gtag('config', 'UA-154374887-1');

Clause by Clause Synopsis of Finance Bill, 2022


Finance Minister Smt. Nirmala Sitaraman presented her fourth Union Budget for the fiscal year 2022-23 followed by the Finance Bill, 2022 to amend the various provisions of the Income-tax Act, 1961 (‘Act’) and certain other laws.

The Finance Bill, 2022 contains 84 clauses out of which 82 clauses amend the existing Income-tax Act. This Bill will be remembered for the insertion of Explanations. Most of the amendments have been carried out in the form of insertion of Explanation. In the case of section 37, an Explanation is added to explain an existing Explanation.

Like previous years, this year too our Finance Minister did not speak much on the tax proposals. In fact, they are being muted and left for the experts to decode from the Memorandum.

Certain amendments are carried out to include the clarifications issued by the CBDT through various Circulars in the statute. Amendment of section 37, amendment of section 14A are some of the examples where Courts have negated the Circulars issued by the CBDT.

The Explanatory Memorandum dedicates 22 pages to discuss the amendments related to Charitable Trusts followed by amendments related to section 37 which took 7-page of the Memorandum. The discussion related to amendment in section 37 and section 40 looks less like a discussion on rationale and more like a written submission before courts.

Various tax reliefs announced through Press Releases are codified into law. There is no change in income-tax rates for all the assessees for the assessment year 2023-24. The income-tax rates as applicable for the preceding assessment year 2022-23 is also applicable for AY 2023-24.

The Finance Minister begins the tax part of the Budget Speech with a big thanks to the taxpayers for their contribution to the nation’s growth and prosperity.

ClauseNatureTopicEffective fromRemarks
3Amendment of section 2Section 2(42C) amended to substitute ‘sales’ with ‘transfer’AY 2021-22
Section 2(47A)-New term ‘virtual digital asset’ defined.AY 2022-23Notification to come
4Amendment of section 10Amendment in Clause (4E)-Exemption to income of non-residents from transfer of offshore derivatives etc. includedAY 2023-24
Amendment in Clause (4F)-Exemption to royalty & interest income of non-residents from leasing of a ship includedAY 2023-24
Insertion of Clause (4G)-Exemption to income of non-residents for portfolio management servicesAY 2023-24
Amendment in Clauses (8),(8A),(8B),(9)-Exemption to certain income in the nature of remuneration, fees, etc. which occurs outside India withdrawnAY 2023-24
Amendment in Clause (23C)
Exemption to universities,hospitals, etc. aligned to the provisions for trusts or institutions covered u/s 11
Approval by PCIT/CIT instead or Prescribed Authority01.04.2022
Option to treat Voluntary contribution for repair and renovation of religious institutions as CorpusAY 2021-22
Accumulation of income where 85% of income not applied and many other provisionsAY 2023-24
5Amendment of section 11Section 11(1) amended: Voluntary contribution received for repair and renovation of religious institutions may be treated as Corpus and its taxability in case of non-complianceAY 2021-22
Section 11(3) amended- Taxability of unapplied accumulated income in the 5th yearAY 2023-24
Section 11 amended- Application of income in the year of actual paymentAY 2022-23
6Amendment of section 12ACompulsory maintenance of Books of accounts to be prescribed for TrustsAY 2023-24Notification to come
7Amendment of section 12ABSub-section (4) amended- Cancellation of registration of a Trust on specified violationsAY 2022-23
Sub-section (5) amended- Time limit for passing order for cancellation or refusal to cancel the registration of a Trust prescribedAY 2022-23
8Amendment of section 13Section 13(1) amended- Disallowance of proportionate income applied for specified personAY 2023-24
Section 13(10) inserted- Computation of income of a Trust in case of certain non-compliancesAY 2023-24
Section 13(11) inserted- No deduction for set-off of lossAY 2023-24
9Amendment of section 14ADisallowance of expenses incurred for earning exempt incomeAY 2022-23
10Amendment of section 17COVID-19 medical treatment expenses incurred by employer shall not be treated as perquisitesAY 2020-21Notification to come
11Amendment of section 35Earlier Drafting error for Deduction for scientific research to donee correctedAY 2021-22
12Amendment of section 37Expenses to be disallowed for an offence AY 2022-23
13Amendment of section 40(a)(ii)Surcharge or cess shall be treated as tax and thus disallowedAY 2005-06
14Amendment of section 43BConversion of Interest into DebentureAY 2023-24
15Amendment of section 50Reduction in goodwill to be treated as transferAY 2021-22
16Amendment of section 56Section 56(2)(viib)- Receipt of unlisted shares for no consideration from AIF regulated by IFSC ActAY 2023-24
Section 56(2)(viib)- COVID-19 related expenses upto Rs. 10 Lakh shall not be treated as giftAY 2020-21Notification to come
Section 56(2)(viib)- Taxability on Gift of VDAAY 2023-24
17Amendment of section 68Source of source of loan and borrowings is required AY 2023-24
18Amendment of section 79Carry forward and set off of losses in case of strategic disinvestment of PSUs AY 2022-23
19Insertion of new section 79ANo set off of losses consequent to search, requisition and surveyAY 2022-23
20Amendment of section 80CCD14% deduction allowed for NPS contribution to state government employeesAY 2020-21
21Amendment of section 80DDDeduction in respect of maintenance including medical treatment of a dependant who is a person with disabilityAY 2023-24
22Amendment of section 80-IACSunset clause for incorporation of startup extended by 1 yearAY 2022-23
23Amendment of section 80LAIncome from transfer of a ship is included for deductionAY 2023-24
24Amendment of section 92CATme limit to issue direction for determination of the arm's length price extended by 2 years from 31.3.2022 to 31.3.2024AY 2022-23
25Amendment of section 94Bonus and Dividend stripping provisions extended to securitiesAY 2023-24
26Amendment of section 115BABManufacturing commencement date extended by one year to 31.03.2024AY 2022-23
27Amendment of section 115BBDSpecial tax rates on dividends received from foreign companies ceases to applyAY 2023-24
28Insertion of new sections 115BBH and 115BBITax on income from virtual digital assets -Sec 115BBH
Special tax rate for specified income in excess of 15% of trusts and institutions-Sec 115BBI
AY 2023-24
29Amendment of section 115JCAMT reduced to 9% and 15% for IFSC and Cooperative society AY 2023-24
30Amendment of section 115JFAMT reduced to 9% and 15% for IFSC and Cooperative society AY 2023-24
31Amendment of section 115TDTax on accreted income modified to cover section 10(23C) Trust or institutions approved u/s 10(23C)AY 2023-24
32Amendment of section 115TEInterest on failure to pay tax on accreted income is made applicable to Trust or institutions approved u/s 10(23C) AY 2023-24
33Amendment of section 115TFAssessee-in-default for failure to pay tax on accreted income is made applicable to Trust or institutions approved u/s 10(23C)AY 2023-24
34Amendment of section 119Power of CBDT to issue order for Section 234F includedAY 2022-23
35Amendment of section 132Reference to Assessment order u/s 143(3) or 144 or 147 changed to cover retention of seized material01.04.2022
36Amendment of section 132BAssessment redefined01.04.2022
37Amendment of section 133AIncome-tax authority redefined to conduct survey01.04.2022
38Amendment of section 139Sec 139(8A)-Furnishing Updated ReturnAY 2022-23Notification to come
39Insertion of new section 140BAdditional income-tax payable for furnishing updated returnAY 2022-23Notification to come
40Amendment of section 143Assessment or certain institutions01.04.2022
41Amendment of section 144Updated return furnished u/s 139(8A) includedAY 2022-23
42Amendment of section 144BFaceless Assessment provisions amendedAY 2022-23Notification to come
43Amendment of section 144CPower to issue directions extended by two years to 31.03.202401.04.2022
44Amendment of section 148Approval provisions amended01.04.2022
45Amendment of section 148APrior approval provisions amended01.04.2022
46Insertion of new section 148BPrior approval for assessment, reassessment or recomputation in certain cases01.04.2022
47Amendment of section 149Time limit to issue notices amended01.04.2022
48Amendment of section 153Time limit to complete assessment in case of updated return01.04.2022
49Amendment of section 153BTime limit to complete search assessments cases01.04.2021
50Insertion of new section 156AModification of demand notice in IBC cases01.04.2022
51Amendment of section 158AADirections to avoid repetitive appeals ceases01.04.2022
52Insertion of new section 158ABProcedure where an identical question of law is pending before High Courts or Supreme Court in any assessee case01.04.2022Notification to come
53Amendment of section 170Validity of proceedings on successor entity in case of reorganisation01.04.2022
54Insertion of new section 170AFurnishing modified return after Adjudicating Authority Order in IBC cases01.04.2022Rules to come
55Amendment of section 179Omission of superfluous word ‘in liquidation’ from marginal heading.
Tax due shall also include fees.
56Amendment of section 194-IATDS on immovable property shall be on higher of actual consideration or stamp duty value01.04.2022
57Amendment of section 194-IBExclusion from Section 206AB 01.04.2022
58Insertion of new section 194RTDS on benefit of perquisite in respect of business or profession.01.07.2022
59Insertion of new section 194STDS on Consideration for transfer of virtual digital asset01.07.2022Guidelines to come
60Amendment of section 201Payment of interest01.04.2022
61Amendment of section 206ABSections 194-IA, 194-IB and 194M excluded01.04.2022
62Amendment of section 206CPayment of interest01.04.2022
63Amendment of section 206CCAWordings of the provisions for non-filers rationalised01.04.2022
64Amendment of section 234APayment of interest on filing of return under Sec 139(8A) includedAY 2022-23
65Amendment of section 234BTax paid u/s 140B includedAY 2022-23
66Insertion of new section 239ARefund of TDS from payment to non-resident01.04.2022Notification to come
67Amendment of section 245MAPassing of order by AO after the order of DRC01.04.2022
68Amendment of section 246ASection 239A order is made appealable to CIT(A) 01.04.2022
69Amendment of section 248Appeal provisions repealed after section 239A is introduced01.04.2022
70Amendment of section 253Power to issue directions for filing of Faceless Appeal extended by 2 years to 31.03.202401.04.2022
71Amendment of section 255Power to issue directions for disposal of Faceless Appeal extended by 1 year to 31.03.202401.04.2022
72Amendment of section 263TPO order is included in Revision powers of jurisdictional CIT01.04.2022
73Amendment of section 271AABCIT(A) is empowered to impose penalty in search cases01.04.2022
74Amendment of section 271AACCIT(A) is empowered to impose penalty in undisclosed income  cases01.04.2022
75Amendment of section 271AADCIT(A) is empowered to impose penalty in fasle entry, etc. cases01.04.2022
76Insertion of new section 271AAEPenalty on Trusts and other institutions for passing on benefit to related person01.04.2022
77Amendment of section 271CWordings of provisions aligned01.04.2022
78Amendment of section 272APenalty amount increased to Rs. 500 from Rs. 10001.04.2022
79Amendment of section 276ABProvisions made inoperative01.04.2022
80Amendment of section 276BWordings of provisions aligned01.04.2022
81Amendment of section 276CCReference to furnishing of updated return u/s 139(8A) included01.04.2022
82Amendment of section 278AReference to Section 276BB included01.04.2022
83Amendment of section 278AAReference to Section 276BB included01.04.2022
84Section 285B substitutedProvisions substituted to cover specified activities01.04.2022Notification to come

Other related articles on Budget 2022

Finance Minister Presents Finance Bill 2022 after Union Budget 2022 in Loksabha

Download Finance Bill, 2022 (PDF) as introduced in Loksabha

Download Memorandum Explaining the Provisions in the Financial Bill 2022

Income Tax announcements in Budget Speech: Union Budget 2022

New Income Tax Slab Rates after Union Budget 2022

Changes in Personal Taxation by Union Budget 2022

Section 139(8A): Filing of Updated Return - Budget 2022

Corporate Tax Proposals: Union Budget 2022

Changes in TDS and TCS Provisions by Finance Bill, 2022

Tax Exemption on Amount Received for COVID-19: Budget 2022

Health & Education 'cess' Not Deductible as Business Expenditure: Budget 2022

Section 80DD Tax Relief to Persons with Disability: Budget 2022

Conversion of Interest into Debenture Does Not amount to Payment under Section 43B: Budget 2022

Source of Source for Loans and Borrowings Under Section 68: Budget 2022

Amendment to Section 14A to Disallow Expenses if No Exempt Income: Budget 2022

Reduced Alternate Minimum Tax u/s 115JC and Surcharge for Cooperative Societies: Budget 2022

Extension of Sunset Manufacturing Date under section 115BAB

Extension of Sunset Date of Incorporation for Start-ups Section 80-IAC

Withdrawal of Special Tax Rate on Dividend Under Section 115BBD

Drafting Error for Deduction under Section 35 Corrected

Surcharge on Long Term Capital Gains and Income Tax Reduced by Budget 2022

Definition of ‘Slump Sale’ Amended to Cover all Transfers: Budget 2022

Clarification on Transfer of Goodwill on Reduction from Block of Assets

Bonus Stripping under Section 94(8) to Cover Shares and Units

Disallowance of Expenses for Offence under section 37 further Clarified: Budget 2022

Carry forward and Set off of losses for Change in Shareholding due to Strategic Disinvestment under Section 79

Set off of Loss with Undisclosed Income found during Search and Survey: Section 79A

Section 119 amended Empowering CBDT to Issue Orders for Late Fees under section 234F: Budget 2022

Scope of Section 285B widened to cover Specified Activities: Budget 2022

Section 179 Amended to Align with Provisions and to Covers Fees

Withdrawal of exemption under clauses (8), (8A), (8B) and (9) of section 10: Budget 2022

Amendment to Assessment of Successor for Business Reorganisation under section 170: Budget 2022

Changes in Penalty and Prosecution Provisions: Budget 2022

Section 158AB: Avoid Repetitive Appeals by Department

CIT Power to Revise TPO Order under section 263

Section 245MA amended to give Power to AO to Pass Order as per DRC direction

Changes in Tax Provision for Trusts and NGOs: Finance Bill 2022

Clause by Clause Synopsis of Finance Bill, 2022

Get all latest content delivered straight to your inbox
Socialize with Us

Post a Comment