India Union Budget | 2022-23

A Booster shot towards a $ 5 trillion economy

22 Key Income-tax amendments in ‘India Union Budget 22’ | All you should know

1. General tax rates for individuals or corporations unchanged. No indication around inheritance taxes. No changes in deductions or exemptions as compared to FY 2021-22.
2. Effective tax rate on long term capital gains reduced to 23.92% from erstwhile 28.5% due to restriction of surcharge at 15% on LTCG. [S. 112]
3. Income from transfer of ‘Virtual Digital Asset’ (Crypto) taxed at 30% without any deductions or allowance. No set-off provisions or carry forward allowed for any loss from such a transfer [S.115BBH].
4. Tax withholding/ TDS @ 1% by the person responsible for making a payment towards the transfer of such ‘Virtual Digital Asset’ [S. 194S].
5. Gifting of ‘Virtual Digital Asset’ now covered under the embedded gift tax provision in the Act on the receiver of such gift. [S. 56(2)(x)].
6. Errors in the IT return and an opportunity to file missed return provided by bringing in a concept of ‘Updated Returns’ to be filed within 2 years with an additional payment of applicable taxes and interest. Option of ‘Updated Returns’ is not applicable if in detriment to Revenue’s interest. [S. 139(8A)].
7. Litigation Management – Deferment of appeal by Revenue to High court or Supreme Court on the question of law that is identical to the question of law pending before High Court or Supreme Court [S. 158AB].
8. A clarificatory and retrospective amendment addresses that ‘Cess’ is not a tax allowable deduction. [S. 40].
9. Sunset clause for manufacturing tax @15% extended from 31 March 2023 to 31 March 2024 [S.115BAB].
10. Extension of date of incorporation for an eligible start-up for exemption from existing 31 March 2022 to 31 March 2023 [S. 80 IAC].
11. Income of a non-resident exempted as a result of a transfer of offshore derivative instruments entered into with an Offshore Banking Unit of an IFSC [S. 10(4E)].
12. Income of a non-resident exempted by way of royalty or interest, on account of lease of a ship in a previous year paid by a unit of an IFSC [S. 10(4F)].
13. Income of a non-resident exempted from a portfolio of securities or financial products or funds, managed or administered by any portfolio manager in an account maintained with an Offshore Banking Unit [S. 10(4G)].
14. Tax withholding / TDS @ 1% on payment basis or stamp duty value of the immovable property (earlier only on payment basis) [S. 194-IA].
15. Withdrawal of concessional rate of taxation @15% on dividend income from foreign companies with effect from 1 April 2022 [S. 115BBD].
16. Bonus stripping on shares and securities not permitted from 1 April 2022 (earlier applicable to mutual funds) [S. 94].
17. Set off of tax losses provision made flexible for adaption by public sector companies for facilitating strategic disinvestment [S. 79].
18. Reduction of Goodwill from the block of asset to be considered as a transfer [S. 47].
19. No benefit of set-off of loss allowable on income discovered during search and seizure [S. 132].
20. Rationalisation of Faceless Assessment Scheme along with provisions for assessment and reassessment.
21. Faceless Assessments in Transfer Pricing and Appeal postponed by 2 years to 31 March 2024, due to technological constraints and upgrades. [S. 92CA | S. 144C | S. 253 | S. 255].
22. The power for the revision for Indian Transfer Pricing order is now clarified to be with the Commissioners (PCIT| CCIT| CIT) in charge of Transfer Pricing in India and not the Assessing Officer. [S.263].