Income Tax Budget 2022: No change in Income Tax slabs, 30 percent tax on virtual asset transfer

Income Tax Budget 2022: Union Finance Minister Nirmala Sitharaman proposed permission to allow individuals to file an updated Income Tax Return within two years of the relevant assessment year under Union Budget 2022-23 on February 1, 2022. The announcement aims to provide an opportunity to the individuals who have made errors while filing the return to correct their errors within 2 years. 

The Finance Minister did not announce any change in the income tax slabs, in a huge disappointment for many of the salaried individuals. The income tax slabs and rates will remain same as before. The salaried individuals were expecting an upward revision in the basic tax exemption limit.

To provide an opportunity to correct an error, taxpayers can now file an updated return within 2 years from the relevant assessment year: FM Nirmala Sitharaman pic.twitter.com/E73lNaXpGT

— ANI (@ANI) February 1, 2022

Following are the key announcements made by Finance Minister Nirmala Sitharaman under the Income Tax Budget 2022. 

Reduced Income Tax Rates for Co-operatives

To provide a level-playing field between companies and cooperatives, FM Nirmala Sitharaman has proposed to reduce income tax rates for co-operatives to 15 percent and reduce co-operative surcharge from 12% to 7%. The corporate surcharge will also be reduced from 12% to 7%.

Tax Relief to Persons with Disability

The annuity and lumpsum received by parents or guardians attaining 60 years during lifetime of a person with disability will be eligible for tax relief.

Parity between central and state governments

The tax deduction limit for employer contribution to NPS for state government employees to be increased from 10 percent to 14 percent to bring them at par with central government employees.

Both Centre and States govt employees' tax deduction limit to be increased from 10% to 14% to help the social security benefits of state govt employees and bring them at par with the Central govt employees: FM Nirmala Sitharaman pic.twitter.com/qPUvX2JZzd

— ANI (@ANI) February 1, 2022

Incentives for startups

The period of incorporation of the eligible startups for providing tax incentives has been extended till 2022-23. 

Taxation of Virtual Digital Assets

Any income from transfer of any virtual digital asset shall be taxed at a rate of 30 percent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except cost of acquisition.

Deterrence of Tax Evasion

No set-off of loss allowed against an income detected during search and seizure.

Rationalization of surcharges

Surcharge on AOPs and long-term capital gains capped at 15 percent.

Indirect Taxes

The Gross GST collections for January 2022 are  Rs 1,40,986 crores, which is the highest since the inception of GST. 

Customs Duty

-Customs duty on gems, cut and polished diamonds to be reduced to 5%.

-Customs Duty on Imitation Jewelry and Chemicals reduced.

-Customs Duty on umbrellas raised to 20% and the exemption on the import of parts of umbrellas has been withdrawn. 

-The duty on steep scrap has been extended by another year. 

-Anti-dumping duty on stainless steel is being revoked.

-Customs duty on shrimp aquaculture to be reduced.

-Customs Duty on Sodium Cyanide to be increased.

Current Income Tax Regime

The current income tax regime will continue as it is, as no change was announced by FM Nirmala Sitharaman. The Finance Minister had introduced a new tax regime in the Union Budget 2020 presentation, under which the tax rates were reduced for those willing to forego tax exemptions and deductions. The new tax regime is optional for taxpayers, which means that they can either pick the old tax regime or choose the new one.

Current Income Tax Regime- Check Income Tax Slabs and Rates