Key Highlights of Budget 2022

Key Highlights of Budget 2022

Finance Minister, N Sitharaman showed gratitude and empathized with those suffering from Covid-19 Pandemic. Thereafter, the Budget started with announcement, which was a push for the infrastructure sector.

Under the Infra-sector, the government extended their priority towards –

• PM Gati Shakti Master Plan, where around 100 Gati Shakti cargo terminals will be placed in the coming 3 years.
• Inclusive Development of Infrastructure wherein the government will undertake procurement of Wheat and Rabbi, during the financial year 2021-22, and the same will cover 1208 lakh metric tonnes of wheat and paddy from around 163 lakh farmers. Apart from this chemical free farming will be promoted all across the country.
• Transition of Energy as well as Climate Changes and actions
• And lastly, the financing of the investment

Some other updates from the Infra-sector were –

• By the Financial Year 2023, the highways will be expanded by 25,000km.
• Then, by the next 3 coming years, around 100 new cargo terminals will be developed by the government.
• Then, over the next 3 years, around 400 new generation Vande Bharat trains would be launched.
• And lastly, the draft Riverlink in respect of 5 projects has been finalized, wherein irrigation benefit would be provided to 9 lakh hectare of farmer land.

After this, some sought of relief was extended to the rural and urban people –

• Benefit of the scheme of ECLGS has been further extended till Mar-2023 and also the coverage of the scheme would be extended from Rs. 50,000 crores to Rs. 5 trillion.
• There would be Rs. 48,000 crores sanctioned for the PMAY for both rural and urban sector.
• Also, under Nal se Jal, Rs. 60,000 crores has been sanctioned, which will cover around 3.8 crores households.
• The SCBs will also set up 75 digital units in 75 districts in India.

Next we come to the most awaited sector that is taxation.

• A provision in respect of filing of the updated Income Tax returns has been provided, wherein the taxpayers can update their Income Tax Returns within a period of 2 years from end of the respective Assessment Year.
• For the Co-operatives, the AMT rates have been reduced from 18.5% to 15%. Along with this, the surcharge on total income has been reduced for income ranging from Rs. 1Cr to 10Cr.
• Now, for the persons with disability, tax relief has been granted, wherein annuity payment will be allowed to differently abled dependents, in case their parents attain age of 60 years.
• Good news came for the start-ups, wherein those established before 31.03.2023 would be provided with the tax holiday, which was earlier extended to Start-ups established before 31.03.2022.
• Also, the last date for commencement of manufacturing, in order to claim lower taxation rates, in accordance with the Section 115BAB, has been further extended to 31.03.2024.
• Another hot topic is taxation of Virtual/Digital assets, which is commonly known as Cryptocurrency. Under this, income by way of transfer of virtual digital assets would be taxed @ 30% and no deduction could be claimed for the expenses and loses.
• No repetitive appeals would be allowed where there is common question of laws.
• Apart from this, the off-shore banking units/IFSC income would be provided with exemptions.
• Good news for AOPs, as the surcharge applicable on them has been capped @ 15%.
• The rate of surcharge on LTCG on any sought of asset has been capped @ 15%.
• Also, it has been clarified that the amount of health and education cess would not be available to corporates as business expenditure u/s 37.

Next comes the deficit/expenditure

• It is proposed that the fiscal deficit by the FY 2025-26 would be 4.5% of GDP.
• However, the fiscal deficit projected in the FY 2022-23 would be 6.4% of GDP.
• Also, the revised fiscal deficit for FY 2021-22 stands @ 6.9% of GDP.
• The total expenditure in the financial year 2022-23 is projected to be around Rs. 39.45 trillion.
• Benefit has been provided to states, as they would be allowed 4% fiscal deficit to GDP during the FY 2023.
• Apart from this, a 50 year interest free loan be provided to the states, and the same would be over and above their respective normal borrowing.
• During the FY 2022-23, scheme for financial assistance to states in respect of capital investment outlay would be Rs. 1 trillion.

Next comes the Customs and Duties

• Government has proposed to reduce import duty on certain chemicals.
• Apart from duty cut, the customs duty exemption on steel scrap has been further extended by another year in respect of small- and medium-sized businesses.
• Another update is that the custom duty on stainless steel, flat products, high steel bars has been revoked.

Next one is the Finance Sector –

• ECLG scheme has been further extended to March 23 in respect of small and medium sized businesses.
• Government has notified that the public issue of Life Insurance Corporation is expected in short period of time.
• Also, the government is proposing to replace the SEZ Act, with a new legislation.
• The government is proposing to amend the Insolvency and Bankruptcy Code 2016, and is hence looking for speeding up the resolution process.
• Also, the time period for winding up of companies be reduce to a period of 6 months from the current period of 2 years.

Another hot and much awaited topic was Digital Currency/Assets

• By 2022-23, government, through Reserve Bank of India, would be launching digital rupee using blockchain technology.
• In this, the income by way of transfer of virtual digital assets would be taxed @ 30% and no deduction could be claimed for the expenses and loses

Next we come to the Infrastructure Sector –

• Under this, the 5G spectrum auctions will be rolled out in the financial year 2022. Under this, the scheme for design-led manufacturing will form the part of production-linked scheme.
• Around Rs. 480 billion would be set aside in the year 2022-23, for providing affordable housing.
• Apart from this, an additional Rs. 195 billion would be apportioned for production-linked incentives for those indulged in solar equipment manufacturing.
• About 5% of the USO Fund would be provided for the upgradation of the R&D and technology.
• Under the BharatNet project (PPP), the contracts for laying optical fibre in villages will be awarded in the year 2022-23.

Then come the Agriculture Sector –

• Certain domestic schemes be introduced in order to reduce the dependency on oilseed imports in India.
• There would be availability of fund with blended capital which would be raised under co-investment model, and the same be utilized for financing of agriculture startups.
• And most importantly, the railways will strive to develop infrastructure for providing ease to small farmers.

Other areas of budget include Transport Sector –

• Around 400 energy efficient trains are expected to be manufactured over coming 3 years.
• Indian National Highways network will be expanded by 25,000km in the year 2022-23.
• Now, for the expansion of highways, the cost for the same would be around Rs. 200 billion.
• Lastly, India is looking to bring battery swapping policy in the coming years.

Next is the scheme for Women & Children –

• Recognisation to the ‘Nari Shakti’, schemes were launched which tends to provide integrated development for women and children.
• Around 2 lakh Anganwadis would be upgraded by the government in order to improve child healthcare.

Next comes the Easement of Business –

• In order to provide ease of doing business, around 75,000 compliances have been sought to be eliminated and around 1,486 union laws have been repealed.
• Now, after ease of doing business, the next step would be ease of living.
• And lastly, the voluntary exit for the companies has been cut down to 6 months from the previous period of 2 years.

Then comes the Defense Sector –

• So, under the Union Budget 2020, the government commits to reduce the import and hence promote self reliance and sufficiency in the defense sector.
• Also, around 68% of capital which is allocated to the defence sector would be embarked for local industry.
• Apart from this, the private industry would be encouraged to take up design and development of military platforms and equipment and the same be done in collaboration with DRDO and other organizations with the help of SPV model.

Coming to Climate & Net Zero –

• Government of India commits to use their funds for projects which will help in reducing carbon intensity of economy.
• Also, sovereign green bonds will be one of the mode of government’s borrowing during the FY 2023.
• The proceeds of these bonds would be utilized and deployed in public sector projects.
• An additional Rs 19,500 crores would be allocated for PLI in respect of manufacturing of high efficiency solar modules.
• And lastly, undertaking low carbon development strategies would also open the scope of employment opportunity.

TAXATION

• Import duty on certain chemicals are being reduced
• Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses
• Unblended fuel to get additional duty of 2 rupees per litre from October 2022
• Customs duty on stainless steel, flat products, high steel bars to be revoked

Direct Tax

• Provision for filing ‘Updated ITR’s’ within 2 years from end of relevant AY

• Reduced AMT rates for Co-operatives from 18.5% to 15%Reduced surcharge for Co-operatives with total income of 1cr to 10Cr
• Tax relief for persons with disability: Allow annuity payment to differently abled dependents when parents attaining age of 60 years
• Deduction for NPS for State Govt employees u.s 80CCC made at par with Central Govt.
• Start-ups established before 31.03.2023 (earlier – 31.03.2022; now extended by one year) will be provided tax breaks
• Last date for commencement of manufacturing for claiming lower tax regime U/s 115BAB to be 31.03.2024 (earlier 31.03.2023; now extended by one year)
  • Virtual digital assets (Cryptocurrency): Income from transfer of virtual digital assets to be taxed at 30%;
  • No deduction for expenses other than cost of acquisition; No set off of losses
  • TDS @ 1% on consideration above specific threshold
  • Gift to be taxed u.s 56(2)(x) Under Income Tax act
  • No repetitive appeals for common question of laws
  • Off-shore banking units/ IFSC income to be provided exemptions
  • Surcharge of certain AOPs to be capped at 15%
  • Health and education cess not allowable as business expenditure u/s 37
  • No set off of losses against undisclosed income detected during search
  • Surcharge on Long Term Capital Gains on any assets to be capped at 15%

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