The middle-income group kept waiting with bated breath for relevant announcements in the Budget 2022, which could reduce the tax burden especially due to rising inflation and increased costs because of work from home. However, Finance Minister Nirmala Sitharaman did not announce any changes in tax slabs, while presenting the Union Budget, for the personal income tax category.
Abhishek A Rastogi, Partner at Khaitan & Co, says, “The only relevant announcement was concerning certain declarations which could be made within the additional period of two years for making voluntary compliance of tax payment. From that perspective, the middle-class income group’s expectations have not been met by the budget.”
The FM proposes to tax gains from virtual digital assets at 30 per cent. “For computing the gains, the only deduction for the cost of acquisition will be available. Loss arising on virtual digital assets would not be available for set-off against other income,” says Ashok Shah, Founding Partner, NA Shah Associates. Further, a tax at the source of 1 per cent is also to be deducted.
Shah adds, “Proposed measure is a stiff provision and will adversely impact investment and dealing in digital assets. It also needs to be seen whether Non-Fungible Token shall be included in its definition.”
Provisions relating to TDS would lead to unintended complications. The identity of the payee is difficult in the digital assets trade. “If the PAN of the payee is not available, there could be TDS of 20 per cent. Tax on the gifting of the virtual digital asset will act as a dampener. Overall, this could deal with a deadly blow on the virtual digital ecosystem,” explains Shah.
With the focus on increasing the Capex and improving the growth prospects of the economy in this budget, Harshad Chetanwala, Co-founder MyWeathGrowth.Com, says, “can have a much larger positive impact on the overall finance of the common man over a period.”
Chetanwala further adds, “Whenever the country’s economy does well it also contributes to the development of its people financially. While the wishlist on direct tax and other related benefits continue to remain open for the next year, this one is a growth-oriented budget and now the key is to look into its implementation.”
With no mention in the budget about the tax slabs in light of the two-year-long pandemic which has hit every household gravely, the budget speech had no sign of relief in respect of the income tax with there being no change or mention in the tax collection structure.
Rastogi adds, “It comes as a disappointment for salaried individuals who heavily anticipated a revision of income tax slabs and a lowering of the pre-existing rates. It must be noted that this is the income group which has been tremendously hit in the last 20 months and the benefits to this group would have further increased the consumption.”