Tuesday 28 June 2022
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Income tax returns can now be revised for omission, mistakes

There is also encouragement for businessmen like the reduction in the MAT rate for cooperatives to 18.5% and extended timelines for the new corporate tax regime

Income tax returns can now be revised for omission and mistakes including declared income not reported. The changes can be made through a one-time window till two years from the end of the assessment year on payment of tax.

on the transfer of any long-term capital gains has been capped at 15%.

The government has reduced the minimum alternate tax (MAT) rate for cooperatives to 18.5% in order to bring it on par with the rate for corporate houses. Also, the for cooperatives has been reduced to 7% from 12% for total income ranging between Rs 1-10 crore.

The budget has also extended the timelines for benefits under the new corporate tax regime. The government had announced a 15% corporate tax rate for newly incorporated manufacturing companies till 31 March 2023, which has now been extended till 31 March 2024. The period of incorporation for startups to avail of tax benefits has been extended by a year to 31 March 2023.

The finance minister also announced the auction of 5G spectrum in 2022; proposed setting up 75 digital banking units in 75 districts; announced a national programme for mental health, worsened by the Covid-19 pandemic; and brought virtual currencies like cryptocurrency and non-fungible tokens under the tax net.

Like last year, there is no change in the income tax slabs in this year’s budget, dashing some of several hopes of taxpayers.

In 2020, the government had announced a new tax regime with lower slabs for those willing to forego the various exemptions granted by the government. This regime is optional for taxpayers.

The last time the government had announced a major change in tax slabs was in 2019 during the interim budget when then-interim Finance Minister Piyush Goyal proposed a full rebate for individuals with annual income up to Rs 5 lakh, up from Rs 2.5 lakh earlier.

No standard deduction

Despite wide expectations, there was no change in standard deduction either.

As per the current system of taxation, a salaried individual is allowed to claim a standard deduction of Rs 50,000 from his/her salary income.

An increase in standard deduction was widely anticipated in view of elevated inflation levels and the impact of the pandemic on the middle class.

Updated I-T returns

The government has proposed to provide a one-time window to correct omissions in income tax returns (ITRs) filed.

Taxpayers can file the updated returns within two years from the assessment years.

‘Crypto tax’

Sitharaman proposed a 30 per cent tax on income from transfer of virtual digital assets.

One per cent tax deducted at source (TDS) on transfer of virtual assets above a threshold, gifts would be taxed, the minister said.

Separately, she announced that government will soon roll out digital rupee based on technology.

Relief for people with disability

Sitharaman announced tax relief for people with disabilities in her budget speech.

“The parent or guardian of the differently-abled person can take an insurance scheme for such a person. According to the present law, the lump-sum payment or annuity is available to the differently-abled person on the death of the subscriber that is the parent or guardian.

“There could be situations where the differently-abled dependent may need payment of annuity or lump sum amount even during the lifetime of their parent or guardian. I propose thus to allow the payment of annuity or lump sum amount to the differently-abled dependent during the lifetime of the parent or guardians attaining the age of 60 years.”

Relief for startups

The finance minister also announced an extension of one year for the incentives provided to startups.

“Tax incentives for startups increased from three years to four years of incorporation, in view of the pandemic,” she said.

Corporate tax

The corporate tax rate has been kept at the same level.

However, a concessional corporate tax rate of 15 per cent would be available for one more year till March 2024 for newly incorporated manufacturing companies.

NPS for govt staff

The government has proposed to increase tax deduction from 10% to 14% on contributions to NPS by the state government to employees.

The benefit won’t be available to non-government staff.
MAT reduction for cooperatives

The finance minister said that the government proposes to reduce Minimum Alternative Tax (MAT) to 15 per cent for cooperative societies, at par with corporates.

LTCG

Sitharaman announced that the on the long-term capital gains (LTCG) will be capped at 15%.

LTCG is available only for listed shares and units of mutual funds.

The government charges a 10% long-term capital gains tax on profits of Rs 1 lakh and above made on equity investments if held for more than a year.

Finance Minister Nirmala Sitharaman today presented the Union Budget 2022-23 in the parliament. In five big infrastructure projects, the government has proposed expanding highways in the country by 25,000 km, allocating Rs 60,000 crore to the “Nal se Jal” scheme, five link projects across various states, an additional Rs 48,000 crore in the Prime Minister Scheme and boosting infrastructure development in the Northeast.

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