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Income tax slabs 2022: No changes in Income Tax, govt employees’ tax deduction limit increased to 14%

Nirmala Sitharaman also proposed a reduction in corporate surcharge and said that the transfer of any virtual digital asset shall be taxed at the rate of 30%.

By: Express Web Desk | New Delhi |
Updated: February 1, 2022 5:07:39 pm
I-T, BudgetThe Finance Minister also proposed a reduction in corporate surcharge and said that the transfer of any virtual digital asset shall be taxed at the rate of 30%.

While presenting the Union Budget on Tuesday, Finance Minister Nirmala Sitharaman proposed no change in income tax slabs. She, however, proposed that both Centre and states government employees’ tax deduction limit be increased from 10% to 14%. The move, she said, will help the social security benefits of state government employees and bring them at par with the Central government employees.

The Finance Minister also proposed a reduction in corporate surcharge and said that the transfer of any virtual digital asset shall be taxed at the rate of 30%. “Corporate surcharge to be reduced from 12% to 7%. I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30%. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition,” she said.

With the Budget proposing taxing virtual assets at 30%, Sitharaman said that it cannot be mentioned as a replacement of any other income and 1% TDS to be charged further on payments made using digital assets to keep a track on transactions.

Sitharaman said that cooperative societies can now pay 18.5% alternate minimum tax and companies pay 15%. From now, cooperative, too, will have to pay only 15%.

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She added, “To provide an opportunity to correct an error, taxpayers can now file an updated return within 2 years from the relevant assessment year…Digital rupee to be issued using blockchain and other technologies; to be issued by RBI starting 2022-23. This will give a big boost to the economy.”

The Finance Minister also announced tax relief for persons with disabilities. The parents or guardian can take insurance from their children with disabilities, she said. The payment of annuity or lump sum for disabled dependent will be exempted during the lifetime, she added.

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

Sitharaman added, “The gross GST collections for the month of January 2022 are Rs 1,40,986 crores which is the highest since the inception of GST…Total expenditure in FY23 estimated at Rs 39.45 lakh crore, the total resources mobilisation to be Rs 22.84 lakh crore other than borrowing… The government vows a stable and predictable tax regime. It proposes to reduce Minimum Alternative Tax to 15% for co-op societies, at par with corporate.”

She further said that Rs 1 lakh crore has been allocated to states to help investments. “For 2022-23, allocation of Rs 1 lakh crore has been made to assist the states in catalysing overall investments in the economy. These 50-year interest-free loans are over and above normal borrowings allowed to states. It’ll be used for PM Gati Shakti-related and other productive capital investments of states,” she added.

Kumarmanglam Vijay, Partner, J Sagar Associates, while reacting to the proposals in the Budget, said, “In the backdrop of high growth and high inflationary environment, the Finance Minister has chosen to follow a pragmatic path of focusing on Government spending on infrastructure and digitization of economy. Government has opted to maintain consistency in tax rates and capping of surcharge on capital gains to 15% is welcome.”

He added, “The government’s focus on digitization of economy seems to have gathered momentum with the proposal to launch digital currency, e-passports, e-bill systems and national digital health eco-system. Gains on transfer of Virtual Digital Assets, including Cryptocurrency and NFT, are proposed to be taxed at 30% on gross basis. Definition of NFT, however, shall be notified later. A whole lot of incremental changes are also proposed in taxation of charitable organizations and assessment and appeal procedures. While they may have been undertaken to overcome ambiguity in legislation, extensive changes in procedural aspects also result in lack of understanding amongst the taxpayer and thereby resulting in poor compliance. In a far-reaching change, taxpayers shall have an opportunity to correct any error/omission by filing an updated return within 2 years from the relevant assessment year. All in all, it is a Budget with incremental changes in the right direction.”

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