Union Budget 2022: Income tax changes you should know about

Finance Minister Nirmala Sitharaman presented her fourth Union Budget today. Every Union Budget is eagerly awaited by the taxpayers for the tax implications it brings. However, there are no changes in the income tax slabs this year. That said, there are several tax-related proposals and changes made in this year’s budget.

Let’s take a look at all the important income tax-related changes:

• The income tax slabs have been left untouched, and no changes have been proposed in the standard deductions either - despite expectations that certain relaxations would be given in light of the pandemic aftermath and rising inflation.
• A one-time window will be provided to taxpayers to update omissions in their filed Income Tax Return (ITR). The updated ITR should be filed within two years from the end of the relevant assessment year.

Also Read: Union Budget 2021: What's In It For Taxpayers?

• The period of incorporation of start-ups has been extended to 13 March 2023 for the purpose of tax incentives. Start-ups will get a 100% tax rebate on their profit for a consecutive period of three years within the first ten years of their operations. This can be availed of by start-ups whose total annual turnover is below Rs 25 crore.
• The tax deduction on contributions to NPS by state government employees has been increased from 10% to 14%. The FM mentioned that with this, the social security benefits of state-level employees will be at par with their central government counterparts.
• The FM has proposed a cap on the surcharge on long-term capital gains and AOPs to a maximum of 15%. No set-offs will be allowed on losses against undisclosed income.
• The corporate surcharge will be reduced by 5% from the existing 12%. The concessional rate of corporate tax will be available to newly established manufacturing companies and will be valid for one additional year till the end of 2023-24.
• Maximum Alternative Tax on cooperative societies has been brought at par with corporate rates. The FM proposed that it be reduced to 15%.
   

Also Read: Union Budget 2021-22: List Of Schemes Announced By The FM

• Differently-abled dependents will now be able to withdraw a lump sum or annuity amounts from their insurance scheme during the lifetime of the parent or guardian. However, the parent or guardian must have attained at least 60 years of age. Presently, this is available only on the death of the subscribing parent or guardian. 
• Profit on the sale of digital assets has been brought under the income tax purview. This includes non-fungible tokens (NFT) and cryptocurrencies. A 30% tax will be imposed with no deductions available. In other words, only the original cost of acquisition will be deducted from the sale price to calculate the profit. Any loss on the sale of digital assets cannot be set off. Besides, digital gifts will be taxable in the hands of the recipient. A TDS of 1% will be deducted on payments made against the transfer of digital assets.

Also Read: Highlights Of Union Budget 2021-22

Investors in digital assets would be interested to hear that the FM has proposed the introduction of a ‘digital rupee’ by the RBI. This currency will be issued using blockchain technology and is expected to be rolled out in 2022-23.

These, in brief, are the major changes and proposals made in taxation in the Union Budget 2022.