Everything you need to know from the Budget 2022

Everything you need to know from the Budget 2022

This year’s budget has not introduced any major changes but there are a few changes that we have to look out for and we will be looking at a few of those here.

Crypto-Currencies: First let just talk about the crypto-currency and it’s taxation, as it is something which has raised a little debate in the market. Many people have taken a sigh of relief as they finally heard something about crypto from the government. It is officially legal now to trade and transact in crypo-currencies, NFT’s, etc. However, taxation is the worrisome part of it. Cryptos are declared as virtual or digital asset and will be taxed at 30% on income arising from such transfers while allowing no deduction or allowances except the cost of acquisition, Loss from such transfers are also not allowed to be set off against any Income under any head, the gift of digital asset is taxable in hands of recipient and there is 1% TDS applicable on such transfers / transactions. To sum up whatever you do with crypto’s you have to pay some portion of it as a Tax to the government.

Digital Rupee / Digital currency by the RBI:

You heard it right, the government of India is going to issue it’s own digital currency using the blockchain technology in the year 22-23. This also indicates that the government welcomes technologies like blockchain & other technology and is going to use it in the future for better. The value of this digital rupee will be the same as the Indian rupee.

Direct-Taxation: The middle class society of the country is fairly disappointed as there were no sources of tax deductions or exemptions that were allowed. There were some expectations that due to covid and work from home times some specific deductions or allowances will be allowed but there was nothing as such disclosed in this year’s budget. Middle class memes started flooding the internet after Nirmala Sitharaman’s speech.

Updated Returns:

Provision for filing Income Tax Return to correct the error and omission can be now done within 2 years from relevant Assessment years.

Many people have a doubts with Updated return, please note that this will not apply, if the updated return –

1. Is a return of loss.

2. Has the effect of decreasing the total tax liability.

3. Results in a refund or increases the refund.

Which simply means you can only file an updated return if you have missed out any ‘income’ and pay additional tax on the same.

Surcharge on LTCG: Surcharge on Long term capital gains on any asset is capped to be at 15% which simply means one does not have to pay more than 15% of surcharge over the total net tax liability that he/she has.

Cess as Business Expenses: Health and education cess will not be allowed as a business expenditure, similar to Income tax and surcharge.

NPS for state-government employees: Now the state government employees can claim exemption of NPS at 14% of employer’s contribution which prior was only 10%.

For Start-Ups: Now the state government employees can claim exemption of NPS at 14% of employer’s contribution which prior was only 10%.

For Non-Residents: Non-resident deriving Income from offshore derivative instruments or derivatives issued by an offshore banking unit, income from royalty and interest on account of lease of the ship, and income received from portfolio management services in IFSC shall be exempt from tax.

For Differently Abled: Exemption is provided from the  payment of annuity and lump sum payment to the differently abled person even if it’s made during the lifetime of guardian and parents (Attending age of 60 Years)

Custom-duty: The custom duty on polished diamonds and gemstones are reduced by 5%. This simply means in the near future the prices of the same will be much lower. There is also a duty concession on import of parts of phone chargers, transformers, leather, packaging boxes, etc which also in turn will reduce the prices of these goods. While the prices of Umbrellas are gonna increase as the duty on umbrellas has been increased by 20%.

Other Points: These are the remarkable introductions by the government in this year’s budget, the market during the budget reacted fairly positively closing in positive of +1.31%. Let’s hope that the bounce back continues and markets rise even higher. 

The budget had more emphasis on the long future that is ahead of us. It has also introduced a battery swapping policy, for setting up EV stations. Animation, visual effects, gaming and comics sector offers immense potential to employ youth. An AVGC promotion task force with all stakeholders will be set up to recommend ways to realize this and build domestic capacity for serving our markets and the global demand, it has plans to Roll out 5G services within 22-23, is about to air TV channels from standard 1-12 for educational purpose where children can watch and learn, has plans to build 25000km of highways and many more….

About Tax Planner: Timely tax planning helps to avoid many costly financial mistakes which cannot be undone. However, even if you are late in planning your taxes, you can take some simple last-minute financial steps. The steps will help you minimize your risks and ensure that the investments are aligned with your financial requirements.

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