Explanatory Notes to the provisions of the Finance Act : This circular explains the substance of the provisions of the FA 2022 relating to direct taxes
Explanatory Notes to the provisions of the Finance Act, 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 a 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.
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