Budget 2022- Key Points Related to Direct & Indirect Taxes: The budget 2022 is highly focused on the sectors like digital technology, Infrastructure, health, and education. There are no changes made in the slab of income tax and rates of GST which was expected by many. However, a tax of 30% is introduced on the transfer of digital assets.
Like above the FM also made some other changes in direct & indirect taxation and the list of same is as follows.
Update in past returns: Taxpayers can now update the past filed return within two years from the end of the relevant assessment year. And tax can be paid on omitted income with additional interest.
Extension of one-year period for startups: The period of tax holiday incentive for startups is three consecutive years out of 10 years from incorporation but in view of the Covid pandemic FM extended the period of incorporation of the eligible startup by one more year is up to 31-03-2023 for providing such tax incentive.
Taxation for virtual assets transfers: Any income by way of transfer of any virtual assets such as crypto to be taxed at 30% and no deduction will be allowed except the cost of acquisition of assets even loss on the same cannot be set off against any other income. Gifting of digital assets will also be taxable for receiver of the same. TDS at 1% levied above the threshold limit
the surcharge is reduced from 12% to 7% for corporate
National Pension Scheme:
Like central government employees, the state government employees will also able to claim a tax benefit of 14% instead of 10% on NPS contributions made by their employer i: e, state government. The said provisional is applicable from FY 2022-23 onwards. The above amendment is not applicable for private-sector employees and the tax benefit limit is limited to 10% for private-sector employees.
Section 80DD of the income tax is to provide a deduction to caretakers for the maintenance of disabled dependents. The amount of 75000 or 125000 per annum is provided as a deduction based on the severity of the disability. Currently, such a deduction is available if the annuity or the lump sum is receivable after the death of the subscriber. But now deduction is available if the sum is received during the lifetime of the subscriber on attaining the age of 60 years.
Any brought forward loss cannot be set off against undisclosed income detected during any survey or search.
Any surcharge and cess levied on income will not be considered as business expenditure.
The tax rate for cooperative societies is reduced from 18.5% to 15%.
ITC: The taxpayer cannot claim a restricted ITC even if it is reflected in GSTR2A/2B and the same is to be excluded from other ITC as it is an ineligible ITC.
Cancellation of Registration: The registration of the composite taxable person can be canceled if the yearly return is not filed after the 3 months of the due date. And for normal taxable persons where the registration may get canceled if returns have not filed for 6 consecutive periods is now changed and cancellation proceedings may be started before 6 month period.
Deadline: Now the ITC of last year can be taken till the 30th day of November of next year or before filling the annual return WIE. Note currently the deadline to take ITC is due date of filling September months return of next year. The date to issue CN/DN has also extended and the new time limit to issued CN/DN for invoices issued in last year is 30th November of next financial year or before filling the annual return WIE.
Others: The old system of GSTR-1, 2A, 2-1A, & 3 have been replaced with GSTR 1, 2B & 3B.
Late fees introduced for GST –TCS (Tax collectors)
Section 50(3) has been substituted and now interest to be paid only if ITC is wrongly availed and utilized as well.
The relevant date is now the due date of filling return u/s 39 on supply made to SEZ unit.
Matching, reversal and reclaim of ITC as mentioned in sections 42, 43 and 43A has been scrapped.