No Change in Income Tax Slabs, Updated I-T Returns Can Be Filed Within 2 Years

The Union Budget 2022 has not made any changes in the existing income tax slabs.

Finance Minister Nirmala Sitharaman presented the Union Budget 2022 in Parliament on Tuesday, 1 February.

(Photo: The Quint)

No changes were made in the existing income tax slabs in the Union Budget 2022 announced by Finance Minister Nirmala Sitharaman on Tuesday, 1 February.

However, Sitharaman did announce a change in policy on filing updated I-T returns.

"The Income Tax Department has established a robust framework of reporting of taxpayers' transactions. In this context, some taxpayers may realise that they have committed omissions or mistakes in correctly estimating their income for tax payment. To provide an opportunity to correct such errors, I am proposing a new provision permitting 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."

Finance Minister Nirmala Sitharaman

Sitharaman added, "With this proposal now, there will be a trust reposed in the taxpayers that will enable the assessee herself to declare the income that she may have missed out earlier while filing her returns."

(Photo: The Quint)

Twitter Reacts to No Change in Income Tax Slabs

There were sharp reactions to the government not announcing any additional relief for taxpayers via changes in the income tax slabs.

Defending the government's decision to not change income tax slabs, Union Commerce and Industry Minister Piyush Goyal stated, "Tax burden on the middle class has already been reduced quite a lot. Our efforts are to conserve resources, and increase opportunities and income."

Tax Relief Increased for State Govt Employees

Bringing state government employees at par with central government employees, Sitharaman announced, "At present, the Central Government contributes 14 per cent of the salary of its employee to the National Pension System (NPS) Tier-I. This is allowed as a deduction in computing the income of the employee. However, such deduction is allowed only to the extent of 10 per cent of the salary in case of employees of the State government. To provide equal treatment to both Central and State government employees, I propose to increase the tax deduction limit from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees as well."

Tax Relief to Persons With Disability

Announcing an added benefit for persons with disability, Sitharaman said, "The parent or guardian of a differently abled person can take an insurance scheme for such person. The present law provides for 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. There could be situations where differently abled dependants may need payment of annuity or lump sum amount even during the lifetime of their parents/guardians. I propose to thus allow the payment of annuity and lump sum amount to the differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of sixty years."

Incentive for Start-Ups

Eligible start-ups established before 31 March 2022 had been provided a tax incentive for three consecutive years out of 10 years from incorporation.

In view of the COVID-19 pandemic, Sitharaman announced that the Union Budget 2022 will extend the period of incorporation of the eligible start-ups by one more year, that is, up to 31 March 2023 for providing this tax incentive.

Reduced Alternate Minimum Tax Rate and Surcharge for Cooperatives

To provide a level playing field between cooperative societies and companies, the Union Budget has announced a reduction in the Alternate Minimum Tax rate for cooperative societies and brought it down to 15 percent, the same as is paid by companies.

The surcharge on cooperative societies has been reduced from 12 percent to 7 percent for those having total income of more than Rs 1 crore and up to Rs 10 crore.

While announcing the move, Sitharaman commented, "This would help in enhancing the income of cooperative societies and its members who are mostly from rural and farming communities."