Finance Minister Nirmala Sitharaman has announced major expansion and growth projects in the country this year with a budget of Rs.5.25 Lakh Crores. Major projects include expansion of highways, Nal-Jal Scheme, Five river link projects, digital banking units, etc.
Expected nominal GDP for 2022-23 stands at Rs.258 Lakhs Crores, with an 11.1% growth from the previous fiscal year. On the contrary, the fiscal deficit is measured at 6.4% of nominal GDP borrowings from other countries has been lowered to Rs.8.76 lakh crore for this fiscal year, from Rs.9.68 lakh crore. Gross tax revenues for the union government are expected to increase to Rs.27.58 lakh crore, up 9.6% from revised estimates for 2021-22 ad 24.4% percent more than the budget estimation.
Around 51.5% of gross tax revenue would be generated from corporate tax and personal income tax which is higher than 50% in the previous fiscal year. Total expenditure is on the rise to Rs.3945 lakh crores, with 4.6% from revised estimate and 13.2% from budget estimates. Further, the disinvestment target has been limited to Rs.65000 crores, way lower than the previous year, amounting to Rd.78000 crores.
Important highlights of the budget 2022 are listed below:
1. Subsidy levels tapered:
It has been decided that the subsidy budget for food, fertilizer, and fuel shall be reduced by 26.6% in this fiscal.
2. Kickstarter of startups:
Finance Minister proposed a cap on a surcharge on long-term capital gains from shares of unlisted companies at 15% boost was offered to startups by way of deduction of 100% profits for startups which are incorporated by March 2023. Custom duty rates shall rise over the next 4 years favoring local manufacturers of writs wearable, wearables, smartwatches, smart electric meters, and so on. However, 10% TDS would be deducted from perquisites over Rs. 20,000 from a business or a profession.
3. Development of Infrastructure:
The schemes for building village infrastructure along the borders of China, especially for security purposes.
4. Ease of taxpayer:
New provisions for enabling the taxpayer to file an updated return, which would help them to file additional income later. Further, consideration received from the employer or any other organization will not be paid tax, Subject to a cap of Rs. 10 Lakh, the payment received by kind for Covid death shall not be taxable. New rules for the taxation of income from the transfer of virtual digital assets provide that these incomes will be taxed at the rate of 30%. While calculating the same, no deduction would be allowed, other than acquisition cost. 1% tax shall be deducted at source for payment made. This TDS provision shall be applicable for a value of Rs. 50,000 or more in case of individuals or HUF’s who don’t possess any business income, or the businessmen whose income doesn’t exceed Rs.1 crore, and professionals whose income doesn’t exceed Rs.50 Lakh.
5. Replacement of existing SEZ:
The Finance Minister in consonance with the Ministry of Commerce has proposed replacement of existing laws regarding SEZs with new legislation with a motive to empower states to become partners in “Development of Enterprise and Service Hubs”.
6. Investment for Railway:
The Railway has reeved a fair share of Rs.1.37 lakh crore for its infrastructure.
7. Agri Budget:
The new scheme has been announced for delivery of digital and hi-tech services to farmer along with a new fund to finance startups with regards to agriculture and rural enterprises.
8. Growth in capital outlay:
The 10% growth is expected in capital outlay for armed forces, with an investment of Rs.1.52 Lakh crore.
9. Policy related initiatives:
The issuance of e-passports, shift in urban planning, battery swapping policy, changes in insolvency, and bankruptcy code.
10. PM Gati Shakti Master Plan:
It aims for expansion of national highway by a stretch of 25,000 km, with development of multimodal logistics parks at four locations, introduction of station, one product concept and others to enable local business to flourish.
11. Incorporation of sustainable goals:
Setting “energy transition and climate action” as one of the priorities, the government has unveiled a series of measures to adopt green energy and mobility. Digital penetration and improvement of the delivery of services in sectors such as agriculture, education, health, banking, etc. Incentive worth of Rs. 19,500 crores were announced by the finance minister to boost the manufacture of high-efficiency modules for enhancing domestic manufacturing units and achieving the goal of installing 280GW of solar capacity by 2030. Further, an open platform shall be established, under the Ayushman Bharat Digital Ecosystem, to provide digital registries of health providers and facilities, unique health identity, universal access to health facilities. The government will also take steps to bridge the gap between rural and urban education through PM e-Vidya TV channel, offering additional education in several regional languages from classes 1 to 12.
12. Custom duty relief:
There will be a sharp decline of custom duty on the import of cut and polished diamonds and gemstones. However, the customs duty on imitation has spiked to 20% i.e. Rs 400/kg.
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