Budget 2022: Announcements on Taxation
Presenting India’s budget 2022-23, Finance Minister Nirmala Sitharaman made a series of announcements on the taxation front and the steps being taken to enhance ease of living for citizens as well as bring parity among the state and central government employees enrolled in the National Pension Scheme (NPS). Besides these, the minister also announced the introduction of taxation on digital and virtual assets in the context of a steep rise in ownership of such assets in the country in the recent years.
The following are the highlights of the taxation related announcements made in budget 2022-23:
Clarification on Health and Education Cess
Health and education cess is an additional surcharge levied on an assessee. The minister while delivering the budget speech has clarified that it is not a business expenditure and cannot be allowed as a business expense while deriving at the total income.
Parity between state and central government employees
In a bid to bring about parity in government contribution towards the NPS for both state and central government employees, the government has announced an increase in tax deduction limit from 10 per cent to 14 per cent as employers' contribution to NPS for state government employees.
Surcharge on cooperative societies reduced
The new financial year will also witness a reduction in surcharge on cooperative societies reduced to 12 per cent while startups will get one year of tax incentives until March 31, 2023.
Relief for taxpayers
To provide relief to taxpayers in cases of inadvertent omissions and/or errors, the finance minister announced that in the new financial year, taxpayers can now file their updated ITRs within two years of relevant assessment year to promote affirmative action based on trust and voluntary disclosures.
30 per cent tax on transfer of digital assets
In view of the rising ownership and value of digital and virtual assets, the government has brought digital assets and cryptocurrencies under the ambit of taxation. The minister announced that any income from taxation of virtual digital assets would be taxable at 30 per cent from the new financial year. Furthermore, Tax Deducted at Source (TDS) will also be applicable beyond a specified monetary threshold.