| An Overview of Finance Bill, 2022 |

An Overview of Finance Bill, 2022

CA Pradip Kapasi

The first and apparent feeling which one gathers minimized, if not altogether neutralized. It’s
on a bare look at the Finance Bill - 2022 is therefore highly disturbing to know that there is a
overwhelming. More than 150 amendments sea change in this self - imposed discipline when
are sought to be carried out through 84 clauses one reads the Finance Bill, 2022 which contains a
that are spread over 80 pages. The Explanatory good number of amendments that are proposed
Memorandum accentuates the stupendous feeling with retrospective effect for imposing additional
when one looks at its 109 pages. The amendments burden on the tax payers, some of which dates
almost cover the entire gamut of the Income Tax back to A.Y. 2005-06 and many of which are
Act, 1961. Large scale changes have been made introduced with a customary prescription of
for revising the schemes of Faceless Assessment, ‘for removal of doubts’, giving an impression that
Reopening and Re-assessments and taxation the law as is now being proposed was always
of Charitable Trusts and Institutions, including there in the text. Again no chances are missed to
providing for special rates of taxation. Innovative introduce, now regulatory confusion, to increase
provisions are introduced for taxation of income the scope of litigation by providing, at the same
on transfer of Virtual Digital Assets and also time, that ‘the provisions shall come into effect from
for filing an ‘updated return’ and an ‘modified 1st April, 2022/2023’. Introducing retrospective
return’ and for denial of set-off of losses against provisions is a shot in the arms of those who
‘undisclosed income’. Far reaching changes have thrive on litigation; such provisions have a serious
been made in the matters of deduction of business destabilizing impact on economy and introduces
expenditure and in respect of procedure for a trust deficit that takes a reasonably long time to
mergers and acquisitions. Regulatory amendments repair.
have been made in Chapter VIA and XVIIB for
TDS / TCS. All of these provisions are discussed Most of the other provisions are proposed to be
in detail by eminent authors and writers in introduced with effect from 1st April, 2022 and are
specially devoted articles and write - ups in this intended to apply for A.Y. 2022-23 and onwards
volume of ‘The AIFTP Journal’. Significantly, no and are therefore partially retroactive is as much
changes in the rates are proposed for taxing the as they would apply to the affairs, commencing
total income for A.Y. 2022- 2023 and 2023-2024, on or after 01.04.2021. These provisions would
but for a few changes in relation to the levy of have impact on determination of total income for
surcharge. the year and also on the interest payable on the
unpaid advance tax. Very little time of the ongoing
The present government prides itself on financial year is left available for the tax payer to
consciously not introducing any amendment manage or rearrange his affairs.
with retrospective effect so as to burden the
tax payers. It took pains taking measures to A good number of court decisions, most of
ensure that the perceived damage caused by the which are favorable to tax payers delivered by
retrospectivity of vodafone amendments was apex courts are sought to be overruled by the

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proposed amendments and as noted earlier, of the concept of the Digital Assets and of the
with retrospective effect, in some cases. Such responses of the tax fraternity of the world. In
amendments, besides being highly disrespectful its present form, as proposed, it would generate
of the courts of the country and of the tax payers, numerous issues that could have been avoided
puts into reverse gear the financial planning of with some patience and discretion. It surely is a
those affected by such destabilizing and mindless tax, the time of which has yet not arrived.
action of the Parliament.
Very interesting provisions have been introduced
Proposing changes or complete reversal of the in the form of the permissions to file the Updated
amendments and the schemes, within a short Return of Income and Modified Return of Income.
period of less than a year, clearly conveys the lack The former opens up a possibility to own up
of homework by the Minister and her advisor. the mistakes and make up for the same within
It’s beyond comprehension that how large scale a fairly wide window of time, hither to not
provisions introduced with a lot of fanfare available, on payment of additional tax without
ignoring the apprehensions of the tax payers and attracting any penalty of the fear of prosecution.
their advisors, are sought to be reversed within The procedural challenges or deficiencies would
a short time. Proposed substitution of s. 144B, surely be addressed to in the times to come.
introduced just the previous year, is a classic case The permission to file the modified return in
on the point. cases of amalgamation and demerger, is a tacit
acceptance of the direction of the Supreme Court
The another case on point is the proposed to make sense of the procedural difficulties faced
overhaul of the Scheme of Re-opening and Re- in assessments, on succession of companies. In
assessment, again within a short time of less than both these cases, it is desirable that the parallel
one year of its introduction. Far reaching changes amendments are carried out in the scheme of
are now proposed which makes anyone seriously assessment and reassessment as a logical extension
suspect the wisdom and bonafide of all those of the new permission to file the return of income.
connected with unleashing and imposing incessant
amendments that destabilize the well settled law There is an urgent need to address the issue of
and procedure. generating a hand-some capital expenditure that
would be the key driver of the economy in the
The amendments of the Finance Act 2021 has times to come. The legislature, without wasting
flooded the courts with litigation of unparalleled this opportunity, should ensure that sufficient tax
quantum within a short time of their introduction, incentives are provided for an all-round growth,
prompting the courts to act with alacrity to on the lines of s. 32AC and s. 32AD of the Act.
knockdown the amendments and assessments, at Likewise, there is also a need to address the
times by bulk disposals of thousands of petitions, serious malady caused on account of very harsh
all over the country. It is sincerely hoped that provisions of s. 115TD of the Act.
the authorities will be able to generate enough
manpower to meet the challenges of the set aside The Finance Bill 2022 provides a pleasant
orders that would require reframing within a short surprise where the ministry, in the Explanatory
time provided by the courts. Memorandum on more than two occasions,
acknowledges the errors committed in drafting
The proposal to tax an income, on transfer of a the Finance Act, 2021, confirming the old adage;
digital virtual asset, at a flat rate of tax without to err is human and to admit the error is divine. It is
allowing any deduction for an expenditure and said that no news is good news and the Finance
allowance and without permitting the set-off of Minister has in COVID - 19 times, suppressed the
losses appears to be a proposal that could have need to raise much needed revenue by not raising
been deferred for deriving a better understanding the rates of taxes.
mom

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