Budget 2022: Nirmala Sitharaman did not succumb to ‘feel-good’ factor

In the round-up to the Budget, there was a general perception that there could be populist measures like rejig of tax slabs, increase in the standard deduction, etc. to provide a feel-good factor. However, it’s very heartening to note that the finance minister in the Budget placed before the Parliament on 1 February succumbed to no such temptation and on the contrary, her proposals were much forward-looking. The major amendments with respect to individual taxation are discussed: Filing of updated return of income With an objective of voluntary compliance, it is proposed that an individual can file an updated return of income (even if an original or amended return of income is not filed) to offer additional income and pay the tax (and interest) due on it along with additional tax as prescribed.  Such voluntary updation of return can be done any time within twenty-four months from the end of the relevant assessment year. Conditions have been stipulated when such voluntary updation cannot be done like when any assessment/reassessment for that year is pending, etc. Virtual digital assets In recent times, there has been a lot of discussion on cryptocurrencies and India’s position on the same. The budget reinforces a few overarching steps on this behalf. India will have its own central bank digital currency, a digital rupee based on blockchain technologies to be issued by the Reserve Bank of India (RBI) in 2022-23. Accordingly, a definition of a virtual digital asset is sought to be introduced in the Indian Income-tax Act, 1961 (Act). The gains from the sale of such assets are going to be taxable at a rate of 30 percent. It is also proposed that no deduction would be allowed towards the expenses (other than the cost of acquisition of such assets) and the loss, if any, would not be allowed to be set off against any other income. To ensure that such gains/ losses are appropriately reported in the return of income, it is also proposed that the payer shall deduct tax at the rate of 1 percent of the sum to be paid. Another important aspect is that in the case of gifting of such virtual digital assets, the recipient will be subject to tax. Payment in relation to COVID Any sum paid by the employer to the employee or by any person to any individual in respect of the expenditure incurred towards his/ her medical expenditure or towards family members for treatment of COVID  shall not be considered as a taxable income, subject to the conditions as may be laid down. Any monetary consideration received by a member of the family of a deceased person from the employer of deceased person or in case of receipt from any other person/ persons (up to an aggregate of not exceeding Rs 10 lakh in the later), within 12 months of the date of such death, shall not be considered as taxable income. Rationalisation of surcharge Surcharge applicable on Long Term Capital Gain (LTCG) on sale of listed equity shares and equity oriented mutual funds stands capped at a maximum of 15 percent, whereas there was no cap on other LTCGs. It is now proposed to cap the maximum surcharge at 15 percent on all types of LTCGs. Tax relief to persons with disability As per the existing provisions, an individual/ HUF is eligible for a deduction in respect of a) expenditure for the medical treatment, training, and rehabilitation of a dependent, being a person with a disability; or b) the amount paid to LIC or any other insurer for the maintenance of a disabled dependent. The aforesaid deduction is allowed only if the lumpsum payment/ annuity is available to the differently-abled person on the death of the parent or guardian. It is now proposed to allow the deduction even if the lump sum/ annuity payment is received during the lifetime, i.e., upon attaining the age of sixty years or more of the individual or the member of the HUF in whose name subscription to the scheme has been made. These are some of the measures which have been introduced in the Budget which addresses very topical issues and makes this Budget forward-looking. The writer is Tax Partner, EY. Views are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.