FINANCE BILL, 2022
PROVISIONS RELATING TO
DIRECT TAXES
Introduction
The provisions of Finance Bill, 2022 (hereafter referred to as "the Bill"), relating to direct taxes seek to amend the Income-tax Act, 1961 (hereafter referred to as 'the Act'), to continue reforms in direct tax system through tax-incentives, removing difficulties faced by taxpayers and rationalization of various provisions.
With a view to achieving the above, the various proposals for amendments are organized under the following heads:—
(A) Rates of Income-Tax
(B) Promoting voluntary tax compliance and reducing litigation;
(C) Socio economic welfare measures;
(D) Widening and deepening of tax base;
(E) Revenue mobilisation;
(F) Phasing out of exemptions;
(G) Rationalisation measures.
DIRECT TAXES
A. RATES OF INCOME-TAX
I. Rates of income-tax in respect of income liable to tax for the assessment
year 2022-23.
In respect of income of all categories of assessee liable to tax for the assessment year 2022-23, the rates of income-tax have either been specified in specific sections (like section 115BAA or section 115BAB for domestic companies, 115BAC for individual/HUF and 115BAD for cooperative societies) or have been specified in Part I of the First Schedule to the Bill. There is no change proposed in tax rates either in these specific sections or in the First Schedule. The rates provided in sections
115BAA or 115BAB or 115BAC or 115BAD for the assessment year 2022-23 would be same as already enacted. Similarly rates laid down in Part III of the First Schedule to the Finance Act, 2021, for the purposes of computation of “advance tax”,
deduction of tax at source from “Salaries” and charging of tax payable in certain cases for the assessment year 2022-23 would now become part I of the first schedule. Part III would now apply for the assessment year 2023-24 and would remain unchanged.
(1) Tax rates under section 115BAC and section 115BAD—
An individual and HUF tax payers have an option to opt for taxation under section 115BAC of the Act and the resident co-operative society has an option to opt for taxation under the section 115BAD of the Act.
On satisfaction of certain conditions as per the provisions of section 115BAC, an individual or HUF, from assessment year 2021-22 onwards, has the option to pay tax in respect of the total income at following rates:
Total Income (Rs) Rate
Upto 2,50,000 Nil
From 2,50,001 to 5,00,000 5 per cent.
From 5,00,001 to 7,50,000 10 per cent.
From 7,50,001 to 10,00,000 15 per cent.
From 10,00,001 to 12,50,000 20 per cent.
From 12,50,001 to 15,00,000 25 per cent.
Above 15,00,000 30 per cent.
Similarly, a co-operative society resident in India has the option to pay tax at 22 per cent for assessment year 2021-22 onwards as per the provisions of section 115BAD, subject to fulfilment of certain conditions.
(2) Tax rates under Part I of the first schedule applicable for the assessment year 2022-23
A. Individual, HUF, association of persons, body of individuals, artificial juridical person.
Paragraph A of Part-I of First Schedule to the Bill provides following rates of income-tax:—
(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or HUF or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part I applies) are as under:—
Up to Rs. 2,50,000 - Nil.
Rs. 2,50,001 to Rs.5,00,000 - 5 percent.
Rs. 5,00,001 to Rs.10,00,000 - 20 percent.
Above Rs. 10,00,000 - 30 percent.
(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—
Up to Rs. 3,00,000 - Nil.
Rs. 3,00,001 to Rs.5,00,000 - 5 percent.
Rs. 5,00,001 to Rs.10,00,000 - 20 percent.
Above Rs. 10,00,000 - 30 percent.
(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,—
Up to Rs.5,00,000 - Nil.
Rs. 5,00,001 to Rs.10,00,000 - 20 percent.
Above Rs 10,00,000 - 30 percent.
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