Explanatory Notes to the provisions of the Finance Act, 2022 – Income Tax Circular

Explanatory Notes to the provisions of the Finance Act, 2022 – Income Tax Circular No. 23/2022 dated 03.11.2022

CIRCULAR NO. 23/2022

F. No. 370142/48/2022-TPL
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)

Dated the 3rd of November , 2022

EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT, 2022

CIRCULAR

INCOME-TAX ACT

Finance Act, 2022 – Explanatory Notes to the Provisions of the Finance Act, 2022
CIRCULAR NO. – 23/2022, DATED 3rd NOVEMBER, 2022

AMENDMENTS AT A GLANCE

Section of Income-tax Act, 1961	Particulars
2	Definitions
10	Incomes not included in total income
11	Income from property held for charitable or religious purposes.
12A	Conditions for applicability of sections 11 and 12
12AB	Procedure for fresh registration
13	Section 11 not to apply in certain cases
14A	Expenditure incurred in relation to income not includible in total income
17	“Salary”, “perquisite” and “profits in lieu of salary” defined
35	Expenditure on scientific research
37	General
40	Amounts not deductible
43B	Certain deductions to be only on actual payment
50	Special provision for cost of acquisition in case of depreciable asset
56	Income from other sources
68	Cash credits
79	Carry forward and set off of losses in case of certain companies
79A	No set off of losses consequent to search, requisition and survey
80CCD	Deduction in respect of contribution to pension scheme of Central Government
80DD	Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability
80-IAC	Special provision in respect of specified business
80LA	Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre
92CA	Reference to Transfer Pricing Officer
94	Avoidance of tax by certain transactions in securities
115BAB	Tax on income of new manufacturing domestic companies
115BBD	Tax on certain dividends received from foreign companies
115BBH	Tax on Income from virtual digital asset
115BBI	Specified income of certain institutions
115JC	Special provisions for payment of tax by certain persons other than a company
115JF	Interpretation in this Chapter (Chapter XII-BA)
115TE	Tax on accreted income
115TD	Interest payable for non-payment of tax by trust or institution
115TF	When trust or institution is deemed to be assessee in default
119	Instructions to subordinate authorities
132	Search and seizure
132B	Application of seized or requisitioned assets
133A	Power of survey
139	Return of income
140B	Tax on updated return
143	Assessment
144	Best judgment assessment
144B	Faceless Assessment
144C	Reference to dispute resolution panel
148	Issue of notice where income has escaped assessment
148A	Conducting inquiry, providing opportunity before issue of notice under section 148
148B	Prior approval for assessment, reassessment or recomputation in certain cases.
149	Time limit for notice
153	Time limit for completion of assessment, reassessment and recomputation
153B	Time limit for completion of assessment under section 153A
155	Other amendments
156A	Modification and revision of notice in certain cases.
158AA	Procedure when in an appeal by revenue an identical question of law is pending before Supreme Court
158AB	Procedure where an identical question of law is pending before High Courts or Supreme Court
170	Succession to business otherwise than on death
170A	Effect of order of tribunal of court in respect of business reorganisation
179	Liability of directors of private company
194-IA	Payment on transfer of certain immovable property other than agricultural land
194-IB	Payment of rent by certain individuals or Hindu undivided family
194R	Deduction of tax on benefit or perquisite in respect of business or a profession
194S	Payment on transfer of virtual digital asset
201	Consequences of failure to deduct or pay
206AB	Special provision for deduction of tax at source for non-filers of income-tax return
206C	Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.
206CCA	Special provision for collection of tax at source for non-filers of income-tax return
234A	Interest for defaults in furnishing return of income
234B	Interest for defaults in payment of advance tax
239A	Refund for denying liability to deduct tax in certain cases
245MA	Dispute Resolution Committee
246A	Appealable orders before Commissioner (Appeals)
248	Appeal by a person denying liability to deduct tax in certain cases
253	Appeals to the Appellate Tribunal
255	Procedure of Appellate Tribunal
263	Revision of orders prejudicial to revenue
271AAB	Penalty where search has been initiated
271AAC	Penalty in respect of certain income
271AAD	Penalty for false entry, etc., in books of account
271AAE	Benefits to related persons
271C	Penalty for failure to deduct tax at source
272A	Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc.
276AB	Failure to comply with the provisions of sections 269UC, 269UE and 269UL
276B	Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B
276CC	Failure to furnish returns of income
278A	Punishment for second and subsequent offences
278AA	Punishment not to be imposed in certain cases
285B	Submission of statements by producers of cinematograph films or persons engaged in specified activity

 

1. Introduction

1.14 The Finance Act, 2022 (hereafter referred to as ‘FA 2022′) as passed by the Parliament, received the assent of the President on 30° March, 2022 and has been enacted as Act No. 6 of 2022.
1.2 This circular explains the substance of the provisions of the FA 2022 relating to direct taxes.

2. Changes made by FA 2022

2.1 The FA 2022 has.-

(i) specified the existing rates of income-tax for the assessment year 2022-23 and the rates of income-tax on the basis of which tax has to be deducted at source and advance tax has to be paid during financial year 2022-23; and

(ii) amended sections of the Income-tax Act, 1961 (‘the Act’).

3. Rate structure

3.1 Rates of income-tax in respect of incomes liable to tax for the assessment year 2022-23.

3.1.1 Part I of First Schedule to the FA 22 specifies the rates of income-tax in réspect of incomes of all categories of assessees liable to tax for the assessment year 2022-23. These rates are the same as those laid down in Part IH 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 during the financial year 2021-22. Main features of the rates specified in the said Part I are as follows:

3.1.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person.

Paragraph A of Part | of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family (HUF), association of persons, body of individuals or artificial juridical person {other than a co-operative society, firm, local authority and company) as under:

Income chargeable to tax	Rate of income- tax
	Individual (other than senior and very senior citizen), HUF, association of persons, body of individuals and artificial juridical person.	Individual, resident in India who is of the age of sixty years or more but less than eighty years. (senior citizen)	Individual, resident in India who is of the age of eighty years or more (very senior citizen)
Up to Rs. 2,50,000	Nil	Nil	Nil
Rs. 2,50,001 – Rs. 3,00,000	5%
Rs. 3,00,001 – Rs. 5,00,000		5%
Rs. 5,00,001 – Rs. 10,00,000	20%	20%	20%
Exceeding Rs. 10,00,000	30%	30%	30%

For individuals opting for the concessional taxation regime under section 115BAC of the Act, the rates are as under:

Total Income (Rs.)	Rate of income- tax
Up to 2,50,000	Nil
From 2,50,001 to 5,00,000	5
From 5,00,001 to 7,50.000	10
From 7,50,001 to 10,00,000	15
From 10,00,001 to 12,50,000	20
From 12,50,001 to 15,00,000	25
Above 15,00,000	30

 

The amount of income-tax so computed, including in the case of an individual or an HUF exercising option under section 115BAC, or as computed under the provisions of section 111A or section 112 or section 112A of the Act but not having any income under section 115AD of the Act, shall be increased by a surcharge.-

(i) having a total income (including the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent. of such income-tax; and

(ii) having a total income (including the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent. of such income-tax;

(iii) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such income-tax;

(iv) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax;

(v) having a total income (including the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding two crore rupees, but is not covered under clause (iii) or (iv) above, at the rate of fifteen per cent of such income-tax.

However, surcharge shall be at the rates provided in (i) to (iv) above for all categories of income without excluding dividend or capital gains in case if the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E of the Act.

Further, in case an individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) has any income under section 115AD of the Act, the amount of income-tax so computed, shall be increased by a surcharge.,-

(i) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent of such income-tax; and

(ii) having a total income exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent of such income-tax:

(iii) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (0) of sub-section (1) of section 115AD of the Act exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such Income-tax:

(iv) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax;

(v) having a total income [including the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act exceeding two crore rupees but is not covered in sub-clauses (ill) and (iv), at the rate of fifteen per cent. of such income-tax:

It may be further mentioned that marginal relief shall be available so the total amount payable as income-tax and surcharge on total income exceeding-

(i) fifty lakh rupees but not exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees.

(ii) one crore rupees but not exceeding two crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

(iii) two crore rupees but not exceeding five crore rupees shall not exceed the total amount payable as income-tax on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees.

(iv) five crore rupees shall not exceed the total amount payable as income-tax on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees.

The Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.

No marginal relief shall be available in respect of Health and Education Cess.

Source: Income Tax