Here are the key takeaways :
- New updated return: A wholly new sub-section 139(8A) for updating Income Tax Return proposed in Budget 2022. Few taxpayers may later realize the omission or mistakes that occurred in return or some income has been missed out so in that case, they will have the option to update the IT return within 2 years from the end of the relevant assessment year. The updated return option is not available in the below cases :
- If the updated return is a loss return
- If there is any decrease in tax liability or increase in the amount of refund
- If any search or survey has been conducted for relevant year
- If any proceeding for assessment or reassessment is pending or completed
Taxpayers need to pay the applicable tax on the additional income at the time of filing the updated ITR. Also, payment of additional tax will also be required. It is proposed that an amount equal to twenty five percent or fifty percent as additional tax on the tax and interest due on the additional income furnished would be required to be paid.
- Deduction for NPS u/s 80CCD: At present, deduction for the contribution of NPS is allowed at 14% of salary ( Basic + DA) for central government employees. However, for state government employees, it is capped at 10% of salary ( basic salary + DA). In Budget 2022, it is proposed to bring parity between central and state government employees. Accordingly, a limit of deduction is proposed to increase 14% on employer’s contribution for state government employees also.
- Taxation of virtual digital assets: A new section 115BBH inserted for taxation of virtual digital assets. It is proposed that any income arising from the transfer of virtual digital assets shall be taxable at a flat 30% without allowing any deduction for expenses incurred except the cost of acquisition.
Also, any loss arising from the transfer of digital assets shall not be allowed to be set off against any other income and such loss shall not be allowed to be carried forward.
Further, the gift of the virtual digital asset is also to be taxed in the hands of the recipient.
- Surcharge on long term capital assets: The maximum rate of surcharge on Long term capital gain of listed equity shares, units, etc is 15% while the surcharge for other long-term capital assets is capped at 37%. The budget 2022 proposed to bring down the rate of surcharge for other long-term capital assets also at 15% to bring parity in all long-term capital assets.
- Extension of date of incorporation for eligible startups for exemption: Eligible startups incorporated on or after 1st day of April, 2016 but before 1st day of April 2022 are eligible for tax incentives if the few conditions are satisfied. Due to pandemic, there have been delays in setting up such units so it is proposed to extend the period of incorporation of eligible start-ups to an additional one year up to 31st March, 2023.
If you opt for a new tax regime then the benefit of interest on home loan under section 24 on self occupied property, section 80C, section 80EE, and section 80EEA cannot be claimed.
- Tax incentives for disabled person: The present law provides for a deduction of any amount deposited under the insurance scheme to the parents or guardian only if the lump sum payment or annuity is available to the person with disability on the death of the subscriber. In Budget 2022, it is proposed to amend that deduction will still be available if the lump sum payment or annuity is available to disable persons during the lifetime of the subscriber on attaining the age of 60 years.
- Income tax exemption for expenditure of COVID treatment: It was announced that income-tax shall not be charged on the amount received by a taxpayer for medical treatment from an employer or from any person for treatment of COVID-19. Also, in case of ex-gratia received to a family member on account of death due to the Covid -19, it is proposed that the exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons.
- Other points: - Health & education cess is not allowable as business expenditure u/s 37.
- No set-off of losses against undisclosed income detected during the search.