Budget 2022: Tax regime to introduce new provisions for tax return, to promote competition, and imbue IT-based progression
Finance minister introduces tax regime in budget 2022 with new provisions for tax return, tax incentives to startups, schemes for taxation on virtual digital assets, mitigation of litigation, an account of indirect taxes, and custom duties
Finance minister, Nirmala Sitharaman, addressed tax regime in budget 2022 as the last part of her speech. At first, she introduced provisions to file an updated return on additional taxes within 2 years. Moreover, should some account of income be missed out by a tax-payer, in that case, a provision to declare it with voluntary compliance is introduced.
Further, the budget seeks to bring a balance between co-operative societies and companies by re-adjusting alternative minimum taxes for cooperative societies by reducing it at 15%. Competition among manufacturing companies is paid heed to through tax concessional limit. Moreover, the liquidity provided to startups is stayed till 2023.
The transaction of virtual digital assets has picked up pace in India. The budget introduced a taxation scheme for it. The vast magnitude of the transaction induced an imposition of 30% tax on such transactions. Mitigation management is introduced to avoid repetitive litigation between tax payers and the department. Income of non-residents, such as through portfolio-management etc., are exempted from tax though subject to terms and conditions.
It was suggested that there is an ambiguity against undisclosed income when it comes to tax evasion. Provisions are introduced to bring certainty on it. Additionally, benefits passed to agents for promotion by an entity shall be subject to tax by the person giving benefits if it exceeds ₹ 20,000/year.
While discussing indirect taxes, GST was hailed as a landmark reform. There are objectives of introducing IT driven progressive regimes. Further, it expects to bring balance between facilitation and enforcement for better compliance.
Tax exemptions are introduced to encourage domestic manufacturing of capital goods. Exemptions are rationalised for MSMEs. There has been a take on agriculture produce, chemicals, fabrics, and medicines. There will incentives on exports. For simplification, these are included comprehensively instead of giving out later through notices.
