DIRECT TAXES

• There are no changes in the existing Tax Rates. They remain same as mentioned under the Finance Act, 2021.

To take forward the policy of stable and predictable tax regime:

• Vision to establish a trustworthy tax regime.
• To further simplify tax system and reduce litigation.

Introducing new ‘Updated return’

• Provision to file an Updated Return on payment of additional tax.
• Will enable the assessee to declare income missed out earlier.
• Can be filed within two years from the end of the relevant assessment year.

Cooperative societies

• Alternate Minimum Tax paid by cooperatives brought down from 18.5 per cent to 15 per cent.

• To provide a level playing field between cooperative societies and companies.
• Surcharge on cooperative societies reduced from 12 per cent to 7 per cent for those having total income of more than Rs 1 crore and up to Rs 10 crores.

Tax relief to persons with disability

• Payment of annuity and lump sum amount from insurance scheme to be allowed to differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardian attaining the age of 60 years.

Parity in National Pension Scheme Contribution

• Tax deduction limit increased from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees.
• Brings them at par with central government employees.
• Would help in enhancing social security benefits.

Incentives for Start-ups

• Period of incorporation extended by one year, up to 31.03.2023 for eligible start-ups to avail tax benefit.
• Previously the period of incorporation valid up to 31.03.2022.

Incentives under concessional tax regime

• Last date for commencement of manufacturing or production under section 115BAB extended by one year i.e. from 31^st March, 2023 to 31^st March, 2024.

Scheme for taxation of virtual digital assets

• Specific tax regime for virtual digital assets introduced.
• Any income from transfer of any virtual digital asset to be taxed at the rate of 30 per cent.
• No deduction in respect of any expenditure or allowance to be allowed while computing such income except cost of acquisition.
• Loss from transfer of virtual digital asset cannot be set off against any other income.
• To capture the transaction details, TDS to be provided on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
• Gift of virtual digital asset also to be taxed in the hands of the recipient.

Litigation Management

• In cases where question of law is identical to the one pending in High Court or Supreme Court, the filing of appeal by the department shall be deferred till such question of law is decided by the court.
• To greatly help in reducing repeated litigation between taxpayers and the department.

Tax incentives to IFSC

• Subject to specified conditions, the following to be exempt from tax
  • Income of a non-resident from offshore derivative instruments.
  • Income from over the counter derivatives issued by an offshore banking unit.
  • Income from royalty and interest on account of lease of ship.
  • Income received from portfolio management services in IFSC.

Rationalization of Surcharge

• Surcharge on AOPs (consortium formed to execute a contract) capped at 15 per cent.
• Done to reduce the disparity in surcharge between individual companies and AOPs.
• Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent.
• To give a boost to the start up community.

Health and Education Cess

• Any surcharge or cess on income and profits not allowable as business expenditure.

Deterrence against tax-evasion

• No set off, of any loss to be allowed against undisclosed income detected during search and survey operations.

Rationalizing TDS Provisions

• Benefits passed on to agents as business promotion strategy taxable in hands of agents.
• Tax deduction provided to person giving benefits, if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.

No Concessional tax on dividends

• No concessional tax rate of 15% to be allowed on dividends received by an Indian Company from a Foreign Company in which it holds 26% or more shareholding.

Disallowance under Section 14A

• Disallowance under Section 14A It is proposed that Section 14A disallowance shall be made even if exempt income has not accrued or arisen or has not been received during the previous year and the expenditure has been incurred during the said previous year in relation to such exempt income.

Search and Survey

•  It is proposed to insert a section 79A to provide that no set off of any loss, whether brought forward or otherwise, or unabsorbed depreciation shall be allowed to the assessee against Undisclosed Income discovered during Search or Survey.

COVID’19 RELIEF

 1. Amount Received for Medical Treatment due to COVID-19

•  It is proposed that money received by an individual in respect of any expenditure actually incurred by him on his medical treatment or of any member of his family, in respect of any illness related to COVID-19, shall not form part of income of such person.

2. Amount Received on death due to COVID-19

•  It is proposed that money received from the employer of the deceased person (without limit), or from other persons to the extent that such sum does not exceed ten lakh rupees, where the cause of death is illness due to COVID-19, same shall not form part of income of such person.
• This amendment shall apply retrospectively w.e.f. 01.04.2020.

TDS

1. TDS on Sale of Immoveable Property

•  It is proposed that in case of transfer of an immoveable property (other than Agricultural Land), TDS is to be deducted at the rate of 1% of such sum paid or credited to the resident or the stamp duty value of such property, whichever is higher.

2. TDS on Benefit or Perquisite

•  It is proposed that the person responsible for providing to a resident, any benefit or perquisite, whether convertible into money or not, arising from carrying out of a business or exercising of a profession by such resident, shall, before providing such benefit or perquisite, ensure that tax has been deducted in respect of such benefit or perquisite at the rate of 10% of the value or aggregate of value of such benefit or perquisite. This amendment will be applicable w.e.f. 01.07.2022

INDIRECT TAXES

Remarkable progress in GST 

• GST revenues are buoyant despite the pandemic – Taxpayers deserve applause for this growth.

Special Economic Zones

• Customs Administration of SEZs to be fully IT driven and function on the Customs National Portal – shall be implemented by 30^th September 2022.

Customs Reforms and duty rate changes

• Faceless Customs has been fully established. During Covid-19 pandemic, Customs formations have done exceptional frontline work against all odds displaying agility and purpose.

Project imports and capital goods

• Gradually phasing out of the concessional rates in capital goods and project imports; and applying a moderate tariff of 7.5 percent   – conducive to the growth of domestic sector and ‘Make in India’.
• Certain exemptions for advanced machineries that are not manufactured within the country shall continue.
• A few exemptions introduced on inputs, like specialised castings, ball screw and linear motion guide - to encourage domestic manufacturing of capital goods.

Review of customs exemptions and tariff simplification

• More than 350 exemption entries proposed to be gradually phased out, like exemption on certain agricultural produce, chemicals, fabrics, medical devices, & drugs and medicines for which sufficient domestic capacity exists.
• Simplifying the Customs rate and tariff structure particularly for sectors like chemicals, textiles and metals and minimise disputes; Removal of exemption on items which are or can be manufactured in India and providing concessional duties on raw material that go into manufacturing of intermediate products – in line with the objective of ‘Make in India’ and ‘Atmanirbhar Bharat’.

Sector specific proposals

Electronics

• Customs duty rates to be calibrated to provide a graded rate structure - to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters.
•  Duty concessions to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items – To enable domestic manufacturing of high growth electronic items.

Gems and Jewellery

• Customs duty on cut and polished diamonds and gemstones being reduced to 5 per cent; Nil customs duty to simply sawn diamond - To give a boost to the Gems and Jewellery sector
• A simplified regulatory framework to be implemented by June this year - To facilitate export of jewellery through e-commerce.
• Customs duty of at least Rs 400 per Kg to be paid on imitation jewellery import - To disincentivise import of undervalued imitation jewellery.

Chemicals

• Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining being reduced; Duty is being raised on sodium cyanide for which adequate domestic capacity exists – This will help in enhancing domestic value addition.

MSME

• Customs duty on umbrellas being raised to 20 per cent. Exemption to parts of umbrellas being withdrawn.
• Exemption being rationalised on implements and tools for agri-sector which are manufactured in India
• Customs duty exemption given to steel scrap last year extended for another year to provide relief to MSME secondary steel producers
• Certain Anti- dumping and CVD on stainless steel and coated steel flat products, bars of alloy steel and high-speed steel are being revoked – to tackle prevailing high prices of metal in larger public interest.

Exports

• To incentivise exports, exemptions being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes.
• Duty being reduced on certain inputs required for shrimp aquaculture - to promote its exports.

Tariff measure to encourage blending of fuel

• Unblended fuel to attract an additional differential excise duty of Rs 2/ litre from the 1^st of October 2022 - to encourage blending of fuel.