Direct Tax Proposals of Union Budget 2022

  • Updated return’
    • The budget proposes a new provision permitting taxpayers to file an Updated Return on payment of additional tax.
    • This updated return can be filed within two years from the end of the relevant assessment year. 
  • Cooperative societies
    • To provide a level playing field between cooperative societies and companies, the budget proposes to reduce the Alternative Minimum Tax for the cooperative societies also to fifteen per cent.
    • It also reduced the surcharge on co-operative societies from the present 12 to 7 per cent for those having total income of more than Rs 1 crore and up to Rs 10 crores.
  • Parity in NPS Contribution for State Govt. Employees
    • The Central Government contributes 14 per cent of the salary of its employees to the National Pension System (NPS) Tier-I.
    • This is allowed as a deduction in computing the income of the employee. 
  • Scheme for taxation of virtual digital assets
    • For the taxation of virtual digital assets, the budget provides that any income from the transfer of any virtual digital asset shall be taxed at the rate of 30 per cent.
    • Further, loss from the transfer of virtual digital assets cannot be set off against any other income. 
  • 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.

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Indirect Tax Proposals of Union Budget 2022

  • 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 30th September 2022.
  • Customs
    • Around 350 custom duty exemptions withdrawn and 40 exemptions relating to capital goods and project imports to be gradually phased out 
  • Personal tax
    • Updated tax returns introduced to provide an opportunity to taxpayers to correct omissions/mistakes. 
    • Surcharge on all long-term capital gains capped at 15%.

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