Last Updated on Aug 25, 2022 by Nikitha
The finance minister Nirmala Sitharaman did not propose any changes to the income tax brackets when she presented the Union Budget 2022. She did, however, recommend that the tax deduction maximum for both Centre and state government employees be raised from 10% to 14%. She claims that the action will enable state government employees to receive equal social security benefits as Central government employees.
The finance minister also proposed a decrease in the corporate tax and stated that any virtual digital asset transfer would be taxed at a rate of 30%. She also mentioned that the corporate fee will be cut from 12% to 7%. And suggested that any revenue derived from the transfer of any virtual digital asset be taxed at a rate of 30%. Additionally, except for the cost of acquisition, no deduction in respect of any expenditure or allowance will be permitted in computing such income.
With Budget 2022 proposing a 30% tax on virtual assets, Sitharaman stated that it cannot be used to substitute any other source of income. And that a 1% TDS will be added to payments made with digital assets to maintain track of transactions.
The minister also mentioned that cooperative societies can now pay an additional minimum tax of 18.5%, while companies pay 15%. However, cooperatives will no longer be required to pay more than 15%.
In addition, to provide taxpayers with a chance to fix an error, she stated that they can now file a revised return within two years of the relevant assessment year. The RBI will begin issuing digital rupees in 2022-2023, utilising blockchain and other technologies. This is expected to have a significant positive impact on the economy.
Tax assistance for those with disabilities was also announced, wherein she mentioned that parents or guardians can obtain insurance for their disabled children. She proposed to allow the payment of annuity or lump sum amount to the differently-abled dependent during the lifetime of the guardian attaining the age of 60 yrs.
The new corporate tax regime’s benefit deadlines were also extended in Budget 2022. The government had previously promised a 15% corporation tax rate for newly formed manufacturing companies until 31 March 2023. This has now been extended until 31 March 2024. The deadline for companies to incorporate in order to qualify for tax incentives has been extended by a year, until 31 March 2023.
She went on to say that an allocation of Rs. 1 lakh cr. has been approved for 2022-2023 to help states in catalysing overall economic investments. These interest-free loans for 50 yrs are in addition to the standard borrowing limits for states. It would be utilised for PM Gati Shakti-related projects as well as other state-led productive capital investments.