Budget 2022 LIVE Updates [01-02-2022]

Finance minister Nirmala Sitharaman presented the fourth Budget of the Modi 2.0 government today. The stage for the Budget presentation was set by the Economic Survey stating that the government has the fiscal space to do more to support the economy that is forecast to grow at a healthy 8-8.5 per cent growth in the 2022-23 fiscal.

How Markets Are Moving After Budget Speech

India’s stock benchmarks held on to their gains after Finance Minister presented the union budget, aided by gains in metal and banking stocks.

The S&P BSE Sensex rose 1.33% to 58,784.37. The NSE Nifty 50 advanced by similar magnitude to 17,544.25.

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Biggest Announcements For Taxpayers

• Taxpayers can file an updated return on payment of taxes within two years from the end of relevant assessment year.
• The new provision will ensure voluntary tax filing and reduce litigation, says FM
• 30% tax on proceeds of virtual/digital assets with no deductions other than cost of acquisition
• No set off permitted against other income
• 1% TDS to be levied on payments made on transfer of digital assets
• Deduction for employer contribution to NPS increased to 14% from 10% earlier for State govt employees on par with central govt employees

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India To Launch Central Bank Digital Currency Next Fiscal Year

India plans to launch a central bank digital currency in the financial year starting in April, Finance Minister Nirmala Sitharaman said in her budget speech.

• The digital rupee will help to usher in cheaper, more efficient currency management, Sitharaman said Tuesday. The Reserve Bank of India has been working on a phased implementation strategy for its digital currency, which could reduce dependency on cash.
• India’s move comes after China already began CBDC trials in several cities, while the U.S. Federal Reserve and Bank of England are looking into possibilities for their economies.

Source: Bloomberg

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Budget Speech Ends

Finance Minister Nirmala Sitharman has concluded her budget speech in the Lok Sabha.

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Proposal To Phase Out Duty Exemptions

Sitharaman proposed to phase out duty exemptions to project import and capital goods gradually, apply moderate tariff of 7.5%, with certain exemptions to advanced machinery.

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Proposal To Cap Surcharge On LTCG From Asset Transfers

Sitharaman proposed to cap surcharge on LTCG arising on transfer of any type of assets at 15%. The step will give a boost to startups, she said.

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Loss Against Undisclosed Incomes Can’t Be Set Off, Says FM

Finance minister proposed to not allow any loss set off against undisclosed income during search operations.

• Income tax is not allowable expenditure for computation of business income.
• Any surcharge or cess on income and profits is not allowable as business expenditure.

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Tax Relief For Cooperative Societies

Sitharaman proposed to cut the Alternate Minimum Tax for cooperative societies to 15% to provide them a level-playing field with companies.

• Proposal will reduce surcharge on cooperative societies to 7%, for those whose income is between Rs 1 crore and Rs 10 crore.

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Tejas Networks, HFCL Lead Gains In Telecom Stocks On Plan For 5G Network

• Telecom infrastructure providers HFCL, Tejas Networks gain as Finance Minister Nirmala Sitharaman announces plan for 5G rollout. 
• India to auction 5G spectrum in 2022, Nirmala Sitharaman announced during presentation of federal budget in India’s Parliament.

Source: Bloomberg

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Tax Relief For People With Disabilities

The finance minister proposed to allow payment annuity and lump-sum amount to dependents of differently-abled, during lifetime of parent or guardian reaching 60 years.

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India Announces Tax On Income From Digital Assets

Sitharaman proposed that the government will tax income from digital asset transfers at 30%.

• No deduction allowed while computing income except cost of acquisition.
• Loss cannot be set off from any other income.

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India Sets Fiscal Deficit Target At 6.4% For FY23

The government expects fiscal deficit to be 6.4% of the GDP in FY23, compared with the revised estimate of 6.9% in FY22, Sitharaman said.

• FY23 total expenditure seen at Rs 39.45 lakh crore.
• Total receipts, other than borrowing, seen at Rs 22.84 lakh crore.

• Outlay for scheme of financial assistance to states enhanced to Rs 15,000 crore in revised estimate of FY22.
• In FY23, the allocation is Rs 1 lakh crore to assist the states.

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BUDGET 2022 QUICK SUMMARY

DEFICIT/EXPENDITURE

1. Proposes fiscal deficit of 4.5% of GDP by 2025/26
2. Projects fiscal deficit of 6.4% of GDP in 2022/23
3. Revised fiscal deficit for 2021/22 at 6.9% of GDP
4. Total expenditure in 2022/23 seen at 39.45 trillion rupees
5. States will be allowed 4% fiscal deficit to GDP in FY23
6. 50 year interest free loans over and above normal borrowing allocated to states
7. Scheme for financial assistance to states for capital investment outlay to be 1 trillion rupees in 2022/23

TAXATION

1. Import duty on certain chemicals are being reduced
2. Customs duty exemption on steel scrap to be extended for another year for small- and medium-sized businesses
3. Customs duty on stainless steel, flat products, high steel bars to be revoked
4. Unblended fuel to get additional duty of 2 rupees per litre from October 2022

FINANCE

1. Emergency credit line guarantee scheme for small and medium sized businesses to be extended to March 2023
2. Energy transition and climate action will be a major government priority
3. Public issue of Life Insurance Corporation expected shortly
4. Initiatives from last year’s budget have been provided adequate allocations in this budget
5. Special Economic Zones Act to be replaced with new legislation
6. To amend bankruptcy code to speed up resolution process
7. Aims to lower winding up of companies to 6 months from 2 years currently8.
8. Long term capital gain surcharge to be capped at 15%

DIGITAL CURRENCY

1. To launch digital rupee using blockchain technology starting 2022/23
2. To launch scheme for taxation of virtual digital assets
3. Losses from sale of virtual digital assets cannot be offset against other income
4. Income from virtual digital assets to be taxed at 30%

DEFENCE

1. Govt committed to reducing defence imports

INFRASTRUCTURE

1. 5G spectrum auctions to be conducted in 2022
2. Scheme for design-led manufacturing for 5G will be part of production-linked scheme
3. To award contracts to lay optical fibre in rural areas, completion in 2025
4. 480 billion rupees set aside for affordable housing in 2022/23
5. To allocate additional 195 billion rupees for production-linked incentives towards solar equipment manufacturing

AGRICULTURE

1. Domestic scheme introduced to reduce dependence on oilseed imports
2. Fund with blended capital raised under co-investment model to finance agriculture startups
3. Railways to develop infrastructure for small farmers in 2022/23

TRANSPORT

1. 400 energy efficient trains to be manufactured over next three years
2. National highways network to be expanded by 25,000km in 2022/23
3. Highways expansion to cost 200 billion rupees in 2022/23
4. India to bring out battery swapping policy