Finance Minister Nirmala Sitharaman kept the income tax rates unchanged in her budget for the 2022 fiscal year, which was largely infrastructure-focused. The following 10 things should be known by individual taxpayers:
1. When a property is sold, the tax is computed using the selling price or the property’s stamp duty value. TDS on such a property transaction, on the other hand, is only required to be deducted at 1% of the selling price. To establish consistency between taxable income and TDS base, TDS must now be deducted on the selling consideration or the stamp duty value of such property, whichever is greater.
2. Exemption income expenses are not deductible. There was considerable debate regarding whether costs paid on exempt income might be deducted if no exempt revenue was reported or received during the fiscal year. This issue was recently addressed, stating that expenditures used to earn exempt income are not deductible, regardless of the year in which the exempt income was accrued. As a consequence, fewer lawsuits will be filed.
3. If a question of law is now before a jurisdictional high court or the Supreme Court, the tax department will not be allowed to submit another appeal for any other taxpayer until the question of law is settled. This will reduce litigation and allow for better use of time and resources in similar instances.
4. Tax evaders’ lives are becoming increasingly difficult. Any losses will not be good enough to be used to offset undeclared income identified via a tax department survey or search. This will make tax evasion much more difficult.
5. Employees in the state government would be permitted to deduct up to 14% of their salary for employer payments to the National Pension System. In terms of tax deductions for employer payments to the NPS, this would level the playing field for union and state government employees.
6. Formerly, a tax credit for premiums paid for differently-abled dependents could only be claimed if the plan included an annuity payout upon the subscriber’s death. Even if the plan provides for payment of annuity amounts throughout the subscriber’s life, the deduction will now be allowed if the subscriber reaches the age of 60 or older and quits paying into the plan. This is done in order to aid disabled people who need financial support prior to their guardians’ death.
7. The Rupee in Digital form has arrived. The Reserve Bank of India will establish the Central Bank Digital Currency in the financial year 2022-23, which would be based on blockchain and other technologies. This will aid the growth of India’s digital economy while also making money management more efficient and cost-effective.
8. Any income obtained from the transaction of a virtual asset is subject to a 30% tax rate. Furthermore, losses made as a consequence of VDA are will not be allowed as offset or carried forward. TDS of 1% is applied on the transfer of virtual assets in certain circumstances. This will bring the embryonic digital asset market into the tax net, so the government has a sense of the volume of transactions.
9. AtmaNirbhar Bharat gets a makeover. Long-term capital gains on all assets will be taxed at a lower rate of 15%. It used to apply exclusively to capital gains from listed equity shares and equities-oriented mutual fund units. This is done to attract investors to invest in new enterprises and start-ups.
10. If a taxpayer owes more income tax, they will have an additional three years from the end of the relevant fiscal year to file an amended tax return. With so much data at the IT department’s disposal, taxpayers will be persuaded to cooperate voluntarily, reducing the number of lawsuits.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.