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Finance Minister Nirmala Sitharaman commenced the Union Budget 2022-23by expressing towards those who suffered due to the COVID-19 pandemic. The finance minister estimated India's growth to be at 9.2%, the highest among all large economies. This year's budget focused on Clean Energy, Infrastructure, Agriculture, MSME, Education, Digital Economy, Hospitality, Transportation &Logistics and increasing capital expenditure for the overall development of the economy.Here are the top announcements:
- Fiscal deficit to be around 4.5% of GDP by 2025-26
- Estimates fiscal deficit of 6.4% of GDP in 2022-23
- Estimates fiscal deficit at 6.9% of GDP for 2022-23
- Total capital expenditure is expected to touch Rs.39.45 trillion in 2022-23
Some of the Key Highlights of the Union Budget 2022-23:
MSME Sector:
- Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 to support MSME firms.With an expanded guarantee cover of Rs 5 lakh crore, the extension will help the companies tide over the liquidity crunch resulting due to COVID-19 curbs. This scheme will be key to ensure that MSMEs impacted by intermittent lock-downs in states get funding to stay afloat.
- Allotment of Rs 2 lakh Crore additional credit for MSMEas part of the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
- Raising and Accelerating MSME performance (RAMP) programe with an outlay of Rs6000 Crore to be rolled out.
Finance:
- Life Insurance Company to announce PIO shortly. The government aims to raise up to Rs. 1200 crore by selling a minority stake to the public.
- The surcharge on the Long term capital gain (LTCG) is to be capped at 15%. This is expected to benefit taxpayers earning an income of more than Rs. 2 crores per year as well as reduce the tax burden for investors in manufacturing, start-ups, bonds and other types of unlisted assets.
- Special Economic Zones Act to be replaced with the new legislation.
Digital Currency:
- Launch of RBI-regulated Digital Rupee — a central bank digital currency (CBDC). With this, the government aims to provide users with convenience and security of digital reserve-backed circulation of the traditional banking system.The currency will be backed by blockchain technology starting 2022/23.
- Income generated from digital assets to be taxed at 30%. This is to legitimize the trading of private cryptocurrencies and non-fungible tokens. As per experts, this is in line with the Centre's plan to have a fiat digital currency while disallowing the use of private virtual coins as legal tender.
- New scheme to be launched for taxation of virtual assets
Taxation:
- Import duty on cut and polished diamonds and gemstones to be reduced to 5% from the current 7.5% in order to boost the sector.
- Customs duty exemption on steel scrap to be extended for another year to provide relief to MSME secondary steel producers.
- Withdrawal of customs duty on stainless steel, flat products, and high steel bars
- From Oct 2022, unblended fuel will get an additional duty of 2 rupees per litre
- The tax deduction limit for NPS accounts of state govt employees increased to 14% from 10%
- Taxpayers can correct errors made while tax filing and file an updated return within 2 years from the relevant assessment year.
Agriculture:
- NABARD to fund with blended capital in order to finance start-ups for rural enterprise and agriculture.
- Around 1.63 farmers to get Rs. 2.37 lakh crore direct payment for procurement of wheat and paddy.
Transport:
- Expansion of National Highways Network by 25000 Km in 2022-23.
- Rs 20000 Crore to be allotted for National Highways Network expansion.
- 100 PM Gati Shakti Cargo terminals and400 new generation Vande Bharat trains to be developed in the next 3 years
Capital Expenditure:
- Capital expenditure to be raised to Rs 7.5 lakh crore in 2022-23, up from Rs 5.5 lakh crore in 2022-23.
Others:
- Sovereign Green Bonds is part of the government's overall borrowing program. The proceeds from the borrowing will be used for specific sectors and projects.
- Government to create 60 lakh new jobs as part of the productivity linked incentive scheme in 14 sectors.
- PLI Schemes have the potential to create an additional production of Rs 30 lakh crore.
DISCLAIMER
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.