Budget 2022 – Direct Tax
1. Surcharge reduced on Long Term Capital Gains
– Surcharge on Long Term Capital Gains on any assets & Short Term Capital Gain on equity shares or units of equity oriented MF to be capped at 15% in place of 37% earlier. ( Section 111-A, 112 & 112-A )
2. No change in Income Tax rate for Individuals, HUF, Firms, Companies etc.
Provision for filing ‘Updated Income Tax returns’ within 2 years from end of relevant Assessment
This is a kind of Amnesty scheme.
Propose a provision to file an updated return with payment of additional tax to correct any errors in returned income.
Assesses can declare income that may have been missed out previously.
New provision introduced to file updated ITR within 2 years in case of any omission or mistake.
Tax has to be paid along with interest and late fee in filing the delayed return or default of advance tax along with additional tax.
The additional tax shall be 25% of aggregate of tax and interest payable if return is furnished before completion of 12 months from the end of AY.
However this shall be 50% of aggregate of tax and interest payable if return is furnished after expiry of 12 months but before completion of 24 months from the end of AY.
However search & seizure, Survey cases, also cases of bullion , money , jewelry or valuable things seizure case etc are not eligible for this scheme.
4. Start-ups established before 31.03.2023 shall be eligible for Tax exemption now (earlier this was 31.03.2022; now extended by 1 year) (Section 80-IAC)
Last date for commencement of manufacturing activity for claiming lower tax regime under Section 115BAB to be 31.03.2024 now (earlier 31.03.2023; now extended by 1 year)
6. Crypto currency (Virtual digital assets) to be taxed at 30 % special rate, no deduction allowed. (Section 115BBH)
Online digital assets to be taxed @ 30%.
No deductions or set off of
Flat tax at 30% will be levied without any
No deduction except cost of
TDS at 1% to be deducted on transaction
No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except cost of acquisition
Gift of Crypto to be taxed u/s 56(2)(x)
Applicable from AY 2023-24
No repetitive appeals by Department for common question of laws if same question is pending before High Court or Supreme Court
Health and education cess not allowable as business expenditure u/s 37
No set off of losses against undisclosed income detected during search
10. In case of an exempt income, the expenses relating thereto were disallowed by IT u/s 14-A.
However courts have held that no disallowance of expenses shall be made if there is no exempt income during the year.
Now these expenses shall be disallowed even no exempt income is earned during any year.
Certain taxpayers are claiming deduction under section 43B on account of conversion of interest payable on an existing loan into a debenture on the ground that such conversion is a constructive discharge of interest liability and, therefore, amounted to actual payment which has been upheld by several