The focus of Union Budget 2022 was on ‘digital and technology,’ but not limited to it. Furthermore, the Union Budget set the groundwork and laid out the economic roadmap for the next 25 years, from India 75 to India 100.
India’s GDP of 9.2% is amongst the highest rate across all the economies. Moreover, Amidst the Covid-19 and its variants, the economy was able to perform well. The country plans to keep up with its vaccine efforts and believes the vaccination drives have made a significant difference. Union Budget 2022 includes a significant rise in public investment and capital spending.
Goals of ‘Amrit Kaal’
- Focus on growth and all-inclusive welfare
- Promoting technology-enabled development, energy transition and climate action
- Virtuous cycle starting from private investment, crowded in by public capital investment
Union Budget 2022-23 Key Highlights
Budget Allocation for 2022-23
- In FY23, India is expecting to have a 6.4% fiscal deficit.
- The revised fiscal deficit is anticipated to be 6.9% of GDP.
- States will receive INR 1 lakh crore in interest-free loans over 50 years to help support PM Gati Shakti’s initiatives.
- In 2022-23, the government expects its effective capital spending to be INR 10.68 lakh crore or 4.1% of GDP.
- In 2022-23, the capital expenditure budget to increase by 35.4%, from Rs 4.54 lakh crore to Rs 7.50 lakh crore.
- A new provision allows taxpayers to amend a previous return and include omitted income by making an extra tax payment. Also, you can update the returns within two years from the end of the relevant assessment year.
- For start-ups, the tax incentive period to extend by one year. Tax incentives will now be available to eligible companies formed under Section 80-IAC until 31st March 2023.
- Reduction in corporate surcharge from 12% to 7%.
- Furthermore, a reduction in Alternate Minimum Tax (AMT) for co-operative societies to 15%.
- Income from digital assets (cryptos) will be taxable at 30%. Also, no deductions are available except the cost of acquisition of digital assets. Furthermore, the loss on the sale of digital assets cannot be offset by any other income.
- The Finance Ministry recommended raising the employer contribution to the National Pension Scheme (NPS) Tier-I account from 10% to 14% to achieve parity between central and state government employees.
- Once the parent or guardian of the differently-abled has reached the age of 60, the payment of the annuity or lump sum can be deducted from the parent’s or guardian’s taxes.
- Also, Surcharges and Cess on income cannot be a business expense.
- Carry forward loss cannot be set off against the undisclosed income discovered during any search or survey.
- The due date for amendments, corrections, uploading missed sales invoices or notes or claims (Input Tax Credit or ITC) of one financial year is 30th November of the following year, rather than September of the following year.
- The largest gross GST revenue collection since the start of GST was INR 1,40,986 crore in January 2022.
- Concessional customs duty on capital goods imports will be phased out, with a starting rate of 7.5%.
- Over 350 import exemptions for agricultural products, chemicals, pharmaceuticals, and other items will be phased out.
- Import duty exemptions for phone chargers, transformers, and other electronic components enable domestic production.
- Higher import taxes on fake jewellery to discourage their use.
- Reduction in duty on some types of leather and packaging boxes to encourage exports.
- Furthermore, reduction in customs duty on cut and polished diamonds and stones to 5%.
- Extension on the tariff exemption on steel scrap for another year to assist MSMEs.
- Reduction in Methanol’s customs duty.
- Higher excise fee on unblended fuel to encourage fuel blending (INR 2 per liter).
- An open platform for the National Digital Health Ecosystem. This consists of digital registries of health practitioners and facilities, a unique health identity, and also universal access to health services.
- The pandemic has brought mental health to the forefront. There will be the launch of a nationwide tele mental health programme.
- Upgrading over 2 lakh Anganwadi.
- Setting up a digital university for online education. Also, it will focus on ICT using a hub and spoke model.
- In all states, select ITIs will offer skilling courses.
- PM eVIDYA’s “one class, one TV channel” programme to expand from 12 to 200 TV channels. As a result, all states will be able to provide extra education in regional languages to students in grades 1 through 12.
- The Production Linked Incentive (PLI) Scheme for attaining Aatmanirbhar Bharat has gotten a strong response, potentially creating 60 lakh new employment and additional production of 30 lakh crore during the next Keycap digit five years.
- PLI initiatives in 14 sectors have sparked a massive reaction, resulting in the creation of 60 lakh jobs.
- The government will push funds for blended finance (with the government’s contribution limited to 20%) for sunrise prospects, including climate action, agri-tech, and so on.
- NABARD will support a fund to finance agriculture and rural enterprise start-ups that are important to the farm produce value chain. Also, FPOs to get support by start-ups, which will give technology to farmers.
- Promoting Kisan Drones for crop evaluation, land record digitization, insecticide and also nutrient spraying.
- Wheat procurement in Rabi season 2021-22 and anticipated paddy procurement in Kharif season 2021-22 will include 1208 lakh metric tonnes of wheat and paddy from 163 lakh farmers. This also includes INR 2.37 lakh crore in direct MSP payments to their accounts.
- Farmers will be able to access high-tech services for the first time.
- Promotion of chemical-free natural farming.
- Identify Eighty lakh families for the affordable housing project in 2022-23.
- 60,000 crore set aside to provide tap water more than 3.5 crore households.
- The Ken-Betwa link worth Rs 44,605 crore will provide irrigation to over 9.05 lakh hectares of drinking water, hydro and also solar power to 65 lakh people.
- ‘One Station – One Product,’ 400 next-generation Vande Bharat trains, and also 100 PM trains are among the new railway plans.
- Over the next three years, Gati Shakti cargo terminals will integrate NIP with Gati Shakti. This will be critical for job creation because the transportation network is rich in backward and forward linkages with the rest of the economy.
- DPR drafts for five river links finalized.
- 400 Vande Bharat trains to improve passenger efficiency would be created in the following three years.
- The Union Budget prioritizes public investment in infrastructure modernization over the medium term, leveraging Gati Shakti’s technology platform through a multi-modal approach.
- In FY23, to grant four contracts for multi-modal national parks.
- The upcoming financial year will see the formulation of PM Gatishakti’s highway master plan.
- PM’s Gatishaktu master plan will comprise seven engines of economic transformation.
Energy and EV
- The FM has announced a PLI allocation of INR 19,500 crore for solar modules.
- Emphasis on energy efficiency and conservation.
- Implement a battery-swapping regulation, to help the EV ecosystem along with interoperability standards.
Investments and Start-ups
- Formation of an expert committee to assess the regulatory framework for venture capital.
- Defence R&D would be available to businesses and entrepreneurs.
- Encourage Start-ups to facilitate ‘drone shakti,’ which will encourage the use of drones.
- To launch the next phase of ease of doing business.
- The government has taken steps to help MSMEs become more resilient and competitive.
- The Emergency Credit Line Guarantee Scheme (ECLGS) has aided 130 lakh MSMEs in mitigating the pandemic’s harshest effects.
- FM extends ECLGS till 23rd March to help industries that were disproportionately affected by the pandemic. Since MSMEs account for roughly 95% of ECLGS borrowers, this action will ensure that MSMEs and the services sector will continue to receive support.
- The services sector, which accounts for over 60% of India’s GDP, continues to be a key driver of economic growth, job creation, income production, and also livelihood assistance in the country.
- The extension of ECLG will boost lending to small and medium-sized businesses.
Internet and Connectivity
- In 2022-23, there will be a 5G spectrum auction.
- The PPP approach to award Bharatnet project contracts for optical fiber networks.
- Villages to have the same access to digital resources as cities.
- Launch of an online bill system to reduce delay in payment. Also, All central ministries will be using the online bill system.
- Credit surged by more than INR 5 lakh crore, the highest level in many years.
- Starting in 2022-23, the Reserve Bank of India (RBI) will issue a digital rupee based on blockchain technology.
- E-passports featuring futuristic technology will be issued in 2022-23.
- In 2022-23, the domestic defence industry will receive 68% of the capital procurement budget. Also, India will begin issuing e-passports in 2022-23, according to the finance minister.