Budget 2022 - Highlights

Sandeep Pahwa
Sandeep Pahwa at April 27, 2022

UNION BUDGET HIGHLIGHTS 2022-23

Direct Taxes - Income Tax

1.  A new provision is introduced to allow taxpayers to update the past return and include omitted income by additional tax payment. The updated return can be filed within two years from the end of the relevant assessment year.

2.  An individual taxpayer will continue to pay the same rate of tax depending on the tax regime chosen for FY 2022-23.

3.  Under both tax regimes, tax rebate of up to Rs 12,500 is available to an individual taxpayer under section 87A of the Income-tax Act, 1961.

4.  Individual having business income can opt for new tax regime. However, once opted they get one opportunity in their lifetime to switch back to the old tax regime.

Rates of income-tax in respect of income liable to tax for 2022-23.

There is no change proposed in Income tax rates in respect of income of all categories of assesse liable to tax for the assessment for year 2022-23. The rates provided in sections 115BAA or 115BAB or 115BAC or 115BAD for the financial year 2022-23 are same as enacted.

Tax Rates under Section 115BAC and Section 115BAD2

1.  Income Tax rates and slabs under the both old and new Tax regimes.

Income Tax slabs  and rates for FY 2022-23

Old Tax regime

(With deductions and exemptions)

Net Income Range (Rs.)

New Tax regime (without deductions and exemptions)

Nil

Upto 2,50,000

Nil

5 per cent

From 2,50,001 to 5,00,000

5 per cent

20 per cent

From 5,00,001 to 7,50,000

10 per cent

From 7,50,001 to 10,00,000

15 per cent.

30 per cent.

From 10,00,001 to 12,50,000

20 per cent

From 12,50,001 to 15,00,000

25 per cent.

Above 15,00,000

30 per cent.

 

2.  Income tax slabs and rates for resident individuals above 60 years of age but below 80 years of age (Senior citizen) for FY 2022-23:

Income Tax slabs  and rates for FY 2022-23

Old Tax regime

(With deductions and exemptions)

Net Income Range (Rs.)

New Tax regime (without deductions and exemptions)

Nil

 

Upto 2,50,000

Nil

From 2,50,001 to 3,00,000

5 per cent

5 per cent

From 3,00,001 to 5,00,000

 

20 per cent

From 5,00,001 to 7,50,000

10 per cent

From 7,50,001 to 10,00,000

15 per cent.

30 per cent.

From 10,00,001 to 12,50,000

20 per cent

From 12,50,001 to 15,00,000

25 per cent.

Above 15,00,000

30 per cent.

 

3.  Income tax slabs and rates for resident individuals above 80 years of age (Super Senior citizen) for FY 2022-23:

Income Tax slabs  and rates for FY 2022-23

Old Tax regime

(With deductions and exemptions)

Net Income Range (Rs.)

New Tax regime (without deductions and exemptions)

Nil

 

Upto 2,50,000

Nil

From 2,50,001 to 5,00,000

5 per cent

20 per cent

From 5,00,001 to 7,50,000

10 per cent

From 7,50,001 to 10,00,000

15 per cent.

30 per cent.

From 10,00,001 to 12,50,000

20 per cent

From 12,50,001 to 15,00,000

25 per cent.

Above 15,00,000

30 per cent.

 

Cess @ 4% is added on the income tax amount further.

4.  In the case of every individual or HUF or association of persons or body of individuals, whether incorporated or not, including individual or HUF under section 115BAC, not having income under section 115AD of the Act, surcharge is levied at various income tax rates if the total income exceeds Rs 50 lakhs in any financial year.

Net Taxable Income

Surcharge (%)

Income > 50 lakhs < Rs 1 crore

10

Income > 1 crore < Rs 2 crore

15

Income > 2 crore < Rs 5 crore

25

Income > 5 crore

37

 

5.  In the case of every individual or HUF or association of persons or body of individuals (excluding dividend or income of nature under section 115AD), whether incorporated or not having income under section 115AD of the Act

Net Taxable Income

Surcharge (%)

 

Income > 50 lakhs < Rs 1 crore

10

Excluding income by way of dividend or under sec 115AD

Income > 1 crore < Rs 2 crore

15

Excluding income by way of dividend or under sec 115AD

Income > 2 crore < Rs 5 crore

25

Excluding income by way of dividend or under sec 115AD

Income > 5 crore

37

Excluding income by way of dividend or under sec 115AD

Income > 2 crore < Rs 5 crore

15

Including income by way of dividend or under sec 115AD

 

6.  Corporate surcharge to be reduced from 12% to 7% in FY 2022-23.

7.  Where total income includes income by way of dividend or income chargeable to section 111A or 112A, surcharge applicable on income tax so computed in respect of that part of income shall not exceed 15%.

1.  Rates for deduction of Income tax at source during FY 2022-23under various provision of section 193, 194A, 194B, 194BB, 194D, 194LBA, 194LBB, 194LBC and 195 will not change and remain same.

2.  4) Individual having business income can also opt for new tax regime 115BAC. But they only get one opportunity in their entire lifetime to switch to old tax regime.

3.  In case of firms rate of tax remains unchanged at 30%.

4.  5) In case of domestic company, the rate of income-tax shall be 25% of total income, if the total turnover or gross receipts of previous year does not exceed four hundred crores rupees and

5.  In all other cases rate of tax is 30%.

6.  In case of company other than domestic company rate of tax are same as previous year

7.  Domestic companies have an option to pay tax under section 115BAA @ 15% and 115BAB @ 22% subject to some condition. Surcharge applicable @ 10% in both cases.

8.  Tax rates for co-operative societies slashed to 15%, while start-ups are set to get one year of tax incentives till March 31, 2023.

9.  Updated tax returns can be filed in 2 years from the end of the assessment year and incomes that might have been missed out can be declared.

10.  Alternate Minimum Tax for cooperative societies to be cut to 15%

11.  Proposal will reduce surcharge on cooperative societies to 7%, for those whose income is between Rs 1 crore and Rs 10 crore.

12.  Tax deduction limit increased to 14% on employer’s contribution to NPS account of state government employees

13.  The parent/guardian of the differently-abled can get a tax deduction on payment of the annuity

14.  or lump sum during the lifetime of parent or guardian, once the parent or guardian has attained

15.  60 years.

16.  Any surcharge and cess levied on income are not allowed as business expenditure.

17.  Brought forward loss cannot be set off against undisclosed income detected during any survey or Search.

18.  Section 43B of the Act deals with deduction allowed only on actual payment. Where interest payable to Institution/NBFC/scheduled bank or a co-operative bank has been converted into a loan or borrowing or advance shall not be deemed to have been for this section and not allowed as deduction.

19.  Section 115BAB of the Income-tax Act provides for an option of concessional rate of taxation @ 15 % for new domestic manufacturing companies commencing operation on or before 31st March 2023.

20.  The tax exemption period is extended by one year for start-ups. Eligible incorporated under         Section 80-IAC will now get tax benefits until March 31, 2023.

Rationalization of provisions of section 206AB and 206CCA to widen and deepen tax-base:

a.   Section 206AB and 206CCA has been amended to reduce period of 2 years to 1 year for filing of returns by specified person who has not furnished its return and TDS/TCS have been collected above Rs50,000 in previous year. This has been proposed to widen and deepen tax base in country.

b.  Section 194R has been inserted to discourage the practice of passing benefits to agents which often go unreported and no tax is deducted. TDS @ 10% shall be withheld by person extending such benefits provided value of such benefit or perquisite does not exceed Rs 20,000 during financial year.

c.   Any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.

d.  Insertion of section 239A and amendment in provision of section 248A – A new section is proposed to be inserted in Act to provide such a person, who has made the deduction of tax under such an agreement or arrangement (other than Interest under section 195) and borne the tax liability, when no tax deduction was required, may file an application for refund of such tax deducted before the Assessing Officer. 

 

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