Union Budget 2022 Highlights: Key Points from the Budget Speech

 

While presenting the Union Budget 2022, Finance Minister Nirmala Sitharaman stated India’s goals and plan of action for sustainable development. The year 2022 marks ‘Azadi ka Amrit Mahotsav’ (75 years of independent India). Hence, this year’s budget also serves as a blueprint outlining the goals to be accomplished during the ‘Amrit Kaal’ (the upcoming 25-years period), i.e. India from 75 years of Independence to its century.

 

The Union Budget 2022 took off with Nirmala Sitharaman commending the remarkable ability of the Indian economy to withstand, rebound, and recover from the pandemic. Thanks to the growth in the Indian health infrastructure, she also expressed confidence in our nation’s power to overcome further challenges. The Union Budget 2022 rests on four pillars–inclusive development, productivity enhancement, energy transition, and climate action. Let’s explore the highlights from the budget speech!

 

Budget 2022 Highlights

Income Tax

  • The new provision allows taxpayers to file revised ITR within 2 years from the end of the relevant AY (Assessment Year).

  • The corporate surcharge shall be reduced to 7% (it has been 12% until now).

  • Alternate Minimum Tax (AMT) shall be brought down to 15% for co-operative societies.

  • The tax incentives period has been extended by a year for startups. Startups mentioned under Section 80-IAC can avail tax benefits until March 31, 2023.

  • Income earned on digital assets such as crypto shall be taxed at 30%. Other than the cost of acquisition of digital assets, no deductions are allowed for profits earned from digital assets. Additionally, loss on these assets cannot be set off against any other income. TDS shall be levied above the threshold at 1%. Gifting a digital asset shall also be taxed in the hands of the receiver.

  • With an aim to bring parity between Central and State Government employees, the Finance Ministry has proposed an increase in the threshold of employers contribution to the National Pension Scheme (NPS) Tier-I account to 14% (currently, it is 10%).

  • The parent or guardian of the specially-abled can avail a tax deduction on the payment of the annuity or lump sum during their lifetime once the parent/guardian has attained 60 years of age.

  • One cannot set brought forward losses off against undisclosed income identified during a survey/search.

  • Any surcharge and cess charged on income shall not be accounted for as business expenditure.

     

Indirect Taxes: GST and Customs

  • An amendment to the CGST (Central Goods and Services Tax Act) has been made in Sections 16, 34, 37, 39, and 52. The due date to make amendments, corrections, upload missed sales invoices/notes, or claim any missed Input Tax Credit of the financial year is no longer due on the September of the following year. The new due date is November 30 of the following year.

  • Section 38 is amended completely to replace the reference of GSTR-2 with GSTR-2A and GSTR-2B under the new heading ‘Communication of details of inward supplies and input tax credit’.

  • The new due date to file GSTR-5 by a non-resident individual is the 13th of the next month (earlier, it was the 20th of the next month).

  • Sections 42, 43, and 43A have been removed.

  • Section 29 of the Central Goods and Services Tax Act is amended for the Cancellation of GSTIN by an officer. If a Composition Taxable Person fails to file an annual return for 3 months beyond the due date of April 30 of the following year, his/her registration could be cancelled. Similarly, the 6-months consecutive default in filing returns is replaced with consecutive tax period default for any other taxpayer.

  • The collection record of ₹1,40,986 crore gross GST revenues in January 2022 is the highest since the inception of GST.

  • The concessional customs duty on the import of capital goods is to be discontinued; the initial rate of 7.5% shall be imposed.

  • Over 350 exemptions on importing some agri products, chemicals, drugs, etc., shall be discontinued.

  • Customs duty on imitation jewellery to be raised to discourage imports.

  • Customs duty charged on cut and polished diamonds and other gems to be reduced to 5%.

  • Customs duty exemption on steel scrap to be extended by a year to support MSMEs.

  • Duty on specified leather, packaging boxes brought down to promote exports.

  • Customs duty on methanol shall be reduced.

  • Additional excise duty at ₹2 per litre shall be levied on unblended fuel to encourage fuel blending.

     

Budget Allocation

  • A fiscal deficit of 6.4% has been projected for India in FY23.

  • A revised fiscal deficit is estimated at 6.9% of GDP.

  • States shall receive ₹1 lakh crore as 50-year interest-free loans to help fund investments related to PM Gati Shakti.

  • The effective capital expenditure is estimated at ₹10.68 lakh crore (around 4.1% of GDP) in FY 2022-2023.

  • The spending for capital expenditure is to be raised by 35.4% in FY 2022-2023.

     

Agriculture

  • The government is all set to promote funds for blended finance (government share capped at 20%) for sunrise opportunities such as agri-tech, climate action, and more.

  • Funds shall be enabled through NABARD to finance startups for agriculture and rural enterprise needed for the farm produce value chain.

  • Use of Kisan Drones shall be promoted for improved crop assessment, digitisation of land records, spraying of insecticides and nutrients.

  • Procurement of wheat during the Rabi season 2021-22 and the estimated procurement of paddy in the Kharif season 2021-22 shall cover 1208 lakh metric tonnes of wheat and paddy from 163 lakh farmers, with ₹2.37 lakh crore being the direct payment of MSP value.

  • Implementation of hi-tech services for farmers to be launched.

  • MSP to be transferred directly into the farmers’ bank accounts.

  • Chemical-free farming is to be encouraged in India.

     

Education

  • 2 lakh Anganwadis shall be upgraded to improve child health.

  • A digital university shall be set up for online education using the hub and spoke model.

  • ITIs in all states shall offer skilling courses.

  • The ‘One Class, One TV Channel’ programme of PM eVIDYA shall be expanded from 12 to 200 TV channels.

     

Startups (Drone, etc.)

  • Defence R&D to be set up for industry and startups.

  • Startups shall be promoted to facilitate ‘drone shakti’ and promote drone usage.

     

Investment, Sectoral Allocation

  • An expert committee shall be set up to review the regulatory framework for venture capital.

  • PM development initiatives for the northeast shall be commenced for the North Eastern Council.

     

Virtual Currency

  • RBI to introduce the digital rupee with the help of blockchain technology from 2022-23.

     

MSMEs (Micro, Small, and Medium Enterprises)

  • Ease of doing business and living shall be launched.

  • The FM announced an extension of ECLGS till March 2023 to support sectors affected by the pandemic. Around 95% of ECLGS borrowers are MSMEs, so this measure ensures continued handholding of the services sector and MSMEs. The services sector has accounted for more than 60% of the nation’s GDP. Hence, it is one of the major drivers of our economic growth and job creation.

  • The government is taking measures to ensure MSMEs are more resilient and competitive.

  • ECLGS has helped 130 lakh MSMEs to tackle the adverse effects of COVID-19.

     

e-Vehicles and Energy

  • Energy efficiency and saving measures shall be encouraged and promoted.

  • A battery-swapping policy shall be introduced with interoperability standards to improve the Electric Vehicle ecosystem.

  • The Finance Minister allocates ₹19,500 crore for solar modules in PLI.

     

Banking

  • An online billing system shall be launched for all central ministries to ensure timely payments. 

  • India experienced the highest credit growth in many years at a ₹5.4 lakh crore increase.

  • Scheduled Commercial Banks to install 75 Digital Banking Units in 75 districts.

     

Healthcare

  • An open platform with digital registries of health providers and facilities, unique health identity, and universal access to health facilities shall be introduced for the National Digital Health Ecosystem.

  • A network of 23 tele-mental health centres is to be established.

     

Internet Connectivity

  • 5G spectrum auction to be conducted in 2022-23.

  • BharatNet project contracts for optical fibre networks to be given out under the PPP model.

  • All rural areas must have the same access to the internet and digital resources as urban areas.

     

Defence

  • 68% of the capital procurement budget shall be set aside for the domestic industry.

     

e-Passport

  • The issuance of e-passports with future-proof tech shall be introduced.

  • The FM announced that India would start issuing e-passports in 2022-23.

  • States shall be supported for urban capacity building.

     

Roadways, Waterways, Infra, Logistics, and Railways

  • Draft DPRs for 5 river links have been confirmed and finalised.

  • 400 Vande Bharat trains shall be built in the next 3 years.

  • The Budget 2022 focuses on public investment to enhance and modernise infrastructure over the medium term with the help of the tech platform of Gati Shakti.

  • 4 contracts for multi-modal national parks shall be awarded in FY23.

  • The purview of PM Gati Shakti plan will include the 7 engines of economic transformation.

  • ‘One Station One Product’ concept shall be introduced to help local businesses and supply chains.

     

Housing and Basic Amenities

  • 80 lakh households shall be allotted for the affordable household scheme.

  • ₹60,000 crore allocated to provide access to tap water to around 3.8 crore households.

  • Ken-Betwa link at ₹44,605 crore shall be taken up to provide irrigation benefits to 9.05 lakh hectares, drinking water for 62 lakh people, hydropower, and solar power.

     

Employment

  • For achieving Atmanirbhar Bharat, the Production-Linked Incentive (PLI) scheme has received an excellent response with the ability to create new 60 lakh jobs and additional production of 30 lakh crore during the next Keycap digit five years.

     

The Union Budget outlines the government’s plan of action to control economic fluctuations, improve infrastructure, promote education, support agriculture, etc. It can have substantial effects on your income; hence every citizen must stay abreast with it.

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