A. New updated return
Budget 2022 introduces a new section 139(8A) to update income tax returns. If taxpayers find any errors/omissions in their returns after the deadline has passed, they will have the option to correct the IT return till 2 years from the end of the assessment year to file an updated return.
Note that this is a new section and is different from the revised return. It is proposed that an amount equal to 25% ( if return filed within 12 months) or 50% ( if return filed after 12 months but before 24 months) as additional tax on the tax and interest due on the additional income furnished would be required to be paid.
In addition, the updated return option is not available in the below-mentioned cases:
- The updated return is a loss return
- There is any decrease in tax liability or increase in the amount of refund
- It can not be filed in the case, a search and/or survey has been initiated for the relevant year.
- If any proceeding for assessment or reassessment is pending or completed
B. Deduction for NPS u/s 80CCD
For central government employees, the deduction for NPS contributions is currently authorised at 14% of the salary (basic salary+DA). To bring parity, the limit of deduction is to be increased to 14% on employer’s contribution for state government employees also.
C. Surcharge on Long-Term Capital Assets
The maximum rate of surcharge on the long-term capital gains of listed equity shares, units, etc., is 15%, while the surcharge for other long-term capital assets is capped at 37%. To bring parity in all long-term capital assets, the budget for 2022 proposes lowering the rate of surcharge for other long-term capital assets to 15%.
D. Taxation of virtual digital assets (crypto Currency)
A new section 115BBH has been inserted for the taxation of virtual digital assets. It is proposed that any income arising from the transfer of virtual digital assets shall be made taxable at a flat rate of 30% without allowing any deduction except the cost of acquisition. Further, the gift of the virtual digital asset is also to be taxed in the hands of the recipient.
E. Extension of date of incorporation for eligible startups for exemption
Due to the pandemic, there have been delays in setting up startups so the budget proposed to extend the period of incorporation of eligible start-ups up for tax incentives to 31st March 2023.
F. Tax Incentives for the Disabled
The current law allows for a deduction of any amount deposited under the insurance plan to the parents or guardians only if a lump-sum payment or annuity is offered to disabled persons after the death of the subscriber. The deduction will now be available if a lump-sum payment or annuity is offered to disabled persons during the subscriber’s lifetime after reaching the age of 60 as well.
G. Income tax exemption on COVID treatment expenditur
The amount received by a taxpayer for medical treatment for the treatment of COVID-19 is not subject to income tax. In addition, if a family member receives ex-gratia as a result of a death caused by the Covid -19, the exemption for money received from the employer is proposed to be tax-free limitless. But it is important to note that the exemption for money obtained from other peers is proposed to be restricted to Rs. 10 lakh in total.
