Budget 2022 highlights: Key income tax, personal finance proposals
Here is a look at key tax related and personal finance highlights from Budget 2022, according to a PIB press release.
By Sneha Kulkarni, ET Online | Updated:
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Even though the finance minister did not make any big tax related announcements in the Budget 2022, there were a few tax-related proposals taxpayers should be aware of. Here is a look at key tax related and personal finance highlights from Budget 2022, according to a PIB press release.
"Budget 2022 serves well the cause of macroeconomics to support the growth momentum in our economy. Individual tax payers seeking increase in personal disposable income may be disappointed as there is no change in personal income tax rates/ slabs and no additional / enhancement in deductions. Rationalisation of surcharge by capping it at 15% on long term capital gains across all categories of assets is a step in the right direction. Given the intense activity in trading of crypto currency, non fungible tokens (NFTs), the Government has proposed to tax the income from transfer of such assets by introduction of a strict non nonsense tax regime of @30 % rate of tax with no deductions save the cost of acquisition of such virtual digital asset. The Government has also offered a window for conditional voluntary tax compliance for unreported income where such compliance results in additional tax being paid. Over all – a sensible budget with promise of a bright future for the country and its citizens but for now it may leave the common man cold and untouched," said Sonu Iyer, Tax Partner and People Advisory Services Leader, EY India.
To take forward the policy of stable and predictable tax regime:
"Budget 2022 serves well the cause of macroeconomics to support the growth momentum in our economy. Individual tax payers seeking increase in personal disposable income may be disappointed as there is no change in personal income tax rates/ slabs and no additional / enhancement in deductions. Rationalisation of surcharge by capping it at 15% on long term capital gains across all categories of assets is a step in the right direction. Given the intense activity in trading of crypto currency, non fungible tokens (NFTs), the Government has proposed to tax the income from transfer of such assets by introduction of a strict non nonsense tax regime of @30 % rate of tax with no deductions save the cost of acquisition of such virtual digital asset. The Government has also offered a window for conditional voluntary tax compliance for unreported income where such compliance results in additional tax being paid. Over all – a sensible budget with promise of a bright future for the country and its citizens but for now it may leave the common man cold and untouched," said Sonu Iyer, Tax Partner and People Advisory Services Leader, EY India.
In the Union Budget 2022, the one with the shortest speech, FM Nirmala Sitharaman did not have much to offer to the common man or middle class. Taxpayers' hopes came crashing down as there was not much that came out of the Finance Ministry's kitty- no change in personal income tax slabs or rates. Therefore, an individual taxpayer will continue to be charged one the same tax rates as before, depending on the tax regime that he/she choses for FY 2022-23, which commences from from April 1, 2022.
To take forward the policy of stable and predictable tax regime:
- Vision to establish a trustworthy tax regime.
- To further simplify tax system and reduce litigation.
- Provision to file an Updated Return on payment of additional tax.
- Will enable the assessee to declare income missed out earlier.
- Can be filed within two years from the end of the relevant assessment year.
- 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.
- Tax deduction limit increased from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees.
- Brings them at par with central government employees.
- Would help in enhancing social security benefits.
- Specific tax regime for virtual digital assets introduced.
- Any income from transfer of any virtual digital asset to be taxed at the rate of 30 per cent.
- No deduction in respect of any expenditure or allowance to be allowed while computing such income except cost of acquisition.
- Loss from transfer of virtual digital asset cannot be set off against any other income.
- To capture the transaction details, TDS to be provided on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
- Gift of virtual digital asset also to be taxed in the hands of the recipient.
- All 1.5 lakh post offices would be connected to the central banking system.
- 75 Digital Banking Units (DBUs) will be established in 75 districts by scheduled commercial banks.
- The Central Bank Digital Currency (CBDC), according to the Finance Minister, will provide a significant boost to the digital economy.
- According to the Minister, digital currency will lead to a more efficient and cost-effective currency management system.
- The Digital Currency will use blockchain and other technologies.
- Benefits distributed to agents as part of a business promotion campaign are taxable in the agents' hands.
- If the total value of the benefits supplied during the financial year exceeds Rs 20,000, the person providing the benefits is eligible for a tax deduction.
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