The government has rightly prioritized growth and inclusion in this Union Budget 2022. The stated goals as penned out by the FM are focusing on growth and welfare, promoting the digital economy especially startups in the area of fintech, energy transition, and climate action, and boosting CAPEX.
The Budget ticks all the right boxes to push India towards a 5 trillion USD economy.
The changes in respect of cross-border insolvency resolution, reduction of time limit for winding up from 2 years to 6 months and overhaul of the SEZ regime, and moving towards a trust-based relationship in taxes, would help both the Indians and even foreign investors.
This is complemented with the stable policies related to the tax regime as well with an intent to simplify the tax system. There was a much-needed clarity that was awaited as virtual digital assets like cryptocurrencies and non-fungible tokens have gained a greater amount of popularity with time. The tax proposal introduced seems to suggest that the government is not going to ban them outright as many had feared. Though the tax rate made applicable to such assets is as high as 30% plus applicable surcharge and cess with no deduction available aper from the acquisition cost. TDS of 1% will be applied to payments made for the transfer of digital assets to widen the tax base in relation to virtual digital assets. Setting up of international arbitration center at the GIFT city for quicker dispute resolution along with the world-class universities being set up over there to promote financial services and technology sector.
Another prominent tax measure towards making the lives of taxpayers easy is the provision of filing an updated return within 2 years of the end of the relevant assessment year. The taxpayer is allowed to pay a differential amount of taxes. However, if the taxpayer intends to take any benefit like availing any exemption/deduction/loss not claimed earlier, this facility can't be used. The period of incorporation for tax incentives in the case of start-ups has been extended by one year to 31st March 2023. Similarly, the production commencement date extended from 31st March 2023 to 31st March 2024 for newly set up manufacturing entities. An attempt to reduce litigation in the case of repetitive appeals involving identical issues by way of the Litigation management system.
From the perspective of encouraging capital inflow into the economy, long-term surcharges on capital gains on any asset transfer are capped at 15%, which was earlier as high as 37%. The budget has also taken care of the cooperative societies by giving 15% as alternate minimum tax to be at par with the corporates. All in all, the budget has attempted to have a balance while having something for the youth, backward class, corporates, foreign investors, infrastructure, health care, technology, etc.
Please click here to view the highlights of Budget 2022 and we hope you find this useful.
