Budget 2022-23 has finally come to effect after being introduced by Finance Minister today. The said budget comes up with major announcements, including PLI extension for major sectors, tax relaxations for startups, state funding, etc. The union budget 2022 underlined the nation’s focus on long-term growth support. Focus on raising capital expenditure and the future growth drivers, like clean energy, are the key highlight of the budget. According to the Finance Minister the fiscal deficit and the budgeted expenses & receipts are under control as projected. While presenting the Union Budget in Lok Shabha, the FM said that the nation is projected to thrive @ 9.27 % in the coming year.
Key highlights of the Budget 2022-23
While presenting Union Budget 2020-23, the Honorable Finance Minister came up with the following announcements:
Necessary amendments to IBC to advocate cross border insolvency resolutions
Budget 2022-23 proposes necessary amendments to IBC to advocate cross-border insolvency resolutions. This will be likely to reduce the burden on lenders who struggle to recover their loans.
Introduction of digital rupee
The union budget 2022-23 ensures the release of blockchain-powered digital rupee in the current FY. Blockchain technology[1] also powers digital currency, NFTs (non-fungible tokens), and it is a distributed ledger that is updated in real-time.
Levy of 30% tax on digital assets
The levy of tax @ 30% on the digital asset, paired with the government releasing its own digital currency, implies that the GOI aims to discourage the same and would seek that only the HNIs make such investments and that the GOI shall not allow crypto as currency. The capping of surcharge @ 15% seems fair, and though no individual relaxation was accessible to HNIs, this would also be beneficial to such HNIs with high capital gains income.
Enhanced Capex allocation
The GOI has announced a considerable jump of 35.4 % in capital expenditure for funding various infra-related projects in 2022-23. According to the FM, the GOI shall invest Rs 7.50 lakh crore as capital expenditure in the subsequent year, a significant spike from Rs 5.5 lakh crore in the prevailing year. Depending upon its deployment, Capex spending will facilitate a massive thrust to investment undertaking and bolster economic growth in the subsequent year.
Increased Relaxation to Starts-up from Taxation viewpoint
To promote startups in India, Finance Minister proposes to extend the eligibility for claiming tax holiday for eligible startups by one more year until March 31, 2023.
Atmanirbhar Defence
Finance Ministry has earmarked 68% of the capital procurement budget for domestic industry to reduce the dependency on imports and strengthen Aatmanirbharta.
New legislation for Special Economic Zones
The new legislation will soon replace the Special Economic Zones Act to develop entities and hubs. It will encompass the prevailing industrial enclaves & improve the competitiveness of exports.
Introduction of DESH e-portal
Reorientation of the Skilling programs shall take place in the current year. According to the FM, the government is all set to release the new web portal called Digital DESH e-portal for skilling, upskilling & reskilling of the nation’s youth.
Introduction of Battery swapping policy
The FM has confirmed releasing a battery swapping policy for boosting the EV ecosystem in India. The EV sector has witnessed massive growth in the past five years. Battery swapping policy will likely resolve the issues concerning space constraints in urban areas for establishing a charging station at scale. Besides, said policy is most likely to entail interoperability standards that compel EV manufacturers to produce EVs with standardized, removable/disposable batteries.
5G Spectrum auctions
Required spectrum auctions shall be conducted in the current year to ensure the 5G mobile services roll out by prominent telecom organizations.
Ken Betwa linking project to worth around Rs 44,605 crore
FM announced that the implementation of the Ken-Betwa river linking project worth Rs 44 605 crores would be taken up. The project is projected to benefit more than 9 lakh hectare farmland spread across the drought-prone region of Bundelkhand, 13 districts in UP, & Madhya Pradesh,
Supplementary corpus amounting 19,500 crores for OEMs of solar modules
FM has announced the additional allocation of Rs 19,500 crore for Production Linked Incentive to scaling up the production of high-efficiency modules. The corpus is earmarked to facilitate domestic manufacturing of 280 GW of installed solar capacity by the year 2030.
Taxpayers can now update I-T returns within 2 years
In a bid to ensure error-free filing income tax returns, the IT department shall enable the taxpayers to file an updated return within two years from the assessment year.
Tax deduction limit to be raised from 10 percent to 14 percent for state govt. Employees
FM has confirmed to raise the tax deduction limit from 10 % to 14% for both state and central government employees. The announcement shall bring the social security benefits of state government employees at par with the Central govt employees.
Rs 48,000 crore allocated for housing scheme falling under PM AwasYojana
FM has earmarked the corpus worth Rs 48,000 crores to construct 80 lakh houses falling under PM AwasYojana in urban and rural regions in the year 2022-23.
Other Key Announcements under Union Budget 2022-23
- The union budget 2022 estimates the effective capital expenditure of the Central government at Rs 10.6 lakh crore in 2022-23, making up nearly 4 % of the nation’s GDP.
- The net GST collection for January 2022 has been stood at 1,40,986 crore, which is the highest ever.
- Union budget 2022 has proposed to slash down the import duty on cut and polished diamonds and gemstones by 2.5 percent.
- The FM also confirmed to release of a Simplified Regulatory framework for exporting jewelry via an e-commerce platform.
- E-passport with integrated digital chip shall be rolled in 2022-23.
- Manufacturing of 400 Vande Bharat trains shall be completed by three years from now. All these trains are expected to equip with energy-efficient technology and facilities to ensure world-class travelling experiences.
- Use of drones to be promoted for digitization of land records, crop assessment, spraying of insecticides and nutrients. The Nodal agency NABARD will serve as a funding source for startups and rural firm which are relevant to the farm produce value chain.
Conclusion
It can be concluded from the above, the Union Budget 2022 revolves around the following factors with sustainable growth as its primary objective.
- Clean energy
- Boosting EV ecosystem
- No increment on taxes for general taxpayers
- Empowering Agri sector via Drone system
- Strengthening road infrastructure
- Increased production for solar modules
