The new provision will permit taxpayers to file an Updated Return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year. It is an affirmative step in the direction of voluntary tax compliance.
Impact: It will enable the assessee to declare the income that might have missed out earlier while filing the return. The lengthy process of adjudication by the department can be avoided.
REDUCED ALTERNATE MINIMUM TAX RATE AND SURCHARGE FOR COOPERATIVES:
It is proposed to reduce the AMT rate for the cooperative societies to fifteen percent and to reduce the surcharge on co-operative societies from the present 12 percent to 7 percent for those having a total income of more than Rs.1 crore and up to Rs.10 crores.
Impact: Currently, cooperative societies are required to pay Alternate Minimum Tax at the rate of eighteen and one-half percent. However, companies pay the same at the rate of fifteen percent. This will provide a level playing field with companies and would help in enhancing the income of cooperative societies and their members who are mostly from rural and farming communities.
INCENTIVES FOR START-UPS
The period of incorporation for startups to avail of tax benefits has been extended by a year to March 31, 2023.
Impact: Eligible start-ups established before 31.3.2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation. In view of the Covid pandemic, it is proposed to extend the period of incorporation of the eligible start-up by one more year, that is, up to 31.03.2023 for providing such tax incentive.
INCENTIVES FOR NEWLY INCORPORATED MANUFACTURING ENTITIES UNDER CONCESSIONAL TAX REGIME
A concessional tax regime of 15 percent tax was introduced by our government for newly incorporated domestic manufacturing companies. It has been extended till March 31, 2024.
Impact: It will help to establish a globally competitive business environment for certain domestic companies and provide relief to them with this extension.
SCHEME FOR TAXATION OF VIRTUAL DIGITAL ASSETS:
Any income from the transfer of any virtual digital asset shall be taxed at the rate of 30 percent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition. It is proposed to provide for TDS on payment made in relation to the transfer of virtual digital assets at the rate of 1 percent of such consideration above a monetary threshold. The gift of virtual digital assets is also proposed to be taxed in the hands of the recipient.
Impact: This move would formally bring virtual assets such as cryptocurrencies and non-fungible tokens under the tax net, thereby according it the recognition by the government. The government’s plans on banning private cryptocurrency still remain to be implemented. Losses on account of such investments will not be allowed to be set off.
LITIGATION MANAGEMENT TO AVOID REPETITIVE APPEALS BY THE DEPARTMENT:
It has been provided that, if a question of law in the case of an assessee is identical to a question of law which is pending in appeal before the jurisdictional High Court or the Supreme Court, in any case, the filing of further appeal in the case of this assessee by the department shall be deferred till such question of law is decided by the jurisdictional High Court or the Supreme Court.
Impact: This will greatly help in reducing the repeated litigation between taxpayers and the department.