“This Budget hopes to lay the foundation for ‘Amrit Kal’, from India at 75 to India at 100” ~ Union Finance Minister Nirmala Sitharaman
At a time when India is fighting the third wave of Covid-19, Finance Minister Nirmala Sitharaman presented her fourth Union Budget in Parliament in a paperless format. Contrary to earlier expectations, the Union Budget 2022 has brought no relief for the salaried class. In a boost to entrepreneurs, however, the FM has extended existing tax benefits for startups, in effect for three consecutive years, by one more year. However, income tax slabs for the financial year 2022-23 remain unchanged.
Having said that, Sitharaman did announce a tax relief for citizens with disabilities. “The parent or guardian of a differently-abled person can take an insurance scheme for such a person. The present law provides for a deduction to the parent or guardian only if the lump-sum payment or annuity is available to the differently-abled person on the death of the subscriber i.e. parent or guardian,” said the FM.
She also announced that the Budget 2022 will allow a taxpayer to file an updated return on payment of taxes within two years from the end of the relevant assessment year. “This new provision will ensure voluntary tax filing and reduce litigation,” the FM said.
Sitharaman said that digital payments in the country have witnessed rapid growth and stressed on extending them to every nook and corner. She said the Narendra Modi government will launch 75 digital banking units in 75 districts across India. Digitisation of the banking system has also received a major push. Sitharaman announced that all 1.5 lakh post offices in India will be connected to the core banking system, which will enable people to access their accounts online and also transfer money within post office accounts and to other banks.
Major highlights of Budget 2022
- India’s growth estimated to be 9.2 percent
- Budget to focus on climate action, productivity, PM Gati Shakti plan and financing investments
- E-Passports with electronic chip to be rolled out
- 5G spectrum auctions in 2022
- Proposes fiscal deficit of 4.5 percent of GDP by 2025-26
- Projects fiscal deficit of 6.4 percent of GDP in 2022-23
- Revised fiscal deficit for 2021-22 at 6.9 percent of GDP
- Railways to develop infrastructure for small farmers in 2022-23
- Special Economic Zones Act to be replaced with new legislation
- Customs duty on high steel bars, stainless steel and flat products to be revoked
- Total expenditure in 2022-23 seen at Rs 39.45 trillion
- Corporate surcharge to be reduced from 12 to 7 percent
- Rs 48,000 crore allocated for completion of 80 lakh houses under PM Awas Yojana in rural and urban areas in 2022-23
- Customs on polished diamonds, gemstones reduced to 5 percent
- Use of Kisan Drones for crop assessment
- NABARD with blended capital to fund startups working in agriculture
- Development initiatives for North-East India
- Public issue of Life Insurance Corporation (LIC) expected soon
- Income on any long-term capital gains capped at 15 percent
In a major step, Sitharaman announced that the Reserve Bank of India will be introducing the ‘digital rupee’ using blockchain technology in 2022-23. “This will give a big boost to the economy,” she said.
The Finance Minister also announced a 30 percent tax on income from sale or acquisition of virtual and digital assets. “I propose that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 percent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except cost of acquisition,” Sitharaman said.
After two years of virtual classes and examinations thanks to the pandemic, Sitharaman made a series of announcements for the education sector, including the launch of one Class 1 TV channel to provide supplementary education to students to make up for loss of education due to the pandemic. Sitharaman also stressed on opening of digital universities, which will provide students with “world-class quality universal education”.
“A digital university will be established to provide access to students across the country for world class quality universal education with a personalised learning experience at their doorstep. This will be made available in different Indian languages…the university will be built on a network hub-and-spoke model. The best public institutions in the country will collaborate as a network of hub-and-spoke,” Sitharaman said.
Mental health also finds mention in the FM’s Union Budget speech 2022. Mental health has been impacted due to the pandemic, said Sitharaman, and therefore, the Modi government will set up 23 national tele-mental health centres.