Proposals for personal taxation in Budget 2022


Those who invest in capital assets other than equity funds and listed companies would benefit from the Union Budget 2022. The surcharge on long-term gains from these capital assets—property, unlisted stocks, and artifacts—would be capped at 15%.

Even as it cracks down on getting away with concealed income, the Budget allows taxpayers the opportunity to amend mistakes made in declaring income while submitting taxes.

Long-term capital gains tax surcharges on equity funds and listed stocks are already set at 15%. Surcharges on profits from other assets, on the other hand, are depending on the taxpayer’s income bracket. Incomes between Rs 2 crore and Rs 5 crore are taxed at 25%, and incomes exceeding Rs 5 crore are taxed at 37%.

This resulted in an effective tax rate of 25-27.4% on capital gains from these assets, compared to 11.5 percent on gains from equities funds and stocks.

“The cap on the surcharge rate is likely to help NRI investors and international funds,” says Amit Maheshwari, Tax Partner at AKM Global. A long-standing desire of startups has been to reduce the levy on capital gains from unlisted shares. It will be beneficial to people who own stock options in unlisted companies.

“The rationalisation of the surcharge rate on long-term capital gains will promote investments in capital assets,” says Shardul Amarchand Mangaldas & Co. partner Amit Singhania. However, the idea will only help people with an annual income of more beyond Rs 2 crore, as the surcharge on income below that threshold is currently 15%.

The Budget also aimed to provide taxpayers with the chance to correct problems connected to income misreporting when filing their income tax returns for the year. It has made it possible for these taxpayers to file an updated return within two years after the end of the relevant assessment year.

This is true regardless of whether the taxpayer has previously submitted a return for the relevant assessment year.

Individuals currently have until December 31 of the relevant assessment year to file a revised ITR. “The amended return filing provision is far better than the prior with the time bracket of two years at most till the end of the assessment year,” says Amit Gupta, MD and Co-Founder, SAG Infotech.

In addition, as a deterrent to tax fraud, the Budget stipulates that no loss can be offset against hidden income discovered during search and survey operations. This is in reaction to instances when individuals or corporations offset brought-forward losses against undeclared income discovered during search operations.

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