Tuesday, 1 February 2022

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

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