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Espresso Shot of the Day - UNION BUDGET 2022-23: Key Highlights

TAXATION

• Income from transfer of any virtual digital assets to be taxed at the rate of 30%.Even as the bill on cryptocurrencies is yet to be cleared by Parliament, the government has announced a tax on ‘virtual digital assets’, which includes the much-popular crypto and NFTs. The flat tax rate on digital assets has come a much-awaited clarification with respect to the position on crypto transactions.

• Taxpayers can file updated return on payment of additional tax, within 2 years from the end of relevant AY.
• Period of incorporation of eligible startups to be extended by a year, up to 31^st March 2023, to allow them to benefit from available tax incentives.
• Alternate Minimum Tax rate for cooperative societies reduced to 15%. The move will provide cooperatives a level playing field with companies.
• In some good news for the steel sector, customs duty on stainless steel, flat products, high steel bars to be revoked.
• Customs duty on certain critical chemicals like methanol, acetic acid and heavy feed stocks for petroleum refining to be reduced, a move that will benefit the chemicals industry.

ECONOMY & FINANCE

• FM pegs fiscal deficit at 6.4% of GDP for FY23, proposes fiscal deficit of 4.5% of GDP by 2025/26.
• Capex outlay for 2022-23 at 2.9% of GDP, up by 35.4% from the current Rs 5.54 lakh crore to Rs 7.50 lakh crore in 2022-23
• Emergency Credit Line Guarantee Scheme (ECLGS) extended up to March 2023 and guarantee cover expanded by Rs 50,000 crore to Rs 5 lakh crore.
• Outlay of Rs 1 lakh crore in 2022-23 for ‘Scheme for Financial Assistance to States for Capital Investment’.
• 50-year interest free loans, over and above the normal borrowing, allowed to states.
• Sovereign Green Bonds to be issued to mobilize resources for green infrastructure, the proceeds from which will be deployed in public sector projects.
• Long-term capital gains (LTCG) surcharge on transfer of any type of assets capped at 15%.
• Introduction of Digital Rupee using blockchain, to be issued by the Reserve Bank of India starting 2022-23.
• 75 Digital Banking Units (DBUs) to be set up in 75 districts of the country by Scheduled Commercial Banks. This is aimed at giving a further boost to digital payments ecosystem.
• Amendments to IBC to be carried out to speed up resolution process and facilitate cross border insolvency resolution.

TELECOM

• Spectrum auctions to be conducted in 2022 to facilitate 5G rollout.
• Scheme for design-led manufacturing to be launched for 5G ecosystem as part of the production-linked incentive (PLI) scheme. This will bolster affordable broadband and mobile communication in rural and remote areas.
• Contracts for laying optical fibre in villages to be awarded under BharatNet project, in Public-private partnership (PPP) mode in 2022-23.
• Data centre and energy storage system to be given infrastructure status, a move to provide easy financing.

RAILWAY & INFRASTRUCTURE

• 400 new-generation Vande Bharat trains to be manufactured in next 3 years
• 2,000 km of rail network to be brought under indigenous technology KAWACH for safety and capacity augmentation.
• PM GatiShakti Master Plan for Expressways to be formulated in 2022-23 to facilitate faster movement of people and goods; National Highways network to be expanded by 25,000 km in 2022-23.

Finance Minister Nirmala Sitharaman, in her budget speech, highlighted that India’s economic growth in the current year is estimated to be 9.2%, highest among all large economies. She said the fiscal deficit for FY 2022-23 is estimated at 6.4% of GDP. The budget speech reflected a great emphasis being laid on promoting and developing the country’s digital economy and the growing fintech ecosystem. This was also seen in the form of announcements pertaining to the rollout of an RBI-regulated digital rupee, along with a 30% tax rate on income from virtual digital assets. This would cover cryptocurrencies and non-fungible tokens (NFTs), which have been key subjects of discussion and anticipation in the country’s financial markets in recent times.

Also Read about Budget 2023: Highlights from FM Nirmala Sitharaman’s speech.

Taxpayers can now file updated income tax returns within two years from the end of the relevant assessment year. This has been introduced to allow taxpayers who may have made omissions or mistakes in correctly estimating their income for tax payment, an opportunity to rectify such errors. However, the salaried section of the population was in for a disappointment as no tax concessions were in store for them this time around. Further, the upcoming mega LIC IPO found a mention in this year’s budget speech, even as disinvestment was not a key point of discussion.

Take a look at what’s getting cheaper, and what’s costlier

Some of the things that might burn a smaller hole in people’s pockets following this budget are clothes, imitation jewellery, gemstones and diamonds, mobile phone parts and chargers. Add to this list domestic wearable devices, hearable devices and electronic smart meters. The government has slashed customs duty on cut and polished diamonds and gemstones to 5%, while simply sawn diamond would attract no customs duty. In a bid to incentivize exports, exemptions have also been provided on items such as embellishment, trimmings, fasteners, buttons, zippers, lining material, specified leather, furniture fittings and packaging boxes that may be needed by exporters of handicrafts, textiles and leather garments, leather footwear and other goods. But certain imported items and umbrellas will get costlier. The duty on umbrellas has been raised to 20% and exemption to parts of umbrellas withdrawn.