Taxation of Virtual digital assets.

Finance Act 2022 introduced a tax on virtual digital assets (VDA).

Ø Section 2(47A) provided a definition of VDA.

A. An Asset satisfying all the below conditions

Key-highlights of GST Proposals in Finance Bill 2022

 1.    Time-limit to avail ITC u/s 16(4) extended till 30th November of next year from 30th September.

2.    Additional Condition for availment of ITC u/s 16(2)- ITC can be availed only if the same is not restricted in GSTR-2B.

3.    Composition Tax Payer’s Registration can be cancelled suo-moto if they have not filed their GSTR-4 return beyond 3 months from the due date.

4.    Credit Notes in respect of supply made in a financial year can be issued by 30th November of next financial year (currently allowed till 30th September)

5.    Any rectification of error in GSTR-1/ GSTR-3B is now permitted till 30th November of next financial year (currently allowed till 30th September).

6.    The two-way communication process in filing GST returns is scrapped.

7.    The due date for filing return by non-resident taxable person is prescribed as 13th day of next month

8.    Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of ITC on a “provisional” basis.

9.    Section 47 of the CGST Act is being amended so as to provide for levy of late fee for delayed filing of TCS returns.

10.  Section 49 of the CGST Act is being amended so as to provide for restrictions for utilizing the amount available in the electronic credit ledger.

11.  Section 49 of the CGST Act is being amended so as to allow transfer of amount available in E- cash ledger of a registered person to the E- cash ledger of a distinct person;

12.  Section 49 of the CGST Act is being amended so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger

13.  Section 50(3) of the CGST Act is being substituted retrospectively, with effect from the 1st July, 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized. (Meaning  thereby Interest will not be levied if ITC is not utilized)

14.  Refund claim of any balance in the electronic cash ledger shall be made available.

15.  Rate of Interest u/s 50(3) prescribed as 18% in all cases. 

Budget 2022 - Tax Impact First Cut.

 01.   There is no change in the tax rates.

02.   In order to report any income which has not been offered to tax, a new updated tax return has been introduced which can be filed within 2 years from the end of the relevant assessment year subject to payment of an additional 25% of the total tax & interest liability.   

03.   When for a particular matter, which has been decided in favour of the assessee by the Tribunal or Jurisdictional high court and revenue has challenged the same in case of the same assessee or another assessee before the High Court or Supreme court, then revenue can defer filing of appeal before ITAT and High court in case of other taxpayers for same question of law subject to prior approval of PCIT.  (w.e.f. 1.4.22)  

04.   In order to remove doubts, it has been expressly stated that Cess is not allowable as business expenditure with retrospective effect from 2005.

05.   Rule 8D is applicable even in case when no exempt income is earned & hence disallowance u/s 14A is mandatory.

06.   Penalty for offences under foreign law is not allowable as deduction u/s 37(1).

07.   Conversion of interest liability into debenture is not an allowable expenditure u/s 43B.

08.   Extension of following dates. 

(i)                  Section 115BAB - New manufacturing unit - Date of commencement of operation extended from March 2023 to March 2024.

(ii)                Section 80-IAC - Registered start up unit - Date of Incorporation extended from March 2022 to March 2023.

09.   AMT on co-operative society reduced to 15% from 18.5%.

10.   Amount received from employer towards Covid treatment during FY 2020-21 & FY 2021-22 is not taxable as gift or perquisite.

11.   The definition of specified person has been amended to reduce the period of non-filing from 2 years to 1 year. Thus if vendor has not filed return for 1 year then TDS is to be deducted at double rate.

12.   Introduction of section 194R where TDS required to be deducted @ 10% on benefit or perquisite of a business or profession.

13.   Removal of concessional rate of tax on foreign dividend. It is taxable at normal rate now.

14.   Introduction of maintenance of books of accounts by Charitable Institution. Further, Penalty for passing on unreasonable benefit to Trustee or specified person.

15.   Introduction of process of converting charitable institution to non-charitable.

Reduction of goodwill from books of accounts is deemed transfer