Budget 2022: Surged Capex Spreads A Cheer, Unchanged Tax Slab Disappoints5 min read
With a focus on four pillars of development- inclusive development, productivity enhancement, energy transition and climate action, the Budget 2022 has given a blueprint of the economy from India at 75 to India at 100.
Finance Minister Nirmala Sitharaman while presenting the second budget post covid-19 outbreak, highlighted several economic reforms that are going to be reflected for the coming year.
This year’s budget was the shortest one in terms of duration and lasted for one hour 31 minutes only. The focus of the Union Budget 2022 particularly revolves around the Capex, GDP, LTCG, Tax Slabs and Digital Rupee.
1. Capex is the real winner
In the Union Budget 2022, the Finance Minister has proposed to step up capital expenditure outlay by 35.4% to a whooping Rs 7.50 lakh crore in FY23.
It has increased more than 2.2 times the expenditure of 2019-20. This outlay in 2022-23 will be 2.9 percent of GDP.
With this investment taken together with the provision made for creation of capital assets through Grants-in-Aid to States, the ‘Effective Capital Expenditure’ of the Central Government is estimated at Rs 10.68 lakh crore in 2022-23, which will be about 4.1 per cent of the GDP.
2. The GDP cheer
The GDP is seen to grow by 9.2% — the quickest rate among major economies — in the current year, with the government expecting a repeat performance in the next year with an estimated 8% to 8.5% expansion.
The gross GST collections for the month of January 2022 are Rs 1,40,986 crores which is the highest since the inception of GST. Total expenditure in FY23 estimated at Rs 39.45 lakh crore, the total resources mobilization to be Rs 22.84 lakh crore other than borrowing.
The government now vows a stable and predictable tax regime.
3. Surcharge on LTCG down at 15% from previous 37%
Bringing in a major relief, surcharge on long-term capital gains has been capped at 15%, down from up to 37% earlier.
Surcharge on long-term capital gains on transfer of any assets has been capped at 15%. As of now, the surcharge on any long-term gains from sale of stocks were capped at 15%.
This rate might go up to 37% for other assets, as announced by the Finance Minister.
4. Tax on Crypto Proceeds and Digital Assets surged
Proceeds from sale of cryptocurrencies and other digital assets will now attract a tax of 30%. This with no deductions allowed other than the cost of acquisition.
Along with the same, payments made to transfer these digital assets will attract a TDS of 1%.
5. Digital Rupee- The new age currency
In a major push for digital currency, the Finance Minister stated that digital rupee will be issued using blockchain technology by the Reserve Bank of India starting 2022-23.
This is expected to give a big boost to the economy. Blockchain technology also powers cryptocurrency, non-fungible tokens (NFTs) and it is a distributed ledger, updated in real-time.
In a blockchain, the transaction records cannot be changed at any given instance and the ledger remains transparent and authentic.
6. Tax payers left in lurch
It was announced that there will be no change in personal income tax slabs and rates in Budget 2022. This comes as a sad one for the salaried class employees who were hoping for some relief.
It was also announced that the government will provide a one-time window to correct omissions in income tax returns (ITRs) filed.
A taxpayer can also file an updated return on payment of taxes within two years from the end of the relevant assessment year.
7. Fiscal Deficit:
Speaking about the Fiscal Deficit and what lies ahead, the FM said, “While setting the fiscal deficit level in 2022-23, I am conscious of the need to nurture growth, through public investment, to become stronger and sustainable”.
The revised Fiscal Deficit in the current year is estimated at 6.9 per cent of the GDP as against 6.8 per cent projected in the Budget Estimates.
The Fiscal Deficit in 2022-23 is estimated at 6.4 per cent of the GDP, which is consistent with the broad path of fiscal consolidation announced last year to reach a fiscal deficit level below 4.5 per cent by 2025-26.
What else is in the news?
8. Infrastructure and Roads-
PM Gati Shakti Master Plan for Expressways will be formulated in 2022-23 to facilitate faster movement of people and goods. The National Highways network will be expanded by 25,000 km in 2022-23. Rs 20,000 crore will be mobilized through innovative ways of financing to complement the public resources.
9. Banking and Financial-
More than 35 crore Post Office deposit accounts with deposits aggregating Rs 10 crore will now be connected to the banking system. The Post Office deposits limited transfer of funds within their ecosystem as the same was not connected to the banking ecosystem.
Procurement of wheat, paddy, kharif and rabi crops, benefiting over 1 crore farmers.
NABARD to facilitate fund with blended capital to finance startups for agriculture & rural enterprise. Rs. 2.37 lakh crore towards direct payments for minimum support price.
Chemical-free, natural farming will be promoted across the country.
New Universities will be established with a focus on digitisation. They will be brought up in different Indian languages, based on a networked hub model.
One Class, One TV channel will be expanded from 12 to 200 TV Channels to provide supplementary education in all regional languages, to make up for loss of formal education due to Covid.
12. Health and Sanitation-
National Digital Health Ecosystem to be rolled out. National Tele Mental Health program to be set up to focus on mental health.
23 tele mental health centres of excellence.
Integrated benefits to women and children through Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0.
Rs. 60,000 crore allocated to cover 3.8 crore households in 2022-23 under Har Ghar, Nal se Jal.
The Union Budget 2022 focused on promoting digital and technological innovations across all the sectors at large. It has outlined the scope of growth for technology led development, digitisation whilst ensuring an inclusive welfare society.
Disclaimer: This information is purely based on publicly available data and the content is for informational purposes only.