Explanatory Notes to the provisions of the Finance Act, 2022 – Income Tax Circular No. 23/2022

Explanatory Notes to the provisions of the Finance Act, 2022 – Income Tax Circular No. 23/2022 dated 03.11.2022

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

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:

For individuals opting for the concessional taxation regime under section 115BAC of the Act, the rates are as under:

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.

However, surcharge shall be at the rates provided in (i) to (iv) above for all categories of income without excluding dividend or capital gains in case if the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E of the Act.

Further, in case an individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) has any income under section 115AD of the Act, the amount of income-tax so computed, shall be increased by a surcharge.,-

(i) having a total income 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 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 of the nature referred to in clause (0) of sub-section (1) of section 115AD 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 of the nature referred to in clause (b) of sub-section (1) of section 115AD 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 of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act exceeding two crore rupees but is not covered in sub-clauses (ill) and (iv), at the rate of fifteen per cent. of such income-tax:

It may be further mentioned that marginal relief shall be available so the total amount payable as income-tax and surcharge on total income exceeding-

(i) fifty lakh rupees but not exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees.

(ii) one crore rupees but not exceeding two crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

(iii) two crore rupees but not exceeding five crore rupees shall not exceed the total amount payable as income-tax on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees.

(iv) five crore rupees shall not exceed the total amount payable as income-tax on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees.

The Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.

No marginal relief shall be available in respect of Health and Education Cess.