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Individuals with income above Rs 2 crore get some relief in the form of capping of surcharge at 15 per cent on long term capital gains (on specified assets) from existing graduated rates, Parizad Sirwalla, Partner and Head, Global Mobility Services, Tax, KPMG said.

"Further, the long-term capital gains on listed equity shares, units etc, are liable to maximum surcharge of 15 per cent, while the other long term capital gains are subjected to a graded surcharge which goes up to 37 per cent. I propose to cap the surcharge on long term capital gains arising on transfer of any type of assets at 15 per cent. This step will give a boost to the startup community and along with my proposal on extending tax benefits to manufacturing companies and startups reaffirm our commitment to Atmanirbhar Bharat", the Finance Minister said in her Budget speech for 2022-23.

Sirwalla said the ongoing pandemic, coupled with the rising inflation, has adversely effected the household expenses of the common man for an elongated period now. However, with the higher capex and fiscal deficit target the Finance Minister has limited specific relief to individual taxpayers.

To provide impetus to trust based governance as a concept, an updated tax return system has been introduced wherein a taxpayer can file a return upon payment of specified taxes within 2 years from the end of the relevant assessment year.

A specific tax regime is introduced for income from virtual digital assets to be taxed at the rate of 30 per cent with no deduction for any expenditure except the cost of acquisition of such asset. Interestingly, some relief to individuals with income above Rs 2 crore in the form of capping of surcharge @15 per cent on long term capital gains (on specified assets) from existing graduated rates, Sirwalla said.

Rajeev Dimri, Partner and National Head of Tax, KPMG said the Budget proposal lay the foundation for strengthening of different sectors like transportation and logistics sectors (Gati Shakti), banking and fintech (75 digital units to be set up), agriculture, EV sector (battery swapping policy), among others.

On the Direct tax front, to further ease compliances for taxpayers, the new IT return system to be introduced; this space to be watched out. The Government has only marginally increased the time limit to commence production by 31.03.2024 for units opting for the beneficial corporate tax rate of 15 per cent.

Some steps seem to have been taken to reduce litigation, by restricting appeal rights of revenue authorities for consecutive years.

Dimri said, to give a boost to the startup community, the Government has also capped the surcharge on long term capital gains at 15 per cent now. As a push to promote exports, SEZ Act to be replaced with a new legislation and states shall become partners for development of infrastructure is a big overhaul and seems to be a positive step. In tandem, reforms are also proposed to be undertaken in the Customs administration of SEZs, with facilitation related changes to be made.

Dimri said from an Indirect Tax perspective, the concessional rate on capital goods imports under Project Import Scheme is proposed to be withdrawn, to promote domestic industry - imports to be taxed at 7.5 per cent now. With the object of improving indigenous manufacturing, various changes are proposed to be carried out in the Customs Duty rates, while the details would need to be analyzed, the same should ideally be in line with the comprehensive rationalized rate structure.