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.

Clause	Nature	Topic	Effective from	Remarks
3	Amendment of section 2	Section 2(42C) amended to substitute ‘sales’ with ‘transfer’	AY 2021-22
		Section 2(47A)-New term ‘virtual digital asset’ defined.	AY 2022-23	Notification to come
4	Amendment of section 10	Amendment in Clause (4E)-Exemption to income of non-residents from transfer of offshore derivatives etc. included	AY 2023-24
		Amendment in Clause (4F)-Exemption to royalty & interest income of non-residents from leasing of a ship included	AY 2023-24
		Insertion of Clause (4G)-Exemption to income of non-residents for portfolio management services	AY 2023-24
		Amendment in Clauses (8),(8A),(8B),(9)-Exemption to certain income in the nature of remuneration, fees, etc. which occurs outside India withdrawn	AY 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 Authority	01.04.2022
		Option to treat Voluntary contribution for repair and renovation of religious institutions as Corpus	AY 2021-22
		Accumulation of income where 85% of income not applied and many other provisions	AY 2023-24
5	Amendment of section 11	Section 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-compliance	AY 2021-22
		Section 11(3) amended- Taxability of unapplied accumulated income in the 5th year	AY 2023-24
		Section 11 amended- Application of income in the year of actual payment	AY 2022-23
6	Amendment of section 12A	Compulsory maintenance of Books of accounts to be prescribed for Trusts	AY 2023-24	Notification to come
7	Amendment of section 12AB	Sub-section (4) amended- Cancellation of registration of a Trust on specified violations	AY 2022-23
		Sub-section (5) amended- Time limit for passing order for cancellation or refusal to cancel the registration of a Trust prescribed	AY 2022-23
8	Amendment of section 13	Section 13(1) amended- Disallowance of proportionate income applied for specified person	AY 2023-24
		Section 13(10) inserted- Computation of income of a Trust in case of certain non-compliances	AY 2023-24
		Section 13(11) inserted- No deduction for set-off of loss	AY 2023-24
9	Amendment of section 14A	Disallowance of expenses incurred for earning exempt income	AY 2022-23
10	Amendment of section 17	COVID-19 medical treatment expenses incurred by employer shall not be treated as perquisites	AY 2020-21	Notification to come
11	Amendment of section 35	Earlier Drafting error for Deduction for scientific research to donee corrected	AY 2021-22
12	Amendment of section 37	Expenses to be disallowed for an offence	AY 2022-23
13	Amendment of section 40(a)(ii)	Surcharge or cess shall be treated as tax and thus disallowed	AY 2005-06
14	Amendment of section 43B	Conversion of Interest into Debenture	AY 2023-24
15	Amendment of section 50	Reduction in goodwill to be treated as transfer	AY 2021-22
16	Amendment of section 56	Section 56(2)(viib)- Receipt of unlisted shares for no consideration from AIF regulated by IFSC Act	AY 2023-24
		Section 56(2)(viib)- COVID-19 related expenses upto Rs. 10 Lakh shall not be treated as gift	AY 2020-21	Notification to come
		Section 56(2)(viib)- Taxability on Gift of VDA	AY 2023-24
17	Amendment of section 68	Source of source of loan and borrowings is required	AY 2023-24
18	Amendment of section 79	Carry forward and set off of losses in case of strategic disinvestment of PSUs	AY 2022-23
19	Insertion of new section 79A	No set off of losses consequent to search, requisition and survey	AY 2022-23
20	Amendment of section 80CCD	14% deduction allowed for NPS contribution to state government employees	AY 2020-21
21	Amendment of section 80DD	Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability	AY 2023-24
22	Amendment of section 80-IAC	Sunset clause for incorporation of startup extended by 1 year	AY 2022-23
23	Amendment of section 80LA	Income from transfer of a ship is included for deduction	AY 2023-24
24	Amendment of section 92CA	Tme limit to issue direction for determination of the arm's length price extended by 2 years from 31.3.2022 to 31.3.2024	AY 2022-23
25	Amendment of section 94	Bonus and Dividend stripping provisions extended to securities	AY 2023-24
26	Amendment of section 115BAB	Manufacturing commencement date extended by one year to 31.03.2024	AY 2022-23
27	Amendment of section 115BBD	Special tax rates on dividends received from foreign companies ceases to apply	AY 2023-24
28	Insertion of new sections 115BBH and 115BBI	Tax 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
29	Amendment of section 115JC	AMT reduced to 9% and 15% for IFSC and Cooperative society	AY 2023-24
30	Amendment of section 115JF	AMT reduced to 9% and 15% for IFSC and Cooperative society	AY 2023-24
31	Amendment of section 115TD	Tax on accreted income modified to cover section 10(23C) Trust or institutions approved u/s 10(23C)	AY 2023-24
32	Amendment of section 115TE	Interest on failure to pay tax on accreted income is made applicable to Trust or institutions approved u/s 10(23C)	AY 2023-24
33	Amendment of section 115TF	Assessee-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
34	Amendment of section 119	Power of CBDT to issue order for Section 234F included	AY 2022-23
35	Amendment of section 132	Reference to Assessment order u/s 143(3) or 144 or 147 changed to cover retention of seized material	01.04.2022
36	Amendment of section 132B	Assessment redefined	01.04.2022
37	Amendment of section 133A	Income-tax authority redefined to conduct survey	01.04.2022
38	Amendment of section 139	Sec 139(8A)-Furnishing Updated Return	AY 2022-23	Notification to come
39	Insertion of new section 140B	Additional income-tax payable for furnishing updated return	AY 2022-23	Notification to come
40	Amendment of section 143	Assessment or certain institutions	01.04.2022
41	Amendment of section 144	Updated return furnished u/s 139(8A) included	AY 2022-23
42	Amendment of section 144B	Faceless Assessment provisions amended	AY 2022-23	Notification to come
43	Amendment of section 144C	Power to issue directions extended by two years to 31.03.2024	01.04.2022
44	Amendment of section 148	Approval provisions amended	01.04.2022
45	Amendment of section 148A	Prior approval provisions amended	01.04.2022
46	Insertion of new section 148B	Prior approval for assessment, reassessment or recomputation in certain cases	01.04.2022
47	Amendment of section 149	Time limit to issue notices amended	01.04.2022
48	Amendment of section 153	Time limit to complete assessment in case of updated return	01.04.2022
49	Amendment of section 153B	Time limit to complete search assessments cases	01.04.2021
50	Insertion of new section 156A	Modification of demand notice in IBC cases	01.04.2022
51	Amendment of section 158AA	Directions to avoid repetitive appeals ceases	01.04.2022
52	Insertion of new section 158AB	Procedure where an identical question of law is pending before High Courts or Supreme Court in any assessee case	01.04.2022	Notification to come
53	Amendment of section 170	Validity of proceedings on successor entity in case of reorganisation	01.04.2022
54	Insertion of new section 170A	Furnishing modified return after Adjudicating Authority Order in IBC cases	01.04.2022	Rules to come
55	Amendment of section 179	Omission of superfluous word ‘in liquidation’ from marginal heading. Tax due shall also include fees.	01.04.2022
56	Amendment of section 194-IA	TDS on immovable property shall be on higher of actual consideration or stamp duty value	01.04.2022
57	Amendment of section 194-IB	Exclusion from Section 206AB	01.04.2022
58	Insertion of new section 194R	TDS on benefit of perquisite in respect of business or profession.	01.07.2022
59	Insertion of new section 194S	TDS on Consideration for transfer of virtual digital asset	01.07.2022	Guidelines to come
60	Amendment of section 201	Payment of interest	01.04.2022
61	Amendment of section 206AB	Sections 194-IA, 194-IB and 194M excluded	01.04.2022
62	Amendment of section 206C	Payment of interest	01.04.2022
63	Amendment of section 206CCA	Wordings of the provisions for non-filers rationalised	01.04.2022
64	Amendment of section 234A	Payment of interest on filing of return under Sec 139(8A) included	AY 2022-23
65	Amendment of section 234B	Tax paid u/s 140B included	AY 2022-23
66	Insertion of new section 239A	Refund of TDS from payment to non-resident	01.04.2022	Notification to come
67	Amendment of section 245MA	Passing of order by AO after the order of DRC	01.04.2022
68	Amendment of section 246A	Section 239A order is made appealable to CIT(A)	01.04.2022
69	Amendment of section 248	Appeal provisions repealed after section 239A is introduced	01.04.2022
70	Amendment of section 253	Power to issue directions for filing of Faceless Appeal extended by 2 years to 31.03.2024	01.04.2022
71	Amendment of section 255	Power to issue directions for disposal of Faceless Appeal extended by 1 year to 31.03.2024	01.04.2022
72	Amendment of section 263	TPO order is included in Revision powers of jurisdictional CIT	01.04.2022
73	Amendment of section 271AAB	CIT(A) is empowered to impose penalty in search cases	01.04.2022
74	Amendment of section 271AAC	CIT(A) is empowered to impose penalty in undisclosed income  cases	01.04.2022
75	Amendment of section 271AAD	CIT(A) is empowered to impose penalty in fasle entry, etc. cases	01.04.2022
76	Insertion of new section 271AAE	Penalty on Trusts and other institutions for passing on benefit to related person	01.04.2022
77	Amendment of section 271C	Wordings of provisions aligned	01.04.2022
78	Amendment of section 272A	Penalty amount increased to Rs. 500 from Rs. 100	01.04.2022
79	Amendment of section 276AB	Provisions made inoperative	01.04.2022
80	Amendment of section 276B	Wordings of provisions aligned	01.04.2022
81	Amendment of section 276CC	Reference to furnishing of updated return u/s 139(8A) included	01.04.2022
82	Amendment of section 278A	Reference to Section 276BB included	01.04.2022
83	Amendment of section 278AA	Reference to Section 276BB included	01.04.2022
84	Section 285B substituted	Provisions substituted to cover specified activities	01.04.2022	Notification 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

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