[BREAKING] Finance Ministry Notifies Finance Act, 2022: Know the Key Changes [Read Act]

Finance Act 2022 - Finance Ministry - Budget 2022 - Taxscan

The Ministry of Finance has notified the Finance Act, 2022. The Parliament had passed ‘The Finance Bill, 2022″ the Parliament completes the Budgetary exercise for 2022-23.

The Central Government has brought 39 changes before passing the Finance Bill. With the amendments in the Finance Bill, the government had proposed to tighten the norms for taxation of cryptocurrencies by disallowing set off of any losses with gains from other virtual digital assets.

According to the Finance Act, 2022, a Virtual Digital asset could be a code or number, or token which can be transferred, stored, or traded electronically. The Virtual Digital Assets will include prevailing cryptocurrencies and non-fungible tokens (NFTs) which have gained fads over the past couple of years. The Budget 2022 has brought clarity concerning the levy of Income Tax on Crypto assets.

From April 1st, 2022, a 30 percent Income Tax plus cess and surcharges, will be levied on such transactions in the same manner as it treats winnings from horse races or other speculative transactions.

The Budget 2022-23 also proposed a 1 percent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which includes individuals/HUFs who are required to get their accounts audited under the Income Tax Act.

In order to remove inconsistency, it is proposed to amend section 194-IA of the Act to provide that in case of transfer of an immovable property (other than agricultural land), TDS is to be deducted at the rate of one percent. of such sum paid or credited to the resident or the stamp duty value of such property, whichever is higher. In case the consideration paid for the transfer of immovable property and the stamp duty value of such property are both less than fifty lakh rupees, then no tax is to be deducted under section 194-IA.

The Finance Act, 2022 has substituted section 144B of the Income Tax Act. The provisions of the proposed section shall apply for faceless assessment, reassessment, or recomputation under sub-section (3) of section 143 or under section 144 or under section 147 of the Act, as the case may be, in the cases specified therein.

The Finance Act 2022 stated that no TDS on Transfer of Immovable Property if Consideration paid or Stamp Duty Value are both less than Rs. 50 Lakhs. Section 194-IA of the Act provides for deduction of tax on payment on transfer of certain immovable property other than agricultural land. Sub-section (1) of the said section provides for deduction of tax by any person responsible for paying to a resident any sum by way of consideration for transfer of any immovable property (other than agricultural land) at the time of credit or payment of such sum to the resident at the rate of one percent. of such sum as income-tax thereon. Sub-section (2) provides that no deduction of tax shall be made where the consideration for the transfer of immovable property is less than fifty lakh rupees.

The Finance Act, 2022 also inserted a new provision imposing a deduction of 10% TDS on the number of perquisites provided to an employee exceeding Rs. 25,000 from 1st July 2022. As per clause (iv) of section 28 of the Act, the value of any benefit or perquisite, whether convertible into money or not, arising from business or exercise of profession is to be charged as business income in the hands of the recipient of such benefit or perquisite. However, in many cases, such recipient does not report the receipt of benefits in their return of income, leading to the furnishing of incorrect particulars of income The Finance Act also gives certain income tax relief for differently-abled Persons. The parent or guardian of a differently-abled person can take an insurance scheme for such a person. The present law provides for a deduction to the parent or guardian only if the lump-sum payment or annuity is available to the differently-abled person on the death of the subscriber i.e. parent or guardian.

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