Take Away from Union Budget 2022

Take Away from Union Budget 2022

Executive Summary:

This article describes:

• • • This article throws light onKey Highlights of Union Budget 2022
    • Positive and Grey Side of Union Budget- 2022

Introduction:

The Union Budget 2022-23, was presented by Union Finance Minister Nirmala Sitharaman at Parliament today, .i.e. 1st February, 2022. The budget focus on 4 pillars – productivity, climate action, financing investments and PM Gati Shakti plan. This year budget mainly covers – issuance of digital rupee using block chain, benefits to youth, women, farmers and backward classes.

Key Highlights of Union Budget 2022

1. Digital Payment & Fintech

• Introduction of digital currency by RBI soon – India to have its own digital currency.
• Digital rupee to be launched in 2022-2023
• Encouragement to digital banking
• 75 e-banking systems in 75 districts
• Post offices to be merged with the banking sector.
• Core banking in all post offices by 2023.
• Embedded chips in e-passports.

2. Taxation

• No relaxation in income tax slabs
• Income from Long Term Capital Gains will be taxed at 15%,
• Corporate surcharge to be reduced from 12% to 7%,
• Any cess or surcharge on income not allowed as business expenditure,
• For Central and State government employees – tax deduction limit to be increased from 10% to 14%
• 30% tax on income from virtual digital assets like crypto currency, NFTs, etc.
• Tax relief to person with disability.
• Tax deduction limit increased from 10 % to 14 % on Employee contribution to the NPS account of State Employees.
• For Eligible starts-ups, to avail tax benefit, period of incorporation extended by one year.
• 1 percent TDS on transfer of virtual assets above a threshold, gifts to be taxed
• Tax incentives to IFSC

3. Rationalization of Surcharge

• Surcharge on AOPs capped at 15 per cent.
• Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent

4. For MSME Sectors

• Udyam, e-shram, NCS and ASEEM portals to be interlinked.
• Under Emergency Credit Linked Guarantee Scheme (ECLGS), 130 lakh MSMEs provided additional credit
• ECLGS to be extended up to March 2023
• Guarantee cover under ECLGS to be expanded by Rs. 50000 Crore to total cover of Rs 5 Lakh Crore.
• Rs 2 lakh Crore additional credit for Micro and Small Enterprises to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
• Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs 6000 Crore to be rolled out.

5. Banking

• 100 per cent of 1.5 lakh post offices to come on the core banking system.
• Scheduled Commercial Banks to set up 75 Digital Banking Units (DBUs) in 75 districts.

6. Export Promotion
Special Economic Zones Act to be replaced with a new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.

• a. Introduction of new Updated Returns- Taxpayers can now file an updated return within 2 years from the relevant assessment year
• b. Special Economic Zones :
  • Customs Administration of SEZs to be fully IT driven and function on the Customs National Portal – shall be implemented by 30th September, 2022.
• c. PM Gati Shakti National Master Plan
  • The seven engines that drive PM Gati Shakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure.
• d. Transportation
  • Road Transport- National Highways Network to be expanded by 25000 Km in 2022-23 and Rs 20000 Crore to be mobilized for National Highways Network expansion.
  • Railways-400 new generation Vande Bharat Trains to be manufactured during the next three years

7. For implementation of Multimodal Parks at 4 locations, contracts to be awarded through PPP mode.

8. Agriculture

• For procurement of wheat and paddy, Rs. 2.37 lakh crore direct payment to 1.63 crore farmers.
• Natural farming to be promoted
• For crop assessment, digitization of land records, spraying of insecticides and nutrients – introducing Kisan Drones.

Positive Side of Union Budget 2022

Companies in the industrial and infrastructure sectors, as well as those in defence and space, as well as those in housing and urban planning, would benefit the most from today’s budget plans.

Positive Impact on Stock Market
In Union Budget 2022, the point of trigger was that when digital currency has been announced by our Finance Minister, the bull of the Stock Market started running much faster.

Tax exemptions also result stock market on positive note, increase in exemption limit shall lead to more money in the hands of Taxpayer and this excess money shall get invested in Stock market.

Reduction in Corporate tax from 12 % to 7 %, reduced financial burden on Corporates which result into high profit margin and Corporates can utilize such extra funds in growth and expansion and it ultimately result into rise in Corporate Value and Share price of that company.

Focus of Ease of doing Business
This Union Budget 2022, has reduced Compliance burdens of Enterprises by eliminating 75,000 Compliances and repealing Union laws, Special Economic Zones Act to be replaced with new legislation. Announcing Ease of Doing Business EODB 2.0 Version is welcoming steps towards Industrialization and globalization.

Step towards – Encouraging Start-ups and MSME.
Eligible start-ups that were formed before 31.3.2022 received a tax benefit for three years out of ten from the date of incorporation. In light of the Covid epidemic, the budget proposes to prolong the term for incorporating an eligible start-up by one year, until 31.03.2023, in order to provide a tax benefit.

The Union Budget for 2022-23 featured a number of initiatives supporting micro, small, and medium-sized enterprises (MSMEs), including the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) through March 2023.

Grey Side of Union Budget

This Union Budget 2022 , brings more infra, more growth and more jobs, well said by our Honorable Prime Minister but same time we cannot ignore its grey side which majorly affect Middle class , Small Scale Business-Man and Traders. Especially in last years of COVID-19 pandemic, adversely affect Trades and Small Scale Businessman. This budget does not provide any hope or relaxation to them.

Budget 2022 made no changes to the existing income tax structure, disappointing the general public and several other groups.

Conclusion :

It is very difficult to make happy everyone same time like that every time Union Budget gives new hopes to some sectors but at the same time it disappoint other sectors too. In reality, Union Budget’s positive and grey impact we can analyze in next year by calculating sector wise growth in Economy.

Regards,
Legal Team

Proind Business Solutions Private Limited
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