On 30 March 2022, the government published the Finance Act 2022 in the Official Gazette. The law implements the measures of the Union budget 2022-2023 presented in February 2022. The law includes the following corporate tax measures:
- A new scheme is introduced for the taxation of virtual digital assets (VDAs), including income from the transfer of VDAs is separately taxed at the rate of 30% with certain conditions;
- The due date for completing the assessment of AY 2020-21 has been extended from 31 March 2022 to 30 September 2022;
- The alternate minimum tax rate is reduced to 15% from 18.5% for cooperative societies, along with a reduction in the surcharge for cooperatives from 12% to 7% for those with total income between INR 10 million (1 crore) and INR 100 million (10 crores);
- The optional 15% corporate tax rate for qualifying domestic manufacturing companies is extended, with the optional rate made available for companies that commence manufacturing or production on or before 31 March 2024;
- The eligibility period for claiming the tax holiday incentive for start-ups (exemption for 3 consecutive years out 10 years from the date of establishment) is extended, with the incentive made available for start-ups established up to 31 March 2023;
- The preferential income tax rate of 15% on dividend income received by an Indian company from a specified foreign company will be abolished for any tax year beginning on or after April 1, 2023;
- The surcharge on long-term capital gains is rationalized so that the surcharge is capped at 15% for long-term gains arising on the transfer of any type of assets;
- The definition of “books of accounts” will include accounts in a written form or in electronic or digital form, or as printouts of data stored in such electronic or digital form; and
- Interest payable to certain financial institutions shall be allowed only on an actual payment basis. Further, where such interest payable is converted into debt or any other instrument by which the liability to pay is deferred to a future date, the same shall not be considered as interest actually paid.
