DHPA budget 2022 final

Head Office: 204, Mahalaya Complex, Off C.G.Road, Swastik cross roads, Navrangpura, Ahmedabad – 380009 URL:www.dhpa.in
01 February 2022
Chartered Accountants
Ahmedabad - Mumbai
Budget 2022
Key Highlights

Contents
2
1. Economic Performance & Budget Financials
2. Direct Taxes
3. Indirect Taxes
 Goods & Services Tax / Excise
 Customs
Prepared by Dhiren H Pandya & Associates LLP, for client service and internal use only.
This document summarizes the key indicator of Budget Performance and key proposals of the Finance Bill 2022
However, this publication is not intended to give legal, tax, accounting or other professional advice
Expert guidance may be sought before acting upon the proposals.

3
Economic Performance
& Budget Financials

4
Economic Performance
Key Indicators
a: Provisional, d: (April To November) 2021, e: (April – December) 2021, f: (April- September)2021,
i. Budget Estimates, j. End of November 2021, k: End of December 2021.
Particulars 2018-19 2019-20 2020-21 2021-22
Growth in %
-GDP (factor cost, constant prices) 6.53 4.04 -7.25 9.18a
-Currency in Circulation(CIC) 16.8 14.5 16.6 7.8
-Index of Industrial Production 3.8 -0.8 -15.3 17.4d
Imports (at c.i.f , in USD billion) 517.52 477.94 398.45 277.42f
Export (at f.o.b, in USD billion) 337.24 320.43 296.30 202.23f
Inflation in % (Average in terms of WPI) 4.3 1.7 1.3 12.5e
Forex reserves (in USD billion) 412.87 477.81 576.98 633.61k
Net Foreign Investment (FDI/ FII/ FPI, in
USD billion)
30.1 44.4 80.103 25.4f
Exchange Rate(INR/USD) (annual average) 69.92 70.90 74.23 74.50j

5
Budget Financials
Key Budget Financials (`
`
`
` in Crores)
Particulars
2020-21
Actual
2021-22
(B.E.)
2021-22**
(R.E.)
2022-23**
(B.E.)
1. Revenue Receipt 1555153 1788424 2078936 2204422
2.Capital Receipts1 1895152 1694812 1691064 1740487
3.Total Receipt (1+2) 3450305 3483236 3595813 3944157
4. Total Expenditure(5+6) 3450305 3483236 3770000 3944909
5. Revenue Expenditure 3011142 2929000 3167289 3194663
6. Capital Expenditure 439163 554236 602711 750246
7. Revenue Deficit(5-1)
As a percentage of GDP
1455989
-7.5
1140576
-5.1
1088352
-47
990241
-3.8
8.Effective Revenue Deficit(7-Grants in
Aid for Creation of capital Assets)
1225613
-6.3
921464
-4.1
850667
-37
672598
-2.6
9.Fiscal Deficit{4-(1+Recoveries of Loan
+ Other receipts)}
1848655
-9.5
1506812
-6.8
1591089
-6.9
1661196
-6.4
10. Primary Deficit (9-Interest Payments)
As a Percentage of GDP
1155755
-5.9
697111
-3.1
777298
-3.3
720545
-2.8
B.E. Budget Estimate, R.E. Revised Estimate
**GDP for BE 2022-2023 has been projected at ` 25800000 crore assuming 11.1% growth over the estimated GDP of ` 23214703 crore for 2020-2021(RE) .
ii)Individual items in this document mat not sum up to the totals due to rounding off iii) Figures in parenthesis are as a percentages of GDP
1 Includes drawdown of cash Balance.

6
Where the Rupee comes from & Where the rupee goes to
Budget Financials
Borrowings &
Other liabilities
35%
Corporation-tax
15%
Income-tax
15%
Customs service
tax 5%
Excise
7%
GST and Other
Taxes
16%
Non-tax Revenue
5%
Non-debt Capital
receipts
2%
Where the Rupee comes
State Shares of
Taxes & Duties
17%
Interest
20%
Subsidy
8%
Defence
8%
Centrally
sponsered scheme
9%
Central Sectors
15%
Fin Com & Other
10%
Other Expenditure
9%
Pension
4%
Where the Rupee Goes

7
Key Policy Announcements
Digitalization
 Introduction of Central Bank Digital Currency (CBDC) i.e. Digital
Rupee from F.Y.2022-23
Telecom Sector
 A Scheme for design-led manufacturing to be launched to build a strong
Ecosystem for 5G as part of the production Linked Incentive Scheme
Solar Power
 An additional allocation of RS.19,500 Crore for Production Linked
Incentive for manufacture of high efficiency modules to achieve goal of
280 GW of installed solar capacity by 2030

8
Key Policy Announcements
Electric Vehicle
 Battery swapping policy to be brought out and inter-operability standards
to be introduced
Capital Expenditure
 Capital Expenditure being stepped up sharply by 35.4% from
Rs.5.54 lakh crore in the current year to Rs. 7.50 lakh crore in 2022-23.
 This outlays in 2022-23 will be 2.9% of GDP
Company Law
 Voluntary winding of companies from the currently required 2 years to less
than 6 months

9
Direct Taxes

10
Rates Of Taxes
 Alternate Minimum Tax:
Type of Assessee Existing Rate Proposed Rate
Unit located in
International Financial
Services Centre
18.5% 9%
Co-operative Societies 18.5% 15%
 Surcharge:
Type of Assessee Existing Rate Proposed Rate
Co-operative Societies 12% 7%
AOP ( only companies as
its members being Non
Resident)
25% / 37% 15%

11
Rates Of Taxes
 Surcharge:
Basic tax Type Income
Range
Surchar
ge
change
Total Income including Income from dividend,
Short term capital gain(115A),
Long term capital gain (112A)
50 lakh to
crore
10% Long term
capital gain
(112)
included
Total Income including Income from dividend,
Short term capital gain(115A),
Long term capital gain (112A)
1 crore to 2
crore
Or more
than 2 crore
15% Long term
capital gain
(112)
included
Other Income excluding dividend, Short term
capital gain(115A), Long term capital gain
(112A)
2 crore to 5
crore
25% Long term
capital gain
(112)
excluded
Other Income excluding dividend, Short term
capital gain(115A),Long term capital gain
(112A)
5 crore + 37% Long term
capital gain
(112)
excluded

12
Corporate Taxation
 Dividend from Foreign companies:
 Preferential rate of 15% in respect of dividend received from
specified foreign company would be chargeable at higher rate as
applicable to companies from 01.04.2023
 Incentive to newly incorporated entities under section
115BAB:
 Newly incorporated manufacturing entities on or before 31.03.24
(earlier it was 31.03.23) will be allowed concessional tax rate of
15%.

13
Virtual Digital Asset
 Taxability:
 Income from transfer of Virtual digital asset would be chargeable at
rate of 30%.
 No deduction would be allowed against such income.
 No set off losses would be allowed against such income.
 Gift of virtual digital asset is also taxable in the hands of recipient.
 W.e.f. 1st April, 2023

14
Specified Income of certain Institutions:
 Taxability:
 Specified Income received by any assessee on behalf of various
institution/trust/ hospital/ universities etc. to be charged at rate of
30% to such assessee.
 No deduction of expenditure would be allowed against such
income.
 No set off losses would be allowed against such income.

15
 Disallowable Expenditure:
 For claiming deduction, Mandatory Certificate is require for donation
made to various institution for scientific research (w.e.f 1st April,
2021)
Business & profession
 Scientific Research :
 Income Tax with surcharge and higher secondary education cess is
disallowable expenditure

Trust – Tax on accreted Income
 Tax on accreted Income would be applicable to any fund or institution
or trust or any university or educational institutional or medical
institution at the marginal rate on accreted income. (earlier this section
was applicable to only trust)
 Interest is also applicable at rate of 1% per month or part if tax on
accreted income is not paid within specified time limit by specified
person (earlier this section is applicable to only trust or institution )
 Accreted income:

17
Trust
 Penalty u/s 271AAE for Violation u/s 10(23C) and
13(1)(c) as regards “Benefits to related
persons”(For Trust, Institution, etc.)
 First time violation during any previous year – a sum equal to
aggregate amount of Income Applied for benefit of related person.
 Subsequent violation – a sum equal to 200% of aggregate amount
of income applied.
 Applicable from 1st April, 2022.

18
Covid – 19
 Income from Other Source:
 Money Received by Individual in respect of Expenditure
incurred on medical Treatment under Covid 19 will not be
taxable income.
 Money Received by member of family of a deceased person in
Covid 19 from employer/ other person upto 10 Lakh not to be
treated as income if received within 12 Months.
w.e.f from 1st April, 2022
 Perquisite :
 COVID 19 related medical expenditure paid by employer not
included in Perquisite.

19
Deductions
 Section 80CCD contribution to National Pension
Scheme
 Deduction of 14% is allowed to all government employees on
employer’s contribution to NPS. (earlier only central Government
employees)
 Incentives to startups
 Startup incorporated on or before 31.03.2024 (earlier on or before
31.03.2023) will be provided tax incentives for 3 consecutive year
out of 10 years.
 Tax relief to disabled person
 Deduction of annuity amount from Total Income to be granted to
differently abled dependent person if parents/ guardian’s age crosses
60 years. ( Earlier benefit available only on death of parents/guardian)

20
Deductions / Capital Gain
 Income of Offshore IFSC:
 Deduction available on transfer of leased ship (earlier it was
only available to aircraft) provided if operation commence on
or before 31.03.2024
 Computation of Capital Gain in case of
Depreciable Asset:
 Reduction of amount of Goodwill of a business & profession
from Block of Assets shall be Deemed to be transfer under
section 43 (w.e.f. 1st April,2021)

21
Set off Loses / Updated Income Tax Return
 Section 79(A) (new section)
 Set off loses brought forward or unabsorbed depreciation under
section 32 is not allowed against undisclosed income found in
course of search & seizure under section 132.
 Updated Return
 Assessee can file updated return on payment of additional tax
within 2 years from the end of relevant assessment year on
voluntary basis. (New Section 140B)

22
TDS – Immovable Property / Penal TDS-TCS
 Transfer of Immovable Property u/s 194-IA
 TDS rate to be higher of 1% of consideration or the stamp duty
value of such property
 No deduction when Immovable property and stamp duty value
of such property, are both less than fifty lakh rupees.
 Higher TDS/TCS 206AB/206CCA
 Criteria of specified person for non-filing reduced from 2 years to
1 year
 TDS liability u/s 194IA, 194IB, 194M excluded from scope

23
 Deduction of tax on benefit or perquisite in
respect of business or profession u/s 194R
 Perquisite to a resident whether convertible in money or not.
 TDS Rate @ 10% of the value or aggregate of value of such
benefit or perquisite.
 Not Applicable in case of;
• Value of such perquisites during the FY does not exceed Rs.
20,000 and
• Person being Individual or HUF, whose total sales, gross
receipts or turnover does not exceed Rs.1 Crore (Business)
or 50 Lakhs(Profession) in Previous year.
 W.e.f. 1st July, 2022.
TDS – Benefit or Perquisite

24
 Payment on transfer of Virtual digital asset u/s
194S
 TDS Rate @ 1% of such sum of consideration.
 Not Applicable in case of;
• Value of such consideration during the FY does not exceed
Rs. 50,000 in respect of Specified person:
a. Individual or HUF, whose total sales, gross receipts or
turnover does not exceed Rs.1 Crore (Business) or Rs.
50 Lakhs (Profession) in Previous year and
b. Individual or a HUF not having income under business or
profession.
• Other than specified person – Consideration does not exceed
Rs.10,000 during the FY.
 W.e.f. 1st July, 2022.
TDS – Virtual Digital Asset

25
Assessment Procedure
 AO to pass order in conformity of Dispute
Resolution Committee’s order
 Specified Taxpayer can either approach DRP u/s 144C or DRC u/s
245MA for dispute resolution.
 AO shall pass an order of assessment, reassessment or re-
computation within a period of one month from the end of the month
in which such order is received from DRC u/s 245MA.
 Amendment take effect from 1st April, 2022.
 AO shall modify/revise the demand payable in conformity with order
of Adjudicating Authority of the Insolvency and Bankruptcy Code,
2016 where required
 Insolvency Bankruptcy (S. 156A)

26
 Refund for TDS Paid where it was not required in
certain cases u/s 239A
 TDS deducted u/s 195 (Non Resident or Foreign Company) other
than interest
 Taxpayer believes no such tax deduction required
 Taxpayer can now apply for refund to the AO instead of appealing to
the Commissioner(Appeals)
 W.e.f. 1st April,2022
 Penalty in case of failure to answer question ,
allow inspection, etc u/s 272A
 Existing penalty increased to Rs. 500, previously Rs. 100.

27
Particulars Existing Proposed
Time period for
submission of
statement by
Producers (S. 285B)
within 30 days from the
end of such FY or within
30 days from the date of
the completion of the
production of the film,
whichever is earlier
Within the prescribed
period
Detailed Coverage of
Producers
cinematograph films cinematograph films,
event management,
documentary production,
etc. also included.
 Submission of statements by Producers of
Cinematograph Films

28
Business Succession
 Succession to business or profession Otherwise
than on death/Business Reorganization :
 Successor shall furnish modified return of income within a period of
6 months from the end of the month in which the order of a HC or
tribunal or an Adjudication Authority under IBC,2016 was issued.

29
GST and Excise

30
GST – Input Credit
 Input Credit:
 To be availed only if credit not restricted in details communicated by
supplier
 Time limit for availing credit proposed to be changed to 13th
November of subsequent year from due date of return for month of
September of subsequent year
 Rectification of errors in ITC can also be done up till 13th November
of subsequent year
 “Auto-generated statements” containing details of ITC to be made
available to recipients - to do away with two way communication
process in return filing (S.38)
 “Self Assessed” Input Tax Credit to be reversed with interest where
tax is not paid by the supplier
 Interest rate for Credit reversal @18% (Retrospectively)

31
GST – Electronic Cash Ledger / Exemptions
 Electronic Cash Ledger:
 Balances proposed to be transferrable to other registrations of
same assessee in the same state or other states (S.25(4) & (5))
 Exemptions:
 GST to be exempted on unintended waste generated during fish
meal production (except fish oil)
 Exclusion from Supply:
 Grant of Alcoholic liquor license against fee by State Government to
be neither treated as supply of goods nor services

32
GST – Returns / Credit Notes / Excise
 Returns:
 Time limit for Non-residents to file return revised from 20th to 13th of
following month
 For rectification of errors, time limit extended to 13th November of
subsequent financial year
 Two-way communication process in returns proposed to be done
away with
 Time Limit for issuing Credit Note:
 To be extended from September of subsequent year to 13th
November of subsequent year
 Excise:
 Additional Basic Excise duty of Rs.2 per litre to be levied on Petrol
& diesel to promote blending of fuel w.e.f. 1st October, 2022

33
Customs

34
 Advance Ruling :
 Withdrawal of Application:
 Flexibility is provided to Applicant to withdraw the application at
any time by paying appropriate fees. [Currently application can
be withdrawn within 30 days of application]
 Validity of Advance Ruling:
 Advance ruling is now valid for a period of 3 Years OR till change
in law or facts on the basis of which the advance ruling has been
pronounced, whichever is earlier. [Currently validity of 3 Years is
not in the provision.]
Custom

35
Edible Oil Existing (BCD) Proposed (BCD) Movement
Microbial fats and oils
and their fractions
30% 100%
Gems & Jewellery
Sector
Existing (BCD) Proposed (BCD) Movement
Imitation Jewellery 20%
Higher of 20% or
Rs.400/KG
Renewable energy
sector
Solar Cells* 20% 25%
Solar Modules* 20% 40%
* Effective from 01-04-2022
Customs – Major Rate Changes

36
Electrical and Electronic
items
Existing (BCD) Proposed
(BCD)
Movement
Single or multiple
loudspeakers, whether or not
mounted in their enclosures
15% 20 %
Headphones and earphones,
and sets consisting
of a microphone and one or
more loudspeakers
15% 20%
Smart Meters* 15% 25%
Printed Circuit Board
Assembly of Smart Meters*
10% 20%

37
Capital Goods Existing (BCD) Proposed (BCD) Movement
S. G. Ingot Castings 10% 7.5%
Ball Screw and Linear
Motion Guide
7.5% 5%
Bushing 10% 7.5%
Coffee Roasting,
brewing or vending
machineries
10% 7.5%

38
Agriculture Products
& By Products
Live Black tiger shrimp
(Penaeus monodon)
30% 10%
Frozen Krill 30% 15%
Algal Oil 30% 15%
Gems & Jewellery
Sector
Natural Diamonds 10% Nil
Cut and Polished
Diamonds
7.5% 5%
Cut and Polished
Natural Gemstones
7.5% 5%

39
Others Existing (BCD) Proposed
(BCD)*
Movement
Frozen Mussels 30% 15%
Frozen Squids 30% 15%
Asafoetida 20% 5%
Cocoa Beans, whole or
broken, raw or roasted
30% 15%
Methyl alcohol (methanol) 5% 2.5%
Acetic acid 7.5% 5%

40
Wrist Wearable
Devices
(Smart watch)
Existing Proposed
(2022-23)
Propose
d (2023-
24)
Proposed
(2023-24)
Proposed
(2023-24)
Printed Circuit
Board Assembly
- - 10% 15% 15%
Charging Cable 10% - 5% 10% 15%
Battery 15% - 5% 10% 15%
Display
Assembly
- - - 5% 10%
Vibrator Motor 10% 10% 10% 10% 10%
Smart Watches 20% 20% 20% 20% 20%

 Exemptions given in Customs is to be withdrawn
[effective from 01-04-2022 and 01-04-2023] for
various goods of following sectors*:
 Textile Sector- Spindles, yarn guides, Ballon control rings, etc.
 Power Sector- Transformers, reactors, circuit breakers, etc.
 Petroleum Sector- Refinery Process Units, recovery and purification
plants, water treatment systems, boilers, etc.
 Leather Sector- Air blast dust removing machine, automatic drying
machine, etc.
 Project Imports- Projects such as power projects, coal projects, etc.
Customs – Withdrawal of Exemptions

42
Budget Team
CA Nirali Pandya (Partner)
CA Dhiren H Pandya, Partner
Email: dhiren@dhpa.in
CA Varun Pandya, Partner
Email: varun@dhpa.in
CA Jay Gandhi
CA Kiran Shah
Nupur Trivedi
CA. Shail Soni
CA Swati Bajaj (Partner)
Nishith Vyas
Nilesh Nai
Jaimini Rana Yesha Patel
Shubham Manghani Shreya Purohit

43
Ahmedabad Office:
204, Mahalaya Complex,
Near Hotel President,
Off. C.G.Road, Navrangpura,
Ahmedabad 380009
Phone: +91 79 26400005 /
+91 79 26426729
Mumbai Office:
C-5 Premkanku Apts,
5TH Floor,
Navroji Cross Road,
Ghatkopar, Nr. Jain Mandir,
Mumbai 400086
Email : info@dhpa.in
URL : http://www.dhpa.in
: http://www.facebook.com/1dhpa
Twitter: http://www.twitter.com/_dhpa_

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