The Union Budget for the fiscal year 2022-23 was announced by the Finance Minister, Nirmala Sitharaman, on 1st Feb 2022. This is the fourth year Nirmala Sitharam has presented the budget in the Lok Sabha. The budget has been perceived as a growth-inducing budget by experts across most industries.
Here is an overview of all the important announcements that Nirmala Sitharaman made during her Budget 2022 speech.
Agriculture
1. Government will promote thematic blended funds in sunrise sectors like climate change, digital finance, agri-tech, pharma and deep-tech to stimulate and encourage their growth.
2. Under the co-investment model, a blended capital fund will be raised to help finance startups and rural enterprises aimed at assisting the agricultural value chain.
3. Kisan Drones will be utilized to assess the crops, spray nutrients and insecticides and digitize land records.
4. The estimated procurement of wheat and paddy from 163 lakh farmers was estimated to be 1208 lakh metric tonnes collectively for wheat in Rabi 2021-22 and paddy in Kharif 2021-22. Direct payment of INR 2.37 Lakh Crore will be deposited into the 163 farmers’ accounts as the Minimum Support Price (MSP).
5. Launch of a scheme, through Public-Private Partnership mode, will be launched to deliver hi-tech digital services to farmers. This scheme will involve public sector research and extension institutions, private players in the agri-tech industry and all other stakeholders from the agricultural value chain.
6. The first stage of promoting chemical-free natural farming will focus on agricultural land in 5 km wide corridors along the Ganga river.
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Budget Allocation
1. Projection of 6.4% Fiscal Deficit made for the fiscal year 2022-23.
2. Estimated fiscal deficit revised to 6.9% of GDP.
3. INR 50 Lakh Crore allotted to states as an interest-free loan for 50 years to be invested in the PM Gati Shakti project.
4. Estimate of effective capital expenditure for the year 2022-23 made at INR 10.68 Lakh Crore, approximately 4.1% of GDP.
5. Outlay of capital expenditure increased from INR 4.54 Lakh Crore to INR 7.50 Lakh Crore for 2022-23.
Defence
1. With a commitment to ‘atmanirbharta’, the government has planned to reduce imports and promote domestic equipment for the armed forces. 68% of the capital outlay for defence has been reserved for the domestic industry for the year 2022-23. The allocation in the previous budget, Budget 2021-22, was 58% for the same.
2. 25% of the budget allocated to Defence R&D has been earmarked for research and development which will be now open to startups, academia, and industry.
Education
1. Almost 2 lakh Anganwadis are set to be upgraded in 2022-23. The upgrades will include powering the Anganwadis with clean energy, improving the environment to encourage early child development, audio-visual aids, and better infrastructure.
2. The introduction of a digital skills and livelihood ecosystem (DESH-Stack e portal) to promote online training and the creation of a digital university to establish a world-class education system. The digital university will offer regional languages and ICT formats (information and communication technology). In collaboration with central universities, the digital university will be built on a network hub-and-spoke model to provide much-needed digital training and infrastructure.
3. ITIs will be selected in each state to provide skill enhancing courses.
4. To enable states to provide supplementary education in regional languages to students, from grade 1 through 12, in remote areas, the program of PM e-Vidya will be expanded from 12-200 TV channels. This is also known as the one class one tv channel program.
Employment
1. It was announced that the Production Linked Incentive (PLI) Scheme, across 14 sectors, to implement ‘Aatmanirbhar Bharat’ has received a very positive response, with the potential to create 60 lakh new jobs and the additional production of 30 lakh crore during the next Keycap five years.
Healthcare
1. Mental healthcare needs were addressed, brought to the forefront by the pandemic. A National Tele-Mental Health program will be launched soon including a network of 23 Tele-mental health centres of excellence with NIHMANS (National Institute of Mental Health and Neurosciences) at the centre. IIIT Bangalore (International Institute of Information Technology) will be providing digital support for the same.
2. An open platform for the National Digital Health Ecosystem was announced. Named the ‘Ayushman Bharat Digital Mission’ which will include the digital registration of healthcare providers and health facilities, universal access to health facilities, and unique health identity.
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Housing And Basic Amenities
1. In an effort to help Pradhan Mantri Awas Yojana (PMAY), the Minister of Finance has announced that INR 48,000 Crore will be allocated for the construction of 80 Lakh residences across the country. The budget for affordable housing in the previous budget was INR 47,390 Crore.
2. Existing Special Economic Zones (SEZs) will be replaced by new legislation that will make exports competitive. This legislation will also assist in the development of new domains and businesses.
3. Government will urge all states to adopt a Unique Land Parcel Identification Number for IT-based record management. Digitization of land records will help participants break the long-standing legal process to sell or buy land anywhere in India. It will also increase transparency in the real estate sector.
4. 1% TDS will now be deducted on either the sale value or the Stamp Duty Value of the property, whichever is higher. The 1% TDS deduction is not to be done when the sale value or stamp duty value, whichever is higher, is under INR 50 Lakh.
5. Government has allocated INR 14,100 Crore to the Smart Cities Initiative and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) project. This is an INR 200 Crore increase over the budget allocated for these projects last year.
6. The Central Vista Project received significant funding of NR 1,833.43 Crore in the 2021-22 annual budget and has been allocated an additional INR 767.56 Crore this year making the budget for 2022-23 INR 2,600 Crore. INR 873.02 Crore of the INR 2,600 Crore budget has been allocated to the construction of residential infrastructure The remaining, INR 1,726.98 Crore is to go towards the revamping and construction of non-residential office buildings.
Infra, Roadways, Railways, Waterways And Logistics
1. Over the next three years employment generation will be increased using the transport network. This is being done by integrating the National Infrastructure Pipeline (NIP) with PM Gati Shakti. The production of 100 PM Gati Shakti cargo terminals and 400 Vande Bharat trains will be done under the One Station-One Product initiative to assist the integration of NIP and PM Gati Shakti.
2. The draft of Detailed Project Reports for five river links, Damanganga-Pinjal, Godavari-Krishna, Krishna-Pennar, Par-Tapi-Narmada, and Pennar-Cauvery, have been finalised.
3. In the fiscal year 2023, tendering for four multi-modal national parks will take place.
Investment, Sectoral Allocation
1. An expert committee is being constituted to review the framework for regulating venture capital in India.
2. The Northeast PM Development plans will be implemented in the Northeast Council. This will enable the youth and women of the northeast to earn a living.
MSME
1. Ease of doing business will be moved into its next phase.
2. Emergency Credit Line Guarantee Scheme (ECLGS) will be extended till the end of the fiscal year 2022-23. This move has been made to uplift sectors affected during the pandemic.
3. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has been revamped to incentivise banks and lending institutions to extend loans.
Taxes
Income Tax
1. Amendment proposed to the Income Tax Act 1961 is to add a new subsection 8A under section 139. This will allow a taxpayer to update their previously filed income up to 24 months after they first filed their income. The additional income, however, will be taxable from 25%-50% on the tax and any interest due on the additional income will be payable.
2. Extension period of one year was provided for the tax incentive period for startups. Startups incorporated under Section 80-IAC will be receiving tax benefits till 31 March 2023.
3. Reduction was made in the corporate surcharge. The previous 12% corporate surcharge was reduced to 7%.
4. Returns from the transfer of digital assets, even gifts, will be taxable. Any income generated by the sale of digital assets like cryptocurrencies in India will now be taxed at 30% and will be subjected to a 1% TDS. Unlike other assets, this tax cannot be set off against other capital losses. The taxation on crypto was based on the process of taxation on the likes of winnings like lotteries and game-winnings.
3. Amendments were made to the National Pension Scheme (NPS) to bring uniformity between the employees of the Central and State governments. The threshold of the employers’ contribution was increased from 10% to 14% for Tier-1 NPS accounts.
4. Relaxation in tax benefits for the caregivers, parent, or guardian of the differently-abled. On insurance schemes taken out for differently-abled by the caregiver, the current law provides for deductions from a caregiver only if a lump sum payment or pension is received from a person with a disability by the death of the registrant i.e. a caregiver. A caregiver of a person with a disability can receive a tax deduction from the pension or lump sum during the lifetime of the caregiver if they are over 60 years of age.
5. Surcharges or cess levied on income will not be allowed to be written off as an item of business expenditure.
6. In case undisclosed income is uncovered during a survey or search, it cannot be used to set off any brought forward loss.
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GST & Customs
1. Input Tax Credit (ITC) cannot be claimed if it is restricted under section 38 (Communication of details of inward supplies and input tax credit).
2. Extension has been provided to avail ITC under section 16(4) from September 30 to November 30.
3. In case GSTR-4 returns are not filed 3 months past the due date, Section 10 Composition Tax Payer’s Registration can be cancelled suo-moto.
4. Registration of a tax-payer will be cancelled if they fail to furnish returns for the tax period prescribed. Individuals paying tax under section 10 are exempt from this amendment.
5. Section 47 to be amended to allow late fees to be levied for delays in filing of TCS returns.
6. Concessional Customs duty on imported goods will be eliminated, and an initial rate of 7.5% will be implemented.
7. About 350 exemptions that were currently made on the import of agricultural products, chemicals, drugs, etc., will be removed.
8. Concession on the import duty of chargers, transformers, etc., to enable domestic production.
9. Customs on imitation jewellery has been raised in order to curb imports.
10. Duty levied on certain packaging and leather products have been cut down to push exports.
11. Customs on cut and polished diamonds and gems will be reduced by 5%.
12. MSMEs get a one-year extension on the exemption from paying customs duty on steel scraps.
13. Reduction in customs duty on methanol.
14. Excise duty on unblended fuel increased by Rs.2 per litre to incentivise fuel mixing.
Other Significant Announcements
Virtual Currency
1. Introduction of the digital rupee by the RBI. the digital rupee will use blockchain technology and will be released at the beginning of the fiscal year 2022-23.
E-Vehicles And Energy
1. The government will be promoting energy-saving measures.
2. Allocation of funds, INR 19,500 Crore, made for solar modules in PLI.
3. Battery exchange policy to be issued along with interoperability standards to improve the EV ecosystem.
Digital Banking
1. Increase in credit growth by INR 5.4 Lakh Crore.
2. To reduce delays in payment, all central ministries will be mandated to use an online billing system that will be launched soon.
Internet Connectivity
1. An auction will be launched for the 5G spectrum in India.
2. Contracts for the Bharatnet project will be tendered as per the Public-Private Partnership model.
3. Efforts will be undertaken to provide access to digital resources to villages at the same level as urban areas.
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