Union Budget 2022

The pandemic has taken so many twists and turns in the past 2 years that it is becoming impossible to predict the future and well-being of mankind.  But still being hopeful and positive about the future, we enter the year 2022 with great hope, better life, and a new Union Budget 2022. The Union Budget for the year 2022 presented by the Finance Minister of India, Nirmala Sitharaman, on the 1st of February.

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With a huge impact due to COVID-19 on the economy, many eyes just like last year will be waiting for a better budget that helps in the revival of the economy.

With many speculations and conjectures taking around, let’s have a look at what the new Union Budget is holding for the people of India in the financial year of 2022-2023.

What is Union Budget?

At the beginning of every financial year, the Government of India comes up with a blueprint of how the expenditures and revenues of the country will be taken care of in that year. The Finance Minister presents the budget in February so that it can be finalized before the starting of the new fiscal year, that is, April. Under Article 112 of the Constitution of India, Union Budget is a detailed statement of the estimated upcoming expenses and revenue sources of the country.

In general, Union Budget is classified into 2 parts:

  1. Capital budget

    The Capital budget comprises 2 major sub-heads: Capital receipts and Capital expenditures. While on one hand capital receipts include loans from RBI (Reserve Bank of India), foreign government, or citizens, capital expenditures on the other hand include the cost incurred for the maintenance and development of health facilities, buildings, machinery, etc.

  2. Revenue budget

    The Revenue budget comprises 2 major sub-heads: Revenue receipts and Revenue expenditures. On one hand, revenue receipts include:

    • Tax revenues: Excise duty tax, income tax, corporate tax, etc.

    • Non-tax revenues: Government fees, fines, profits, etc.

    Revenue expenditures on the other hand include the day-to-day expenditure incurred by the government for their regular functioning.

Union Budget Highlights 2022

Presented by the honorable Finance Minister Nirmala Sitharaman in the year 2022, 1st February, the following are the key highlights put across in this year 2022’s Union Budget:

  1. Direct Tax Proposals

    • The new provision allows taxpayers to update their past returns as well as include the omitted income by additional tax payment. Updated returns to be filed in the time span of 2 years (ending from the relevant AY).

    • For startups, tax incentives are extended for a year. Also, startups are now eligible for tax benefits till 31st March 2023 under Section 80IAC of the Income Tax Act.

    • Reduction in Corporate surcharge from 12% to 7%.

    • 30% tax levied on the transfer of Virtual Digital Assets, like Cryptocurrency. Gifting is also taxable under the hands of the receiver.

    • The tax deduction limit for state government employees to NPS was raised to 14% from 10%.

    • Surcharge and cess on income shall not be considered as business expenditure.

    • Insurance tax benefits for the special able parents

  2. Indirect Tax Proposals

    • Some amendments in Sections 16, 34, 37, 39, and 52 of the Central Goods and Services Act are made. The last date to make any kind of changes and amendments has shifted to 30th November from 30th September of the following year.

    • The initial rate of 7.5% for custom duty on import of capital goods is to be imposed.

    • Imitation jewelry’s custom duty raised to discourage imports.

    • Duty on packaging boxes, specified leather reduced.

    • Custom duty reduced to 5% on cut and polish gems and diamonds.

    • Rs. 2 per liter additional excise duty on unblended fuels.

  3. Budget Allocation

    • For the financial year 2023, a 6.4% fiscal deficit has been estimated.

    • 6.9% of the GPD is the estimation of the revised fiscal deficit.

    • To help fund the Prime Minister’s “Gati Shakti” related investments, the government has provided the states Rs. 1 lakh crore as 50-year interest-free loans.

  4. Other Proposals

    • To improve child health, 2 lakh Anganwadis will be upgraded.

    • All post offices to be linked with core banking solutions to push financial inclusion.

    • No Tax slab change

    • Startups to be facilitated to promote drone usage under the “Drone Shakti” program.

    • Kisan drone usage is also to be promoted for assessing the crops, spraying of nutrients and insecticides, etc.

    • For the North East Council, PM development initiatives are to be implemented.

    • Digital rupee using blockchain technology to be introduced by RBI in the financial year 2022 – 2023.

    • Rs. 19,500 crores announced for allocation in PLI for solar modules.

    • Online billing system to be launched for the reduction in payment delays.

    • 5G spectrum to be auctioned in the financial year 2022 – 2023.

    • e-passports to be issued and insured in 2022 – 2023.

    • 400 Vande Bharat trains to be developed in the next 3 years with better efficiency.

    • PLI (Production Linked Incentive) scheme to be spread across 14 sectors and create 60 lakh job opportunities.

Union Budget Highlights 2021

Presented by honorable Finance Minister Nirmala Sitharaman in the year 2021, 1st February, the following are the key highlights put across in the year 2021’s Union Budget:

  1. Direct Tax Proposals

    • Income tax relaxation for Senior Citizens above 75 years of age if pension income is the only source annual source of income for them.

    • Dispute Resolution Committee has been formed for assesses whose taxable income is up to Rs. 50 lakhs or the assessee has any disputed income of up to Rs. 10 lakhs under Section 245MA.

    • Tax incentives for startups have been extended till 31st March 2022.

    • Removal of double taxation and other hardships for NRIs (Non-Resident Indians).

    • Advanced tax will be applicable only after the declaration of the dividend income.

    • If the employer has not deposited the PF contribution but it is deducted from the employee’s PF account, it will not be considered as a deduction for employers.

    • Section 44ADA which was earlier applied to all the assesses that are Indian residents now applies only to HUF (Hindu Undivided Family), resident individual, or partnership firm, other than LLP.

    • Deductions under Section 80EEA for affordable housing extended till 31st March 2022.

  2. Indirect Tax Proposals

    Custom duty is revised on:

    • Copper scrap: Duty reduced from 5% to 2.5%

    • Excise duty on petrol and diesel reduced

    • Solar inverters: Duty increased from 5% to 20%

    • Solar lanterns: Duty increased from 5% to 15%

    • Gold and silver custom duty reduced

    Imposed (AIDC) Agriculture Infrastructure and Development Cess on diesel and petrol at Rs. 4 and Rs. 2.5 (per liter) respectively.

    CGST amended for provisions like:

    • Taxpayers can claim an input tax credit under Section 16 based on GSTR – 2A and GSTR – 2B.

    • Amendments in Section 35 and Section 44 related to furnishing the GST reconciliation.

Union Budget Highlights 2020

Presented by honorable Finance Minister Nirmala Sitharaman in the year 2020, 1st February, the following are the key highlights put across in the year 2020’s Union Budget:

  1. Direct Tax Proposals

    • A new tax regime under Section 115BAC has been introduced providing an option for taxpayers to opt for either a New Income Tax regime or an Old Income Tax regime.

    • TDS reduced from 10% to 2% under Section 194J for technical service fees.

    • The threshold for tax audit moved from Rs. 1 crore to Rs. 5 crores provided, total turnover in the previous year does not exceed 5% (in terms of cash).

    • For home loans sanctioned till March 31st, 2021, additional deductions of Rs. 1,50,000 under Section 80EEA will be allowed.

    • TDS at 10% is applicable if the dividend paid by Indian companies, to a shareholder, who is an Indian resident exceeds an amount of Rs. 5,000 during the financial year under Section 194.

    • Section 6 amendments (Residential Status):

      • If an individual who is a citizen of India, is not liable to pay taxes in any other country, then they are considered as Indian Residents.

      • Any individual of Indian origin or a citizen of India who is living outside India but comes for a visit for more than 120 days in the previous year, shall be treated as the Resident in India.

      • An individual is considered as a “Non-Ordinarily Resident” in the previous year if, 

        • If he has been an NRI (Non-Resident Indian) for 7 years out of 10 years preceding that year.

        • If the manager of the HUF (Hindu Undivided Family) has been an NRI for 7 years out of 10 years preceding that year.

  2. Indirect Tax Proposals

    • Individuals benefitting in any form of fake ITC are liable for a 100% tax-involved penalty.

    • Powers offered for non-insurance of TDS to notify late fees and TDS Form certificate to be waived off. (for Rs. 200 to a maximum of Rs. 5,000 per day).

    • Voluntary registration of GST for a distinct person to be canceled.

    • Under the definition of Union Territories of India, Ladakh has been included.

    • Removal of difficulty level by CBIC provision moved from 3 years to 5 years’ limit from 1st of July 2017.

To Conclude

The latest Union Budget of 2022 – 2023 looks very promising and puts a lot of focus on the technology and digital growth of the country as well as the Citizens of India. 

Even though each sector of the society thinks for their personal benefit and growth, the Government has to think about all the sectors and take necessary actions keeping in mind the growth of the country as a whole. It is difficult for the Government as well to please every individual in their country but if the majority is happy with their decisions, we will see a better and growing India in the coming years.

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