Here is snapshot of union budget 2022

Budget 2022

Tax and Finance:

A new provision was added to allow taxpayers to file an updated return. Updated return can be filed within 2 years from the end of the relevant assessment year.

Significance of this : (The new provision will ensure voluntary tax filing and reduce litigation, says FM)

Tax breather for co-operatives

  • Alternate Minimum Tax for cooperative societies to be cut to 15%.
  • Proposal will reduce surcharge on cooperative societies to 7%, for those whose income is between Rs 1 crore and Rs 10 crore.

Tax deduction limit increased to 14% from 10% on employers contribution to NPS account of state govt employees

The government will tax income from digital asset/cryptocurrency transfers at 30%. Crypto transfer shall not be treated as capital gain, it will rather be treated as business income or loss hence.

  • No deduction allowed while computing income except cost of acquisition.
  • Loss cannot be set off from any other income.
  • TDS of 1% on payment made for transfer, above a monetary threshold
  • surcharge reduction to 15% would not apply.

Significance of this : (Though, FM has announced the much-needed clarity on crypto transactions. However, tracking such transactions in the absence of a central regulator may be challenging.)

Phasing out duty exemptions

  • More than 350 import duty exemptions on some agri products, chemicals, drugs, etc to be phased out

Significance of this : (The promotion of chemical-free natural farming in India will likely help exports in the coming time, said experts)

  • Concessional customs duty on capital goods to be phased out, initial rate of 7.5% to be imposed
  • Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses
  • Customs duty on stainless steel, flat products, high steel bars to be revoked
  • Unblended fuel to get additional duty of 2 rupees per litre from October 2022

Import duty on cut & polished diamonds & gemstones reduced from current 7.5% to 5%

Budget 2022 has made no change in the standard deduction amount available to salaried individuals and pensioners.

  • This would effectively mean that salaried individuals and pensioners (whose pension is taxed under the head salary) will continue to claim the same amount of standard deduction in the financial year 2022-23 as they did in financial year 2021-22.
  • They can claim Rs 50,000 as standard deduction provided, they opt for the old tax regime in the financial year 2022-23.

section 80C limit was not increased in Union Budget 2022

  • The finance minister did not make any announcement regarding the 80C limit in her Budget 2022 speech.
  • Individual salaried taxpayers looking for an increase in tax relief under section 80C of the Income-tax Act, 1961 were left disappointed.
  • This would effectively mean that individuals opting for the old tax regime for financial year 2022-23 will continue to claim maximum deduction of Rs 1.5 lakh in a financial year.

Startup founders, investors to benefit from 15% cap on tax surcharge

  • This addresses a long-standing demand of new-age companies, which wanted share sales of unlisted firms to be taxed at par with those of listed ones.
  • To be sure, only the surcharge levied on unlisted share sales has been reduced – from 37.5% to 15%.
  • The tax rate remains unchanged at 20%.
  • This would not only cover employee stock option sales but all transactions by privately funded startups, reducing their tax burden by around 16%.
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Special Economic Zones Act to be replaced with new legislation

To amend bankruptcy code to speed up resolution process

Aims to lower winding up of companies to 6 months from 2 years currently

Long term capital gain surcharge to be capped at 15%

Public issue of Life Insurance Corporation expected shortly

Digital rupee, using blockchain, to be launched by RBI in 2023

  • Digital currency will also lead to a more efficient and cheaper currency management system in india.
  • A scheme for taxation of virtual digital assets will be launched.

significance of this : (This step is monumental. For an economy of India’s size and global influence to make a formal push into a digital currency is going to be truly transformational. Govt is formally acknowledging crypto’s legality in India.) 

Sector wise Snapshot:

DEFENCE

  • Govt committed to reducing defence imports

INFRASTRUCTURE AND URBAN PLANNING

  • 5G spectrum auctions to be conducted in 2022
  • Scheme for design-led manufacturing for 5G will be part of production-linked scheme
  • Contracts for laying optical fibre in villages to be awarded under BharatNet project under PPP in 2022-23. 5G spectrum auctions to be conducted this year.
  • 480 billion rupees set aside for affordable housing in 2022/23
  • To allocate additional 195 billion rupees for production-linked incentives towards solar equipment manufacturing.
  • National Ropeways Development Programme to be taken up in PPP mode with the aim to improve connectivity, besides promoting Tourism.
  • For urban capacity building, modernization of building by laws, town planning schemes and transit oriented development will be implemented.
  • Centres of Excellence will be established with an outlay of 250 crore for urban sector development.
  • In addition, a world-class university to be allowed in GIFT IFSC (International Financial Services Centre) free from domestic regulation. Currently, GIFT-IFSC is the maiden international financial services Centre in India.

AGRICULTURE

  • Domestic scheme introduced to reduce dependence on oilseed imports
  • Fund with blended capital raised under co-investment model to finance agriculture startups
  • Railways to develop infrastructure for small farmers in 2022/23


TRANSPORT

  • 400 energy efficient trains to be manufactured over next three years
  • National highways network to be expanded by 25,000km in 2022/23
  • Highways expansion to cost 200 billion rupees in 2022/23
  • India to bring out battery swapping policy.

HEALTH AND WELLNESS:

The Government guarantee cover under ECLGS enhancement to Rs 5 lakh crores with focus on the hospitality sector is a repeated need that was expressed by the sector and responded positively to by the government. ECLGS scheme extended till March 2023

E-VEHICLES:

Private sector will be encouraged to create sustainable and innovative business models for battery and energy as a service, improving the efficiency in the EV ecosystem.

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To further promote electrification, government to come out with Battery Swapping Policy which also includes the concept of energy/battery as a service.

Significance of this step:

  • (The policy will facilitate faster rollout of battery swapping centres where EV owners would be able to refuel their EV by replacing exhausted batteries with charged ones.
  • This will also save time taken in charging the embedded batteries in EVs.
  • At present, a few such options are available in the country and EV owners have to spend hours for charging their vehicles at charging stations especially in cities.)

BUSINESS AND START-UPS

Minimum government and maximum governance, reduction of overlapping compliances will increase compliance which is critical for ease of doing business in India.

Trust-based governance is the planned theme during Amrit Kal of next 25 years – from India at 75 to India at 100

One Nation, One Registration’ will be established for anywhere registration to facilitate ease of living & doing business.

Existing tax benefits for startups, which were offered redemption of taxes for 3 consecutive years, to be extended by 1 more year.

Emergency credit line guarantee scheme for small and medium sized businesses to be extended to March 2023

A task force on animation visual effects, gaming and comic promotion will be set up to recommend ways to serve markets and global demand.

TREVAL AND HOSPITALITY:

ePassports will be rolled out in 2022-23 for convenience in overseas travel

Bottom Line: What gets cheaper, and what will cost you more after this Budget 2022

Fiscals of Budget 2022: 

Deficit Targets

  • Proposes fiscal deficit of 4.5% of GDP by 2025/26
  • Projects fiscal deficit of 6.4% of GDP in 2022/23
  • Revised fiscal deficit for 2021/22 at 6.9% of GDP
  • Total expenditure in 2022/23 seen at 39.45 trillion rupees
  • States will be allowed 4% fiscal deficit to GDP in FY23
  • 50 year interest free loans over and above normal borrowing allocated to states
  • Scheme for financial assistance to states for capital investment outlay to be 1 trillion rupees in 2022/23


India to launch sovereign green bonds

  • Funds will be used for projects that will help reduce carbon intensity of the economy.
  • Sovereign green bonds will be part of government’s borrowing programme in FY23.
  • Proceeds to be deployed in public sector projects.

Significance of this:  (Issue of Green Bonds will enable the viability gap funding needed for achieving the 500 GW RE energy target by 2030.)

Capital expenditure is being stepped up to Rs 7.5 lakh crore.

  • FY23 capex seen at 2.9% of GDP
  • FY23 effective capex seen at Rs 10.7 lakh crore

Fiscal Deficit target set at 6.4% for FY23

  • FY23 total expenditure seen at Rs 39.45 lakh crore.
  • Total Receipts other than borrowing seen at Rs 22.84 lakh crore.

The gross GST collections for the month of January 2022 are Rs 1,40,986 crores which is the highest since the inception of GST.

The Budget math:

Government will cover the expenditure as follows:

From taxes :  
       From GST 16% 
    Corporation tax15% 
    Union Excise duty  7% 
    Custom duty  5% 
    Income tax15% 58%
From Non tax revenue:  
Borrowing and   other liabilities35% 
Divestment  5% 
Non debt capital Receipts  2% 42%
Total  100%

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