Key income tax, personal finance highlights from Budget 2022

Even though the finance minister did not make any big tax related announcements in the Budget 2022, there were a few tax-related proposals taxpayers should be aware of. Here is a look at key tax related and personal finance highlights from Budget 2022, according to a PIB press release.

To take forward the policy of stable and predictable tax regime:

• Vision to establish a trustworthy tax regime.
• To further simplify tax system and reduce litigation.

Introducing new ‘Updated return’:

• Provision to file an Updated Return on payment of additional tax.
• Will enable the assessee to declare income missed out earlier.
• Can be filed within two years from the end of the relevant assessment year.

Tax relief to persons with disability:

• Payment of annuity and lump sum amount from insurance scheme to be allowed to differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardian attaining the age of 60 years.

Parity in National Pension Scheme Contribution:

• Tax deduction limit increased from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees.
• Brings them at par with central government employees.
• Would help in enhancing social security benefits.

Scheme for taxation of virtual digital assets:

• Specific tax regime for virtual digital assets introduced.
• Any income from transfer of any virtual digital asset to be taxed at the rate of 30 per cent.
• No deduction in respect of any expenditure or allowance to be allowed while computing such income except cost of acquisition.
• Loss from transfer of virtual digital asset cannot be set off against any other income.
• To capture the transaction details, TDS to be provided on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
• Gift of virtual digital asset also to be taxed in the hands of the recipient.

Core banking in Post Office:

• All 1.5 lakh post offices would be connected to the central banking system.
• 75 Digital Banking Units (DBUs) will be established in 75 districts by scheduled commercial banks.

Digital rupee introduction:

• The Central Bank Digital Currency (CBDC), according to the Finance Minister, will provide a significant boost to the digital economy.
• According to the Minister, digital currency will lead to a more efficient and cost-effective currency management system.
• The Digital Currency will use blockchain and other technologies.

Rationalizing TDS Provisions:

• Benefits distributed to agents as part of a business promotion campaign are taxable in the agents' hands.
• If the total value of the benefits supplied during the financial year exceeds Rs 20,000, the person providing the benefits is eligible for a tax deduction.