • Any income from the transfer of any virtual digital asset is to be taxed at the rate of 30%
  • No deduction shall be allowed in respect of any expenditure or allowance while computing such income except the cost of acquisition.
  • Loss from the transfer of virtual digital assets cannot be set off against any other income.
  • To track the transaction details, TDS@1% is to be deducted on payment made in relation to the transfer of virtual digital asset

Gift of Virtual Digital Asset (VDA)

  • Gift of virtual digital asset also to be taxed in the hands of the recipient.

Surcharge on LTCG capped at 15%

Surcharge on Long term capital gain on all types of assets capped at 15% irrespective of the amount of long-term capital gains (LTCG).

Surcharge on AOP’s capped at 15%

  • Surcharge on AOPs (consortium formed to execute a contract) capped at 15%.
  • Done to reduce the disparity in surcharge between individual companies and AOPs.

Health and Education Cess not allowable as business expenditure

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

No set-off allowed against detected undisclosed income

  • No set-off of any loss to be allowed against undisclosed income caught, detected during search and survey operations.

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