The Union Budget of 2022 has rolled out just as the Indian economy is gearing up for its next leg of growth. Even though the economy is technically still in its recovery phase from the pandemic, the government expects it to grow anywhere from 8 to 8.5% in the next fiscal year. This would continue the trend of India being one of the fastest-growing economies globally.
Going by the initial reactions to this year’s budget, we see immediately that it’s aiming to support that growth by promoting a greener economy, leveraging the digital revolution’s impact, and creating a more conducive environment for businesses.
We at Zoho Books hosted an interactive session with CA Bimal Jain, a tax expert, to discuss the Union Budget 2022 and the changes it’s bringing to Indian businesses.
This blog will highlight some key points from that discussion for your convenience. Now let’s dive in!
Direct Taxes
There’s a provision to file an updated return on additional tax payments. It enables the assessee to declare the income they missed out on earlier. It must be filed within two years from the end of the relevant assessment year.
The alternate minimum tax paid by cooperatives decreased from 18.5% to 15%.
The surcharge on cooperative societies was reduced from 12% to 7% for those having a total income of more than Rs 1 crore, up to Rs 10 crores.
Annuity and lump sum amounts that dependents who are disabled receive from the insurance scheme will be paid until their parents or guardians turn 60 years old.
The tax deduction limit has been increased from 10% to 14% on an employer’s contribution to the NPS account of State Government employees.
Any surcharge or cess levied on income is not considered a business expenditure.
Brought forward loss cannot be offset against undisclosed income detected during any survey or search.
Indirect Taxes
The last date to make amendments, upload missed sales invoices or notes, or claim any missed Input Tax Credit or ITC of a financial year is 30th November of the following year.
If a composition taxable person fails to file an annual return for three months beyond the due date of 30th April of the following year, their registration can get cancelled.
As per the GST Act, the due date to file GSTR-5 by non-resident taxable persons was every 20th of the next month. This is now revised to the 13th of the next month.
Sections 42, 43, and 43A of matching reversal of tax credits have been removed.
The Customs Administration of SEZs will be fully IT-driven and function on the Customs National Portal by 30 September 2022.
The concessional rates on capital goods and project imports are being phased out with a moderate tariff of 7.5%.
More than 350 exemption entries are slated to be gradually phased out, like exemptions on certain agricultural produce, chemicals, fabrics, medical devices, and drugs, as well as medicine for which sufficient domestic capacity exists.
Customs duty rates will be calibrated to provide a graded rate structure to facilitate the domestic manufacturing of wearable devices and electronic smart meters.
To boost the jewelry sector, customs duties on cut and polished diamonds and gemstones has been reduced to 5%. Sawn diamonds are tagged under Nil customs duties.
- To facilitate the export of jewelry through e-commerce channels, a newer and simplified regulatory framework will be implemented by June this year.
Manufacturing Sector
The last date for manufacturing or production under section 115BAB has been extended by one year (i.e. from 31 March 2023 to 31 March 2024).
The customs rate and tariff structure have been simplified, particularly for sectors like chemicals, textiles, and metals.
Exemption on items that can be manufactured in India and concessional duties on the raw material that goes into the manufacturing of intermediate products have been removed. This is in line with the objective of ‘Make in India’ and ‘Atmanirbhar Bharat.’
Startups
For eligible startups to avail tax benefits, tax incentives are extended by one year, up to 31 March 2023.
More startups will facilitate ‘Drone Shakti’ through varied applications of and support for Drone-As-A-Service (DrAAS).
Cryptocurrency
Digital Rupees will be introduced by the Reserve Bank of India, starting in 2022-23.
A tax of 30% with 1% TDS is now imposed on virtual assets to legitimize the trading of private cryptocurrencies and non-fungible tokens.
The gift of a virtual digital asset will now also be taxed when in the hands of the recipient.
“Making India self-reliant” is one of the main themes of 2022’s Budget, showcasing the clear vision of our lawmakers. They focused primarily on the microeconomic level in hopes that it will, in turn, complement the macroeconomic growth of this country. With all the proper steps in place, let’s hope for our Indian economy to grow stronger than ever before.
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Here are some resources to help you understand the Union budget 2022 better:
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