Finance Minister Nirmala Sitharaman takes giant stride in pushing ‘Trust-based’ governance in tax laws

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Working meticulously away from media glare has been the most striking feature of Nirmala Sitharaman’s stint as the Finance Minister.

Now, in Budget 2022-23, she has given a major push to trust-based governance as a concept in the income-tax law. In yet another important role, the tax deduction limit for state government employees’ contribution to NPS has been raised to 14 per cent from 10.

Ms Sitharaman announced a plan to shift to ‘trust-based governance’, which is set to change the culture of regulatory oversight in the country. This truly reflects a systematic approach of inviting the new investments to push needed economic growth, especially in the post-Covid era.

The taxpayer community would welcome the move. The tax benefits offered to the startups have also gone down well. It will ensure that the redemption of taxes to the three consecutive years is now extended to one more year.

Experts also say that the 30 per cent rate of tax and restriction to set-off losses is a very bold move in discouraging transactions in crypto.

The Finance Minister announced a 30 per cent tax on the proceeds of virtual and digital assets. Taxpayers can now file updated Income Tax Return within two years of the relevant assessment year. This provision will ensure voluntary tax filing and reduce litigation, the FM said.

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