Budget 2022 | Union Budget 2022 | Alert | Highlights | Budget Analysis | Key Points

Budget 2022

Budget 2022 | Union Budget 2022

Introduction | Budget 2022 | Union Budget 2022

On February 1, Finance Minister Nirmala Sitharaman presented the Union Budget for 2022-23, with a focus on accelerating the economy, expanding business prospects, and perhaps creating 6 million new employment. Agriculture, healthcare, small companies, and infrastructure were all highlighted in the proposals.

Today, Finance Minister Nirmala Sitharaman presented the Modi 2.0 government’s fourth Budget. The Economic Survey, which stated that the government has fiscal space to do more to help the economy, which is expected to grow at a solid 8-8.5 percent in fiscal 2022-23, set the tone for the Budget presentation.

The focus of the Budget 2022 was on ‘digital and technology,’ as well as infrastructure, health, education, and the provision of e-services to the general public. This Union Budget set the groundwork and laid out the economic roadmap for the next 25 years, from India’s 75th to India’s 100th birthday.

India had the greatest GDP growth rate of any country, at 9.2%. We are in the midst of the Omicron wave, and the rapidity of our vaccine effort has made a significant difference. ‘Sabka Prayaas’ will continue to grow, according to the FM. Budget 2022 includes a significant rise in public investment and capital spending. The strategic transfer of Air India’s ownership has been completed.

Major Announcements in Budget 2022 :

  • Fiscal deficit target: The country’s total expenditure is estimated at Rs 39.45 lakh crore in FY23, while receipts other than borrowings are estimated at Rs 22.84 lakh crore. The fiscal deficit for FY23 is projected at 6.4 percent of GDP.
  • Updating returns: Taxpayers now have an opportunity to correct errors and file updated returns within two years of the relevant assessment year.
  • Tax deduction limit: The tax deduction limit for state government employees on the employer’s contribution to the National Pension System will be increased to 14 percent from 10 percent to bring them at par with Central government employees.
  • Digital assets: Any income from the transfer of any virtual digital asset will be taxed at 30 percent. Tax must be deducted at source on the payment made in relation to transfer of a virtual digital asset at 1 percent of such consideration above a monetary threshold.
  • LTCG: The surcharge on long-term capital gains arising from the transfer of any type of asset will be capped at 15 percent.
  • Digital rupee: The Reserve Bank of India will issue a digital currency based on blockchain and other technology starting in FY23. “Introduction of Central Bank Digital Currency will give a big boost to digital economy,” the finance minister said.
  • SEZ Act: The Special Economic Zones Act will be replaced with new legislation that will allow states to become partners in developing enterprise and service hubs. This will cover all large existing and new industrial enclaves to optimally utilise infrastructure and enhance export competitiveness.
  • Financial assistance to states for capital investment: The outlay for the ‘Scheme for Financial Assistance to States for Capital Investment’ is being increased to Rs 1 lakh crore in FY23, up from Rs 15,000 crore in the revised estimate for the current year, to assist the states in catalysing overall investments in the economy. These 50-year interest-free loans are over and above the normal borrowings allowed to states and the allocation will be used for PM Gati Shakti-related and other productive capital investments.
  • Rail network: As part of Atmanirbhar Bharat, 2,000 km of network will be brought under Kavach, the indigenous, world-class technology for safety and capacity augmentation, in FY23.
  • Vande Bharat trains: 400 new-generation Vande Bharat trains are to be built over the next three years.
  • Gati Shakti Master Plan: The PM Gati Shakti National Master Plan is driven by seven engines: roads, railways, airports, ports, mass transport, waterways and logistics infrastructure, which will pull forward the economy in unison. The Gati Shakti Master Plan for expressways is to be drawn up in FY23 and 100 new cargo terminals will be built over the next three years. The national highway network will be expanded by 25,000 km in FY23.
  • EV battery-swapping policy: Acknowledging the constraint of space in urban areas for setting up charging stations for electric vehicles, the finance minister proposed to introduce a battery-swapping policy and frame inter-operability standards. The private sector would be encouraged to develop sustainable and innovative business models for battery- or energy-as-a-service.
  • 5G rollout: Spectrum auctions will be conducted in 2022 to facilitate the rollout of 5G mobile services by private telecom companies.
  • Natural farming, kisan drones: Chemical-free natural farming will be promoted across the country, with the focus on agricultural land along the River Ganga in the first stage.
  • The procurement of wheat in Rabi 2021-22 and the estimated procurement of paddy in Kharif 2021-22 will add Rs 2.37 lakh crore in direct payment of minimum support prices to farmers’ accounts. Use of kisan drones will be promoted for crop assessment, digitisation of land records and spraying of insecticides and nutrients.
  • Mental health programme: With the pandemic accentuating mental health problems in people of all ages, a National Tele Mental Health programme will be started to improve access to quality mental health counselling and care services.
  • Digital education: With children having lost almost two years of formal education due to the pandemic, the ‘One Class-One TV Channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels. This will enable all states to provide supplementary education in regional languages for classes 1 to 12. A Digital University will be set up to provide world-class quality universal education with personalised learning experience. This will be available in different Indian languages and ICT formats.
  • Paperless e-bill system: A completely paperless, end-to-end online e-bill system will be started for use by all central ministries for their procurements as a further step to enhance transparency and to reduce delays in payments.
  • E-passports: E-passports using embedded chips and futuristic technology will start rolling out in FY23 to make overseas travel more convenient.
  • Housing: The government will allocate Rs 48,000 crore for PM Awas Yojana and complete 8 million houses for the scheme’s identified and eligible beneficiaries in rural and urban areas in FY23.
  • Defence: To reduce imports and promote AtmaNirbharta in equipment for the armed forces, 68 percent of the capital procurement budget will be earmarked for the domestic defence industry. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with the Defence Research and Development Organisation and other entities.
  • Animation and gaming:  Animation, visual effects, gaming and comics (AVGC) offer immense potential to employ youth. An AVGC promotion taskforce will be set up to recommend ways to realise this and build domestic capacity to serve the domestic markets and global demand.
  • Post office banking: All 150,000 post offices in the country will become part of the core banking system, enabling access to accounts through internet banking, mobile banking and ATMs and also allowing online transfers between post offices and bank accounts. This will help farmers and senior citizens in rural areas, enabling interoperability and financial inclusion.
  • Hospitality: Hospitality and related services offered by small and medium enterprises are yet to bounce back to pre-pandemic levels. The government has decided to increase the guarantee cover for them by Rs 50,000 crore under a scheme that will be extended to March 2023.
  • Solar modules: To facilitate the domestic manufacturing of 280 gigawatts of installed solar energy capacity by 2030, the government will make an additional allocation of Rs 19,500 crore under the production-linked incentive scheme for the production of high-efficiency modules.

Highlights of Budget 2022 :

Direct Taxes – Income Tax | Budget 2022 | Union Budget 2022

  • A new provision is introduced to allow taxpayers to update the past return and include omitted income by additional tax payment. The updated return can be filed within two years from the end of the relevant assessment year.
  • The tax incentive period is extended by one year for startups. Eligible startups incorporated under Section 80-IAC will now get tax benefits until March 31, 2023. 
  • Corporate surcharge to be reduced from 12% to 7%.
  • Alternate Minimum Tax (AMT) to be reduced to 15% for co-operative societies.
  • Income from transfer of digital assets such as crypto to be taxed at 30%. No deductions will be allowed except the cost of acquisition of digital assets. Loss on sale of digital assets cannot be set off against any other income. TDS at 1% will be levied above the threshold. Gifting of digital assets will also be taxable in the hands of the receiver.  
  • To bring parity between Central and state government employees, the Finance Ministry proposed to increase the threshold of employers contribution to the National Pension Scheme (NPS) Tier-I account from 10% to 14%.
  • The parent/guardian of the differently-abled can get a tax deduction on payment of the annuity or lump sum during the lifetime of parent or guardian, once the parent or guardian has attained 60 years.
  • Any surcharge and cess levied on income are not allowed as business expenditure.
  • Brought forward loss cannot be set off against undisclosed income detected during any survey or search. 

Indirect Taxes – GST & Customs | Budget 2022 | Union Budget 2022

  • An important amendment to the Central Goods and Services Tax Act is in Section 16, 34, 37, 39 and 52. The last date to make amendments, corrections, upload missed sales invoices or notes or to claim any missed Input Tax Credit or ITC of one financial year is no longer due date to file September return of the following year, but it is 30th November of the following year.
  • Section 29 of the CGST Act is amended for Cancellation of GSTIN by officer. If a composition taxable person fails to file an annual return for three months beyond the due date of 30th April of the following year, his registration can get cancelled. Likewise, for any other taxpayer, the six months consecutive default in return filing is replaced with consecutive tax period default as may be prescribed.
  • Section 38, earlier called furnishing of inward supplies, is amended completely to remove reference of earlier GSTR-2 and replace it with GSTR-2A and GSTR-2B with new heading as ‘Communication of details of inward supplies and input tax credit’.
  • The due date to file GSTR-5 by Non-resident taxable persons is revised from 20th of next month to 13th of next month.
  • Sections 42, 43, and 43A pertaining to matching, reversal of tax credits have been removed.
  • The record collection of Rs.1,40,986 crore gross GST revenues in January 2022 was the highest since GST inception.
  • Concessional customs duty on import of capital goods to be phased out, the initial rate of 7.5% to be imposed.
  • More than 350 exemptions on importing some agri products, chemicals, drugs, etc., will be phased out.
  • Duty concession on import of phone chargers, transformers, etc., enable domestic manufacturing.
  • Customs duty on imitation jewellery was raised to discourage their imports.
  • Duty on specified leather, packaging boxes reduced to incentivise exports.
  • Customs duty on cut and polished diamonds, gems to be reduced to 5%.
  • Customs duty exemption on steel scrap is being extended by a year to help MSMEs.
  • Customs duty on methanol to be reduced.
  • Levying additional excise duty at Rs.2 per litre on unblended fuel to encourage fuel blending.

Budget Allocation | Budget 2022 | Union Budget 2022

  • A 6.4% fiscal deficit has been projected for India in FY23.
  • Revised fiscal deficit estimated at 6.9% of GDP.
  • States to get Rs 1 lakh crore as 50-year interest-free loans to help fund PM Gati Shakti-related investments.
  • The government’s effective capital expenditure is estimated at Rs 10.68 lakh crore in 2022-23, about 4.1% of GDP.
  • The outlay for capital expenditure to be stepped up sharply by 35.4% from Rs 4.54 lakh crore to Rs 7.50 lakh crore in 2022-23.

Education | Budget 2022 | Union Budget 2022

  • 2 lakh Anganwadis to be upgraded for improving child health.
  • Two years of education regression for school going children means we need to double-up efforts and spending to bridge education gaps. NEP had advocated a 6% of GDP to be directed towards education. While we remain far short, the announcement of tech-based platforms ‘One class, one TV channel’ program of PM eVIDYA for school children and the establishment of a digital university were the need of the hour.
  • Digital university to set up for online education focusing on ICT using a hub and spoke model.
  • Select ITIs in all states that will offer skilling courses.
  • One class, one TV channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels. This will enable all states to provide supplementary education in regional languages for classes 1 to 12.

Startups (Drone, etc) | Budget 2022 | Union Budget 2022

  • Defence R&D to be opened up for industry and startups.
  • Startups will be promoted to facilitate ‘drone shakti’ to promote drone usage.

Agriculture | Budget 2022 | Union Budget 2022

  • Government to promote funds for blended finance (government share limited to 20%) for sunrise opportunities such as climate action, agri-tech, etc.
  • Fund to be facilitated through NABARD to finance startups for agriculture and rural enterprise, relevant for farm produce value chain. Startups will support FPOs and provide tech to farmers.
  • Use of Kisan Drones to be promoted for crop assessment, digitisation of land records, spraying of insecticides and nutrients.
  • Procurement of wheat in Rabi season 2021-22 and the estimated procurement of paddy in Kharif season 2021-22 will give cover 1208 lakh metric tonnes of wheat & paddy from 163 lakh farmers with Rs 2.37 lakh crore will be the direct payment of MSP value to their accounts.
  • Delivery of hi-tech services for farmers to be launched.
  • MSP for farmers to be transferred directly into bank accounts.
  • Chemical-free natural farming to be promoted in India.

Investment, Sectoral allocation | Budget 2022 | Union Budget 2022

  • Regulatory framework for venture capital to be reviewed; an expert committee to be set up.
  • PM development initiatives for the northeast will be implemented for the North Eastern Council. This will enable livelihood activities for youth and women. This scheme is not a substitute for the existing Centre or State schemes.

Virtual currency | Budget 2022 | Union Budget 2022

  • RBI to introduce the digital rupee using blockchain technology starting 2022-23.

MSME | Budget 2022 | Union Budget 2022

  • The next phase of ease of doing business and living will be launched.
  • To support sectors disproportionately affected by the pandemic, FM announces extension of ECLGS till Mar-23. Given that nearly 95% of ECLGS borrowers are MSMEs, this measure will ensure the continued handholding of MSMEs and the services sector. The services sector, which accounts for more than 60% of India’s GDP, remains an important engine of economic growth, job creation, income generation and livelihood support.
  • The extension of ECLG will provide a boon to lending to the MSME sector. Simultaneously, the revamp of CGTSME will be an added incentive for banks to extend lending: SBI’s Soumya Kanti Ghosh.
  • Experts say ECLGS (emergency credit line) extension till March 2023 is a critical step.
  • The govt took measures to make MSMEs more resilient and competitive.
  • Emergency Credit Line Guarantee Scheme has helped 130 lakh MSMEs mitigate the worst impact of the pandemic.

e-Vehicles and energy | Budget 2022 | Union Budget 2022

  • Energy efficiency and saving measures will be promoted.
  • A battery-swapping policy to be brought out with interoperability standards to boost the EV ecosystem.
  • FM announces Rs 19,500 crore allocation in PLI for solar modules.

Digital banking | Budget 2022 | Union Budget 2022

  • An online bill system will be launched to reduce the delay in payment. All central ministries will use it.
  • Credit growth increased by Rs 5.4 lakh crore this year, the highest in many years.

Internet connectivity | Budget 2022 | Union Budget 2022

  • 5G spectrum auction in 2022-23.
  • Bharatnet project contracts for optical fibre networks will be handed out under the PPP model.
  • All villages should have the same access to digital resources as urban areas.

Defence | Budget 2022 | Union Budget 2022

68% of the capital procurement budget in defence will be earmarked for the domestic industry in 2022-23.

e-Passport | Budget 2022 | Union Budget 2022

  • Issuance of e-passports with futuristic tech to be introduced in 2022-23.
  • The finance minister has said India would start issuing e-passports in 2022-23. When first announced in 2019, these were some of the features proposed:
    • These e-passports will take a few seconds to read.
    • The prototype was tested in a US government identified laboratory.
    • They are expected to have thicker front and back covers.
    • The back cover is expected to have a small silicon chip.
    • The chip will have 64 kilobytes of memory space.
    • Holder’s photograph and fingerprints will be stored in the chip.
    • Will have the capacity to store 30 visits.
  • States to be supported for urban capacity building.

Healthcare | Budget 2022 | Union Budget 2022

  • An open platform for the National Digital Health Ecosystem will be rolled out. It will consist of digital registries of health providers and facilities, unique health identity and universal access to health facilities.
  • Pandemic has brought to the fore the issue of mental health. A national tele mental health programme will be launched.

Infra, Roadways, Railways, Waterways and Logistics | Budget 2022 | Union Budget 2022

  • New rail products in the form of ‘One Station – One Product’, 400 next-gen Vande Bharat trains, and 100 PM Gati Shakti cargo terminals over the next three years provides integration of NIP with Gati Shakti and is likely to prove crucial in employment generation as the transport network is rich in terms of backward and forward linkages with the rest of the economy.
  • Draft DPRs for five river links have been finalised.
  • 400 Vande Bharat trains with higher efficiency for passengers will be developed in the next three years.
  • The Budget focuses on public investment to modernise infrastructure over the medium term, leveraging the tech platform of Gati Shakti via a multi-modal approach.
  • Four multi-modal national parks contracts will be awarded in FY23.
  • PM Gatishakti master plan for expressways will be formulated in the next financial year.
  • The scope of PM Gatishakti master plan will encompass the seven engines of economic transformation.

Housing and basic amenities | Budget 2022 | Union Budget 2022

  • In 2022-23, 80 lakh households will be identified for the affordable household scheme.
  • 60,000 crore allocated for providing access to tap water to 3.8 crore households.
  • The value of the increase in infra spend is unclear through PM Gati Shakti plan, unlike the clear 34.5% increase last year to Rs 5.5 lakh crore.
  • Ken-Betwa link at Rs 44,605 crore to be taken up to provide irrigation to 9.05 lakh hectares, 65 lakh people drinking water, hydro and solar power.

Employment | Budget 2022 | Union Budget 2022

  • Production Linked Incentive (PLI) Scheme for achieving Aatmanirbhar Bharat has received an excellent response, potentially creating 60 lakh new jobs and additional production of 30 lakh crore during the next Keycap digit five years.
  • PLI schemes across 14 sectors have achieved a tremendous response and created 60 lakh job opportunities.

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