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AUDIT LOG/TRAIL

According to The Ministry of Company Affairs (MCA) notification dated March 24, 2021 (Companies (Accounts) Amendment Rules, 2021), every company that uses accounting software to maintain its books of account shall use only Accounting Software that has a feature of recording an –

Audit Trail of each and every transaction,

Creating an edit log of each change made in books of account along with the date when such changes were made.

Ensuring that the audit trail cannot be disabled.

The MCA has later announced that the above amendments will take effect on April 1, 2023, which suggests that accounting software used by businesses will have to comply with the Accounts Rules beginning in the financial year 2023-24.

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Highlights of Union Budget 2022-23 under Direct Taxes:

  • Rebate limit of Personal Income Tax to be increased to RS. 7lakh from the current RS. 5lakh in the new tax regime. Thus, persons in the new tax regime, with income up to RS. 7lakh to not pay any tax.
  • Tax structure in new personal income tax regime, introduced in 2020 with six income slabs, to change by reducing the number of slabs to five and increasing the tax exemption limit to RS. 3lakh. Change to provide major relief to all tax payers in the new regime.
  • New Tax Rates  :       
Total Income (RS)Rate(percent)
Up to 3,00,000Nil
From 3,00,001 to 6,00,0005
From 6,00,001 to 9,00,00010
From 9,00,001 to 12,00,00015
From 12,00,001 to 15,00,00020
Above 15,00,00030
  • Proposal to extend the benefit of standard deduction of RS. 50,000 to salaried individual, and deduction from family pension up to RS. 15,000, in the new tax regime.
  • Highest surcharge rate to reduce from 37 per cent to 25 per cent in the new tax regime. This to further result in reduction of the maximum personal income tax rate to 39 per cent.
  • The limit for tax exemption on leave encashment on retirement of non-government salaried employees to increase to RS. 25lakh.
  • The new income tax regime to be made the default tax regime. However, citizens will continue to have the option to avail the benefit of the old tax regime.
  • Enhanced limits for micro enterprises and certain professionals for availing the benefit of presumptive taxation proposed. Increased limit to apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed five per cent of the total gross receipts/turnover.
  • Provision of a higher limit of RS. 2lakh per member for cash deposits to and loans in cash by Primary Agricultural Co-operative Societies(PACS) and Primary Co-operative Agriculture and Rural Development Banks (PCARDBs).
  • A higher limit of RS. 3crore for TDS on cash withdrawal to be provided to co-operative societies.
  • Date of incorporation for income tax benefits to start-ups to be extended from 31.03.23 to 31.3.24.
  • Deduction from capital gains on investment in residential house under sections 54 and 54F to be capped at RS. 10crore for better targeting of tax concessions and exemptions.
  • Proposal to limit income tax exemption from proceeds of insurance policies with very high value. Where aggregate of premium for life
  • insurance policies (other than ULIP) issued on or after 1st April, 2023 is above RS. 5lakh, income from only those policies with aggregate premium up to RS. 5lakh shall be exempt.
  • Minimum threshold of RS. 10,000/- for TDS to be removed and taxability relating to online gaming to be clarified. Proposal to provide for TDS and taxability on net winnings at the time of withdrawal or at the end of the financial year.
  • TDS rate to be reduced from 30 per cent to 20 per cent on taxable portion of EPF withdrawal in non-PAN cases.
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Govt clarifies there is no plan to levy any charges for UPI services

Government has clarified that there is no plan to levy any charges for UPI services. In a series of tweets, Finance Ministry said, UPI is a digital public good with immense convenience for the public and productivity gains for the economy. The clarification came amid some reports that there may be possibility of UPI transactions charge.

The Ministry said, the concerns of the service providers for cost recovery have to be met through other means. It said, the government had provided financial support for the Digital Payment ecosystem last year and has announced the same, this year as well to encourage further adoption of Digital Payments and promotion of payment platforms that are economical and user-friendly.

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Companies Act, 2013 Amendment

In exercise of the powers conferred under sub-sections (1) and (3) of section 128, sub-section (3) of section 129, section 133, section 134, sub-section (4) of section 135, sub-section (1) of section 136, section 137 and section 138 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Accounts) Rules, 2014, namely :-

1. Short title and commencement –

 (1) These rules may be called the Companies (Accounts) Fourth Amendment Rules, 2022.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Accounts) Rules, 2014, in rule 3 –

(i) in sub-rule (1), for the words “accessible in India”, the words “accessible in India, at all times,” shall be substituted;

 (ii) in sub-rule (5), in the proviso, for the words “periodic basis”, the words “daily basis” shall be substituted;

 (iii) in sub-rule (6), after clause (d), the following clause shall be inserted, namely :-

“(e) where the service provider is located outside India, the name and address of the person in control of the books of account and other books and papers in India.”.

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Seeks to implement e-invoicing for the taxpayers having aggregate turnover exceeding Rs. 20 Cr from 01st April 2022.

Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. 01/2022 – Central Tax
New Delhi, the 24th February, 2022

New Delhi, the 24th February, 2022

G.S.R…..(E).- In exercise of the powers conferred by sub-rule (4) of rule 48 of the Central Goods and Services Tax Rules, 2017, the Government, on the recommendations of the Council, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 13/2020 – Central Tax, dated the 21st March,2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) videnumber G.S.R. 196(E), dated 21st March, 2020, namely:-

In the said notification, in the first paragraph, with effect from the 1st day of April, 2022, for thewords “fifty crore rupees”, the words “twenty crore rupees” shall be substituted.

[F. No. CBIC- 20021/1/2022-GST]


(Rajeev Ranjan)
Under Secretary to the Government of India

Note: The principal notification No. 13/2020 – Central Tax, dated the 21st March, 2020 was published in the Gazette of India, Extraordinary, vide number G.S.R. 196(E), dated 21st March, 2020 and was last amended vide notification No. 23/2021-Central Tax, dated the 1st June, 2021, published vide number G.S.R. 367(E), dated the 1st June, 2021.

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Union Budget 2022: 10 Key Budget Expectations

Background
The Union Budget 2022 is around the corner. Finance Minister Nirmala Sitharaman and her team is all set to announce the Union Budget 2022 as on 01 February 2022. At the same time, the Indian economic recovery may take another setback with rising COVID-19 cases due to the new Omicron variant. As lockdowns and restrictions are being imposed by several states to control the COVID-19 cases, it has given an indication that the pandemic is going to last longer.
Thus, taxpayers are expecting certain relief from Union Budget 2022.
In this backdrop, this article attempts to highlight “10 Key Budget expectations” from different categories of taxpayers’ perspective i.e. Individual, Corporates and Non corporate-non individual.

Budget expectations from Individual perspective:

1. Increase in standard deduction limit to INR 1 lakh: The Finance Act, 2018 introduced standard deduction of INR 40,000 to salaried employee with effect from 01 April 2019. This limit was increased to INR 50,000 by the Finance Act, 2019 with effect from 01 April 2020. However, considering the impact of inflation particularly the inflated cost of medical expenses on account of COVID-19, it is expected that the Government increases this threshold to INR 1 lakh.

2. Increase the threshold of taxability of income on Provident Fund (PF): The Finance Act 2021 amended the provisions of section 10(11) and 10(12) of the Income Tax Act, 1961 (The Act) to tax income on PF contributions above INR 2.5 lakh in a year. This limit was further increased to INR 5 lakh for PF accounts having no contribution from employers. However, these limits are harsh for PF accountholders planning their own retirement and contributing to PF to maximise their savings. Further, the memorandum to Finance Bill 2021 explained the rationale of this amendment as the amendment is to avoid misuse of this provision by rich individual who are investing huge amount in PF and claiming the entire interest as exempt.
Given the threshold of INR 2.5 lakh and INR 5 lakh, it appears that even an average earning individual may be covered and will have to pay tax. Thus, it is expected from Union Budget 2022that the Government would raise these thresholds to INR 7.5 lakh

3. Increase the limit of deduction of interest on housing loan: Under the existing the provision1 of the Act, a taxpayer may claim deduction of interest on housing loan while computing income from house property up to a limit of INR 2 lakh. This threshold was fixed by the Finance (No.2) Act, 2014 by substituting the erstwhile threshold of INR 1.5 lakh. Considering the adverse impact of COVID-19 pandemic which has caused liquidity crisis amongst taxpayers, this limit may be enhanced to INR 5 lakh. This will not only motivate the middle class individual taxpayers to invest in residential house but also help the real estate developers to mitigate the adverse impact of COVID-19 to some extent.

4. Clarification on tax treatment of COVID assistance loan: In view of persistent COVID-19 pandemic, employers are providing financial assistance to their employees for meeting the medical expenses. Some employers are providing financial assistance in the form of interest free loan to combat this deadly virus.
Under the Income Tax Law2, interest free loan provided by employer to employee is generally taxed as perquisite. However, the Act also provides certain exception which inter alia include3 loans made available for medical treatment in respect of specified diseases. The specified diseases are prescribed under the Income Tax Rule4, 1962. However, COVID-19 is not specifically covered therein. Therefore, it is expected that COVID-19 may be covered within the ambit of prescribed disease so that employee does not have to pay tax on such financial assistance.
Also, the Central Board of Direct Tax (CBDT) has released a Press Release5 which provides tax exemption on receipt of financial assistance from employer and well wisher. However, legislative amendment in this regard is still awaited which leads to lack of clarity about the meaning and scope of “financial assistance” referred in the said Press Release.
Thus, it is expected that the Government would consider making necessary amendment to give effect to the Press Release.

5. Increase in deduction limit and stamp duty value limit under section 80EEA: The Finance (No.2) Act, 2019 introduced section 80EEA to provide deduction up to INR 1.5 lakh of interest on residential housing loan subject to certain conditions which inter alia include following:
(i)The stamp duty value of residential house shall not exceed INR 45 lakh;

(ii) The loan should be sanctioned between 01 April 2019 and 31 March 2021 and

(iii)The assessee shall not claim deduction of such interest under any other provisions of the Act.

The limit of stamp duty value of INR 45 lakh is less for house property in urban area. Also, the deduction limit of INR 1.5 lakh is not justified as the taxpayer will not be able to claim deduction under any other provisions of the law.
Further, the provision requires that the loan should be sanctioned between 01 April 2019 and 31 March 2021. In view of the COVID-19 pandemic, many taxpayers have not been able to avail the benefit of this section. Therefore, it is expected that the Government would consider extending this date further by a (more…)

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