From year to year, Indians wait in anticipation of the Union Budget announcement, and the Union Budget 2022 was no exception to this practice. The government’s larger goal is to push the industrial foundations of India forward in the hope of propelling the GDP in a positive direction. It's worth looking into the different announcements made regarding tax in Budget 2022.
Direct Income Tax Changes for Individuals
For individual taxpayers, the Budget 2022 hardly announced any changes related to direct taxes and regulations pertaining to individual taxpayers. However, some changes were announced, and these are highlighted below:
- Surcharge Limit on Long-term Capital Gains - The surcharge on long-term capital gains is now capped at 15% for any gains earned. Previously, this was capped at around 37% (for individuals).
- Dependents with Disabilities Deductions - In the event you invest in an annuity plan to provide financial security to a disabled dependent, deduction of payment of lump sum/annuity amount is allowed during the lifetime of parents or guardian, where such parent/guardian are senior citizen. Previously this was considered as deemed income of parents/guardians where amount was received for other than death event.
- Covid - 19 Related Payment Deductions - The following sums will see an exemption from income tax as a result of any illness due to Covid-19:
- Any payment received from any source for your or your family’s treatment.
- Any amount that is paid by employer to an employee’s family after the death of the employee due to Covid-19, provided the amount is disbursed within a year of the employee’s demise.
- Any sum up to Rs. 10 lakh that is received by a family member of a person deceased due to Covid-19, provided the amount is received within a year of the death from any other person. Exemptions that relate to Covid-19 are permitted in retrospect. This means that exemptions apply for any amount received even dating back to FY 2019-20.
- Extension of the Period of ITR Revision - In case your income tax return needs a revision, you get an extended period of a year to file your revised ITR. Income tax return filing in the case of a revision for the FY 2022-23 can be done before the end of FY 2024-2025.
Corporate Income Tax
The changes in rates of corporate tax have not seen any shifts, except for the rate of surcharge for Association of Persons, or AOPs, where only corporations are members. Here, any surcharge applicable to tax is capped at 15%.
Introduction of Digital Money & Tax on Virtual Assets
If you have got onto the bandwagon of investing in cryptocurrency, then you may not be happy with the new tax regulations while filing income tax returns. With the announcements mentioned below, Union Budget 2022 has advocated futuristic legislation:
- Within FY 2022-23, the Central Bank Digital Currency would be launched.
- Any gains accrued from the transfer of virtual digital assets would be taxed at 30%.
- Any loss incurred out of transactions related to digital assets cannot be accounted for against other income.
- On any payments made for the transfer of digital currency, to any Indian resident, TDS at 1% will be deducted.
The Budget 2022 concentrated on 'digital and technology' and areas such as health, infrastructure, education, and mass e-service delivery. This Union Budget set the groundwork and framework for the economy over the following 25 years, from India at 75 to India at 1001. While the income tax reform may not be what you were looking forward to as an individual taxpayer post Union Budget announcement, but you have reasons to avail of products like insurance, health, term, or both, to gain the benefit of tax deductions. At the same time, you financially secure yourself and your loved ones based on the products you choose. A choice for the same can be made by evaluating various options available to you and opting for the most suitable one. The income tax calculator available on the Income tax portal can be used for such evaluation.