
Union Budget 2022 – Highlights
Union Budget 2022 – Highlights:
The Budget 2022 focused on ‘digital and technology’ and sectors like infrastructure, health, education
and provision of e-services to the masses. This Union Budget laid a foundation and blueprint of the
economy over ‘Amrit Kal’ of the next 25 years – from India at 75 to India at 100.
India posted a 9.2% GDP growth, the highest among all economies. We are amid the Omicron wave, the
speed of our vaccination campaign has helped dramatically. The FM stated that ‘Sabka Prayaas’ will
continue with strong growth. Budget 2022 has provided a sharp increase in public investment and capital
expenditure provision. Strategic transfer of ownership of Air India has been completed.
- Direct Taxes – Income Tax
- 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
- 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
- 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
- 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.)
- Defence R&D to be opened up for industry and startups.
- Startups will be promoted to facilitate ‘drone shakti’ to promote drone usage.
Agriculture
- 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
- 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.