The year 2022 was a landmark year in terms of individual taxation. Several investor-friendly announcements were made related to taxation. Here’s a look at the five investor-friendly announcements.
Surcharge On LTCG Capped At 15 Per Cent
The Finance Act, 2022 brought in a huge relief to investors by capping the maximum amount of surcharge at the rate of 15 per cent that would apply on long-term capital gains (LTCG) arising from the sale of listed equity shares, equity-oriented mutual fund units, etc., from 25 per cent or 37 per cent, to 15 per cent.
Employer Contribution To NPS Hiked To 14 Per Cent For State Govt. Employees
The Finance Act, 2022 had introduced a deduction for employer contribution to the National Pension System (NPS) in respect of state government employees up to 14 per cent of salary. Until then, only central government employees could enjoy tax deductions up to 14 per cent on NPS. This amendment has introduced parity and would naturally encourage higher contributions.
Clarity On Taxation Of Virtual Digital Assets
Budget 2022 specified the taxation on virtual digital assets. The transfer of virtual digital assets would be taxable at 30 per cent effective from July 1, 2022, and TDS of one per cent would also apply if the transfer of VDA is made to a resident taxpayer, it was announced.
That said, experts opine that more clarity is needed in respect of the transfer of such assets.
Relaxation Of Condition For Deduction Section 80DD
Previously, the deduction for such investment was allowed only upon the death of the parent/guardian. But now, “deduction under Section 80DD is available even in respect of payment of annuity and lump sum amount from insurance scheme for differently-abled dependents during the lifetime of parents/guardians (on parents/guardians attaining the age of 60 years),” says Sudhakar Sethuraman, partner, Deloitte India.
Common ITR Forms – Draft Issued For Inputs
In 2022, the Central Board of Direct Taxes (CBDT) released the draft common income tax return (ITR) forms for input from stakeholders.
At present, ITR filing can be completed using the online forms or the offline utility provided by the tax authorities, which come with detailed instructions and are pre-filled with the information already available with the tax authorities, thus avoiding mismatch of information, and also making the ITR preparation process faster and more efficient.
The common ITR form is a blend of the current forms of ITR 1 to ITR 4, and is in a way interactive, as it opens up schedules to fill based on the information provided by the taxpayer at the time of filling the form.
“This way, investors would be required to fill in only the requisite portions of the tax return forms, thereby easing up the time spent by them in completing their tax return. Again, similar to the simplified tax regime, the draft common ITR form is optional – the taxpayer can choose these forms or the regular ITR forms,” says Sethuraman.
