Beginning with fiscal year 2022-23, various changes in GST and income tax regimes will come into effect. Some of these changes stem directly from the 2022 Budget, while others stem from various circulars and communications. Some of the key changes effective April 1, 2022 are as follows:
GST – Businesses with turnover over INR 20 crore to issue electronic B2B invoices:
- Businesses (except certain specified ones) with a turnover of over INR 20 crore are required to issue an electronic invoice for B2B transactions. The threshold was INR 50 crore until March 31, 2022. To this end, Notice No. 1/2022 – Central Tax dated February 24, 2022 was issued.
- As a result, more companies would need to issue e-invoices, and otherwise issued invoices would be invalid. It should be noted that the input tax credit (‘ITK‘) cannot be claimed by recipients on invalid invoices.
Income tax on virtual digital assets:
- Section 115BBH is inserted into the Income Tax Act 1961 taxing virtual digital assets.
- Profits from various virtual digital assets like Bitcoin, Ethereum, etc. are taxed at a flat rate of 30%.
- No expenses are deducted apart from the acquisition cost. Offsetting losses from the purchase/sale of virtual digital assets against other income is not permitted. Gains from one virtual digital asset may not be offset against losses from other virtual digital assets.
- Additionally, under the new Section 194-S, 1% TDS will apply to any virtual digital asset transaction effective July 1, 2022. The threshold limit for TDS would be INR 50,000/year for certain individuals (individuals/HUFs).
Window to submit an updated income statement
- Subsection 139(8A) was added to the Income Tax Act. Taxpayers are given an additional opportunity to update their income tax returns.
- Updated declarations can be filed by taxpayers within a period of 24 months after the end of the relevant year of assessment. The provision also provides for cases where updated income statements cannot be filed.
- Section 140B was added to provide that the taxpayer must pay “additional tax” in addition to taxes and interest due in connection with the updated income statement.
TDS on the sale of real estate
- TDS rules have been aligned with calculation rules, Section 194-IA has been amended to require tax to be deducted on the greater of sales proceeds or stamp duty value.
- Taxes will not be withheld if both the stamp duty value of the property and the consideration paid are less than INR 50,000.
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