Limiting the surcharge rate on any long term capital gain:
In our budget expectation video, we mentioned about reduction in tax rate on sale of shares so that there is parity between listed and unlisted shares, however that has not happened but the government has reduced the surcharge rate limit to 15% from 37% for an individual having any amount of capital gains exceeding Rs. 1 Crore.
Updated Return:
A new section has been introduced for taxpayers to file “Updated returns” within 2 years from the end of the relevant assessment year. The returns can be filed if the additional Income tax to the extent of 25% or 50% of the aggregate tax is paid, while filing the updated return
Parity of tax treatment of contribution to National Pension Scheme:
Tax deduction limit under 80CCD for state government employees towards contribution of NPS raised from 10% to 14% of their Salary. It is only for Government employees and not for private employees.
Exemption for amount received for Covid-19 related treatment /death:
Any amount for Covid-19 related medical treatment, received in the hands of the employee, from employer, shall not be treated as Perquisite. The same shall not be taxed under Income from other sources, if the amount is received by a member of the family of a deceased person
Capital Expenditure Allocation:
In this budget the government has given a big push on infrastructure spending by allocating 7.5 Lakh crore v/s 5.5 Lakh crore during previous year. This translated to $ 100 Bn.
Digital Currency: Introduction of Central Bank Digital Currency –
‘Digital Rupee’ – using blockchain technology, it will be rolled out from 1st April’22.
Taxation on Digital Assets:
There was a lot of discussion before the Budget about making a law around Cryptocurrencies, however the government could not introduce any laws as the draft bill was not ready. But in the Budget the government has announced the tax rates on transfer of Digital assets like Cryptocurrencies, NFT at rate of 30%. No deduction in respect of any expenditure is allowed. Further, losses from such transactions cannot be set-off against any other head of gains.
Also in order to widen the tax bracket, the government has introduced TDS u/s 194S to provide for deduction of tax on payment for transfer of virtual digital assets to a resident at the rate of one percent of such sum. However, the compliance is not applicable for individuals and HUF if the value of consideration is less than Rs. 50,000 per annum and in others case it is Rs. 10,000 per annum. This amendment is effect from 1st July 2022.
TDS on benefit of perquisite in respect of business or profession:
This a new TDS provision where any person paying in cash or kind, being nature of any benefit arising from business or exercise of profession at the rate of 10% with an annual ceiling of Rs. 20,000/- . Example would be if the company organises a trip for their dealers then the aggregate amount spent on such trip would be chargeable to TDS and the person receiving such benefit has to disclose under its head as business or professional income.
Cess and surcharge not to be treated as Expense:
Cess shall not be considered as expenses for the purposes of Computation of Income, the stand has been litigative all this while, budget has made it clear about the stand.
Others
- SEZ Act to be revamped, and new law to promote industry clusters
- ECLGS (Emergency Credit Line Guarantee Scheme) to be extended upto March 2023, guaranteed cover extended by another Rs 50,000 crore.
- Startups to have extended benefit of one more year of Income tax benefit.
- Concessional tax regime for Manufacturing sector – tax rate of 15%, to be extended till March 2024 now.