Finance Minister Mrs Nirmala Sitaraman has presented the Union Budget 2022 in the Lok Sabha today. Here are some of the key takeaways in terms of direct and indirect taxes.
Direct Taxes:
- A new provision to allow taxpayers to file an updated return. Updated returns can be filed within 2 years from the end of the relevant Assessment Year.
- Deduction for employer contribution to NPS increased to 14% from 10% of salary earlier for State Government employees on par with Central Government employees
- Alternate Minimum Tax for cooperative societies to be cut to 15%. The proposal will reduce the surcharge on cooperative societies to 7%, for those whose income is between Rs 1 crore and Rs 10 crore.
- The new provision will ensure voluntary tax filing and reduce litigation
- 30% tax on the transfer of virtual/digital assets with no deductions other than the cost of acquisition
- No set off permitted against income disclosed during IT raid/survey.
- 1% TDS to be levied on payments made on transfer of digital assets
- Tax benefits are available to Startups incorporated till 31.03.2023(earlier 31.03.2022).
- Surcharge on LTCG on all kinds of assets to be capped at 15%
Indirect Taxes:
- Import duty on certain chemicals are being reduced
- Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses
- Customs duty on stainless steel, flat products, high steel bars to be revoked
- Unblended fuel to get an additional duty of 2 rupees per litre from October 2022
- Import duty on cut & polished diamonds & gemstones reduced to 5% from existing 7.5%
Budget 2022 has made no change to Individual tax rates which was most anticipated by taxpaying individuals. The standard deduction amount available to salaried individuals and pensioners is also unchanged. This would effectively mean that salaried individuals and pensioners will continue to claim the same amount of standard deduction in the financial year 2022-23 as they did in the financial year 2021-22. They can claim Rs 50,000 as standard deduction provided, they opt for the old tax regime in the financial year 2022-23.
Also, the finance minister did not make any announcement regarding the 80C limit in her Budget 2022 speech. Individual salaried taxpayers looking for an increase in tax relief under section 80C of the Income-tax Act, 1961 were left disappointed. This would effectively mean that individuals opting for the old tax regime for the financial year 2022-23 will continue to claim a maximum deduction of Rs 1.5 lakh.
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