The Union Budget 2022-23 has kept the income tax slab unchanged, allowing taxpayers two years to file their returns.
Presenting the budget proposal on Tuesday, Union Finance Minister Nirmala Sitharaman said the government aims to further simplify the tax system, promote voluntary compliance by taxpayers and reduce litigation.
He introduced ‘Updated Returns’ to provide an opportunity to taxpayers to rectify errors or non-reporting of certain transactions while filing returns.
“I am proposing a new provision allowing taxpayers to file an updated return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year.
He said that now with this proposal, there will be a confidence in the taxpayers which will enable the assessee himself to declare the income which he had earlier missed while filing the return.
“This is a positive step towards voluntary tax compliance,” she said.
To bring parity between state and central government employees, he has proposed to increase the tax deduction limit on employer’s contribution to the National Pension System (NPS) account of state government employees from 10% to 14%. This will help in enhancing the social security benefits of the state government employees and bring them at par with the central government employees.
In order to establish a globally competitive business environment for some domestic companies, a concessional tax regime of 15% tax for newly incorporated domestic construction companies was introduced by our government.
The FM has proposed to extend the last date for commencement of manufacture or production under section 115BAB by one year from March 31, 2023 to March 31, 2024.
The FM has proposed to cap the surcharge on the consortium of companies at 15% from the graded surcharge of 37% currently.
He has also proposed to limit the surcharge on long-term capital gains arising on transfer of any asset to 15% from the currently classified surcharge of up to 37%.
In order to track the transactions involving businesses giving profits to their agents, the Budget proposes to provide for tax deduction by a profiteering person, if the aggregate value of such profits during the financial year exceeds ₹ 20,000.
The budget proposes to reduce the customs duty on cut and polished diamonds and gems to 5%. Only plain diamonds will attract zero customs duty. Custom duty has been imposed on imitation jewellery, to discourage import of low cost imitation jewellery.
The minister proposed reduction of customs duty on methanol, acetic acid and heavy feed stock for petroleum refining, while increasing duty on sodium cyanide for which substantial domestic capacity exists. “These changes will help in enhancing the domestic value addition,” he said.
To encourage exports, exemptions are being provided on items like embellishments, trimmings, fasteners, buttons, zippers, lining materials, specified leather, furniture fittings and packaging boxes, which are required for handicrafts, textiles and leather garments, leather To be genuine exporters of footwear. and other items.
Duty is being reduced on certain inputs required for prawn farming to boost its exports.
To incentivize efforts towards blending of fuels, an additional differential excise duty of ₹ 2/litre will be levied on blended fuels with effect from 1 October 2022.
Divya Baweja, Partner, Deloitte India, said the Budget proposal to extend the gain from the sale of any other capital asset to long-term capital gain is a welcome move.
On two years’ time to file returns, he said, “It is an additional recourse available to those taxpayers who missed reporting their correct income in earlier returns, the payment is subject to additional tax. While these timelines have been extended beyond the existing provisions for filing revised returns, it is important to note that filing updated returns is likely to prove beneficial rather than filing updated returns within 12 months from the end of the assessment year. Is. it at a later date. This provision is a step towards reducing tax litigation which will benefit both the taxpayer and the revenue officials.
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