All You Need to Know About Direct Tax Proposals in Union Budget 2022-23
The finance minister of the country presented the Union Budget 2022-23 on the 1st of February 2022. In the budget, there were proposals made implementing changes in the tax and duties. This was done with the view to simplify the tax system and reduce litigation. For the income tax slabs and tax rates for individual taxpayers, no changes have been proposed.
Direct tax is simply the tax that a person or an organization pays directly to the entity that imposed it. Income tax, personal property tax, real property tax, or taxes on assets are some examples of direct taxes. There are different types of ITR based on the income earned and the tax applicable. Here are some changes pertaining to indirect tax that was proposed in the union budget of 2022-23.
Updates for Individual taxpayers
The government has proposed a one-time window to correct any errors or omissions in Income Tax Returns. Also, they can file the updated returns anytime within two years from the assessment years.
Tax relief to people with disability
The government has now proposed to allow the payment of a lump-sum amount and annuity to the dependents of the disabled individuals during the lifetime of parents or guardians. That means parents or guardians who are attaining the age of sixty years. The current law also provides a tax deduction to parents or guardians only if the lump-sum payment or annuity is available to the disabled person after their demise.
Equality between employees of the central and state government
The tax deduction limit has increased from 10% to 14% on the employer’s contribution of the State Government employees under the National Pension System. This has bought them directly on par with the central government employees. This proposal will help in enhancing social security benefits.
Updates for cooperative societies
There has been a reduction in surcharge and minimum tax rate for cooperatives. The government has proposed to reduce the rate for cooperative societies by 15%. They did this to ensure parity amongst cooperative societies and companies. The government has also proposed to reduce the surcharge on corporate societies from 12% to 7%. This is for those societies whose income falls in the bracket between one crore rupees to ten crores rupees. Most members of the cooperative societies belong to rural and farming communities. This would help in enhancing their income.
Updates for start-ups
The new budget has proposed incentives for startups. Earlier, the eligible start-ups that were established before March 2022 were provided with a tax incentive of three consecutive years out of the ten years from incorporation. Taking the covid-19 pandemic into consideration, the government has extended the period of incorporation of the eligible start-ups by one more year. Up to March 2023, this tax incentive would be provided.
Updates for virtual digital assets
The government has introduced specific tax regimes for virtual digital assets. They will tax any income that is transferred from any virtual digital asset at a flat rate of 30%. There are no deductions regarding any allowance or expenditure allowed while computing such incomes, other than the cost of acquisition. You cannot set the loss incurred in any transfer of digital assets off against any other income. Also, to ensure that they captured the transaction details, a Tax Deduction at Source (TDS) of 1% applies to payments that are made in relation to transferring digital assets. They will also tax the recipient of any virtual digital assets as a gift. You can use an income tax calculator online to get an estimate on those taxes.
Has the new budget made taxation simpler?
The updates that have been made regarding direct taxes in the new budget have definitely made taxation a much simpler process overall. Here is how-
- Managing litigations
Where decisions are pending in the high court or supreme court, they postponed the filing of an appeal by the department until the court made the decision. This helps in the decrease of repeat litigation between the taxpayers and the Income Tax Department. - Difference against tax-evasion
If a person has undisclosed income, no set-off of any loss will be allowed on it during search and survey operations.
With the new budget, the government has simplified things. Also, the proposals made were with the intention of making life easier for people of different strata. If you find it difficult to estimate your taxes, use an income tax calculator to get an estimate of the tax payable.