The Finance Minister (FM) Nirmala Sitharaman presented a largely infrastructure-focused Union Budget of 2022 on February 1. The FM said that a 9.2% economic growth in India was expected in the current financial year as the economy sharply rebounded.
Income tax slabs were left unchanged while announcements were made regarding some important measures for economic growth, inclusive welfare and employment opportunities. The FM also announced plans for strengthening the health infrastructure and faster implementation of the vaccination program. However, the main highlight remains the proposed introduction of digital currency.
Let’s dive into some of the key highlights of Union Budget 2022.
Here are some additional highlights of the Union Budget across various sectors.
Relief measures for MSMEs (Micro, Small and Medium Enterprises) were announced during the Union Budget 2022 speech. Emergency Credit Linked Guarantee Scheme (ECLGS), which provided credit to around 130 lakh MSMEs, had its deadline extended to March 2023.
In Budget 2022, the guarantee cover of ECLGS has expanded by Rs. 50,000 crores to Rs. 5 lakh crore. CGTMSE (Credit Guarantee Trust for Micro and Small Enterprise) will provide extra Rs. 2 lakh crore credit. An additional Rs. 6000 crore would be provided by the RAMP (Raising and Accelerating MSME Performance) program.
Startups, too, have a reason to rejoice as the FM announced the extension of tax incentives for startups by one year. Newly incorporated manufacturing companies would get a concessional tax rate of 15% till March 2024.
The FM announced that the DESH-Stack e-portal (a Digital Ecosystem for Skilling and Livelihood) will be launched for citizens. Skilling programs on this platform would help people skilling, reskilling, and upskilling. This will increase their chances of finding job opportunities.
A digital university will also be developed to provide students with world-class education as per ISTE standards. The ‘One class-one TV channel’ program of eVidya will be expanded to around 200 TV channels, and teachers will provide high-quality e-content. In addition, GOI will set up virtual labs and skilling e-labs to promote critical thinking skills.
The GOI will replace the SEZ (Special Economic Zone) Act with new legislation that will allow States to become partners in developing enterprise and service hubs. The successor legislation will cover all large, existing and new industrial enclaves from all states to optimise infrastructure utilisation and enhance business competitiveness. The new SEZ policy will be out within 3-4 months.
To encourage exports, the budget has provided tax exemptions on items such as lining material, packaging boxes, furniture fittings, buttons, fasteners, zippers, trimming and embellishment etc.
All of the 1.5 lakh post offices in India would come under the core banking system. This would enhance financial inclusion for many investors and provide them access to net banking, mobile banking, fund transfer and ATM facilities. This measure would be especially helpful for senior citizens and farmers living in rural areas and increase interoperability.
The FM also announced the launch of 75 DBUs (Digital Banking Units) in 75 districts by scheduled commercial banks.
The Finance Minister announced a proposal to create a CBDC (Central Bank Digital Currency) called Digital Rupee. This would use blockchain and other technologies for cheaper and more efficient currency management. RBI (Reserve Bank of India) will issue this digital currency in 2022-23.
This digital currency carries high expectations as it will provide a great opportunity for our country to become a global leader in the digital currency world.
For the first time, GOI has proposed a taxation scheme for the sale of virtual digital assets. The Government will tax any income from the transfer of such assets at a 30% rate. TDS is also deductible on payments made for the transfer of virtual digital assets at a 1% rate above a certain monetary limit.
Losses from the sale of virtual digital assets such as NFT and cryptocurrencies cannot be set off against any other income. Moreover, one cannot claim any expenditure, deduction or allowance against such income except for the cost of acquisition. Gifts of digital assets are also taxable in the hands of the recipient.
The above are some of the key highlights of the Union Budget 2022. It was a growth-oriented budget with the aim to continue economic growth and recovery with a special focus on infrastructure, education, healthcare, agriculture and startups. Moreover, it announced financial assistance of Rs. 1 lakh crore for states to revitalise the economy.
Before you go…
Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.