Bhuvan Bhaskar
On the tax front, Finance Minister Nirmala Sitharaman has disappointed the common taxpayers. Like every time, the working people who were hoping for some relief in income tax, the Finance Minister did not give them any reason to smile. Nevertheless, there have been some announcements in the budget, which can be called important from the point of view of the tax regime.
For consolation, the Finance Minister has announced a relief that if a taxpayer forgets to mention any of his income in the return, he will get a chance to update his return for 2 years after that assessment year. Earlier such cases used to go to arbitration and taxpayers had to struggle a lot to get out of them. But now common taxpayers can heave a sigh of relief when they make such a mistake. This can be considered a link to the announcements of Prime Minister Narendra Modi, in which the strategy of increasing compliance by relying more and more on citizens is advocated.
The upper limit of Long Term Capital Gains Tax (LTCG) surcharge has been fixed at 15% in the budget. Till now, it was applicable only to stocks and mutual funds listed on the stock exchanges, but now it has been extended to all asset classes. This announcement will be positive especially for the real estate sector and will give a fillip to the home resale market.
In another tax-related announcement, Finance Minister Sitaraman said that the parents of the differently-abled would be able to take an insurance scheme for them. According to the rules issued at present, the guardian of a disabled person can claim tax exemption on such an insurance scheme only if the lump sum amount or annuity is going to be paid to the disabled on the death of the person taking the insurance plan. But there may also be a situation when a disabled person needs that lump sum amount or annuity during the lifetime of his guardian. Sitaraman changed the old rule and allowed the parents to claim tax exemption even if the amount is paid to the insured disabled during their lifetime provided the age of the guardian is above 60 years.
Binance happy with the proposal of 30% tax on cryptocurrencies, said- “Crypto has become legal in India!
The budget also announced a 1% TDS deduction on payment of transfer of digital assets. Digital assets will include crypto, NFTs, and digital currency issued by the government in 2023. This is a progressive step that will help the official cryptocurrencies to be included in the monetary system. With only 1% TDS, the government has also expressed its intention that its objective is not to earn revenue, but to ensure the regulator’s control over digital currency and assets. By deducting TDS, the entire trail of digital sales will be with the government and the allegations against crypto currency will be resolved now.
However, with another budgetary proposal, the government has tightened the tax on crypto earners as well. According to this proposal, the income earned from transfer of digital assets will be taxed at 30%. If compared with Share, Commodity, Real Estate Mutual Funds, it is quite high. While other assets are taxed at 15% and 10% respectively in the two categories of short term and long term, trading of cryptocurrencies is directly taxed at 30 per cent. By doing this, the government has also indicated in a way that even though it is issuing digital currency, it is in no mood to promote its online trading at the moment.
The Finance Minister has definitely given a gift to the state government employees in the National Pension Scheme (NPS). Till now, the tax exemption limit on the amount put in NPS by central government employees was 14%, but state government employees could claim tax exemption only on 10% of the amount. Now in the Budget 2022, the maximum limit for claiming exemption for state government employees has been increased to 14%.
Budget relief has also been given for cooperative societies, which were till now in the 18% Minimum Alternate Tax (MAT) bracket, but now the tax burden on them has been reduced to 15%. Along with this, the tax redemption facility given to startup companies for three consecutive years has also been extended for one more year.
(The author is an expert in agriculture and economic matters)
,