Union Budget 2022:What gets cheaper and what gets more expensive?

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Union Budget 2022-23 Explained: Here are the updates from Sitharaman’s Budget speech, and an explanation and analysis of it.

Smt. Nirmala Sitharaman addressing a press conference on June 28 2021 in New Delhi cropped
The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman

Union Budget 2022: Finance Minister Nirmala Sitharaman delivered the Union Budget 2022-23 to Parliament on Tuesday. The government has proposed expanding highways in the country by 25,000 kilometres, allocating Rs 60,000 crore to the Nal se Jal scheme, five river link projects across various states, an additional Rs 48,000 crore to the PM housing scheme, and boosting infrastructure development in the North East in five major infrastructure projects.

Union Budget 2022 Explained Live Updates: Finance Minister Nirmala Sitharaman announces five major infrastructure projects; 5G auction in 2022; national mental health programme; virtual currencies to be taxed; 400 more Vande Bharat trains in Railways budget; and more.

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Union Budget 2022:What gets cheaper and what gets more expensive?

Capital expenditure for the armed forces has increased by 10%, with 68 percent of the increase earmarked for domestic industry.

Along with a clear push to promote the country’s domestic defence industry, with over two-thirds of the capital outlay coming from domestic defence manufacturers, the capital outlay for the armed forces, at Rs. 1.52 lakh crore, has increased by nearly 10% over the Revised Estimates from last year, and nearly 13% over what was initially earmarked in budgeted estimate.

When compared to the Rs. 1.35 lakh crore budgeted estimates for 2021-2022, which were initially allocated during the Budget, the capital outlay for the armed forces has increased by nearly 13%.

Budget 2022: Why is FM pushing for increased capex allocation?

Union Minister Nirmala Sitharaman announced a 35.4 percent increase in capital expenditure to fund various infrastructure projects in 2022-23 in her Budget presentation. The government plans to invest Rs 7.50 lakh crore in capital expenditure next year, up from Rs 5.54 lakh crore this year. But why the increased allocation?

MHA budget increased by 11%, but capital expenditure increased by only 5%; J&K and border infrastructure receive increased funding.

The Ministry of Home Affairs (MHA) has been allocated more than Rs 1.85 lakh crore in the Union budget for 2022-23, which is more than 11% more than the allocation of Rs 1.66 lakh crore in the previous budget for the current fiscal. The MHA was allocated Rs 1.67 lakh crore in the 2019-20 budget.

However, capital expenditure in the MHA’s 2022-23 budget has increased by only 5% from Rs 15,924 crore in the previous budget to Rs 16,753 crore this budget.

Budget 2022: How the extension of ECLGS will benefit medium and small businesses

The Emergency Credit Line Guarantee Scheme (ECLGS) will be extended to cover the next fiscal year as well, with an increased guarantee cover of Rs 5 lakh crore, according to Finance Minister Nirmala Sitharaman’s budget presentation. Why is an extension necessary?

What is the Digital Rupee that Nirmala Sitharaman announced?

The government is introducing the Digital Rupee, a digital currency issued by the central bank (CBDC). The Reserve Bank of India will introduce the CBDC in the coming fiscal year. This comes in the wake of the government’s plans to launch the CBDC, which will be powered by blockchain technology. What exactly is CBDC, and why is it needed? What effect does this have on citizens?

Budget 2022 Explained: How will tax on crypto work

Finance Minister Nirmala Sitharaman announced the introduction of a Digital Rupee in fiscal year 2022-23, as well as a 30% tax on virtual assets, while presenting the Union Budget 2022.

IT Returns can now be revised for omission, mistakes, says Govt

Tax returns can now be revised for omissions and errors, including declared but unreported income. Changes can be made during a one-time window that lasts two years from the end of the fiscal year on payment of taxes.

The surcharge on the transfer of any long-term capital gains has been set at 15%.

The minimum alternate tax rate for cooperatives has been reduced to 18.5 percent, bringing it in line with the rate for corporations. In addition, the surcharge for cooperatives has been reduced from 12% to 7% for total income ranging from Rs 1-10 crore.

The timelines for benefits under the new corporate tax regime have also been extended in the Budget. The government announced a 15% corporate tax rate for newly formed manufacturing companies until March 31, 2023, which has now been extended until March 31, 2024. The period for startups to incorporate in order to receive tax benefits has also been extended by a year, to March 31, 2023.

Reduction of surcharge on unlisted shares from 28.5% to 23%

The Finance Minister announced a reduction in the surcharge on unlisted shares from 28.5 percent to 23 percent, which will make it easier for startups and unicorns to exit.

Crypto, NFT comes under tax net

The Budget proposes levying a 30% tax on virtual assets. Finance Minister Nirmala Sitharaman stated that it cannot be used to replace any other source of income and that a 1% TDS will be levied on payments made with digital assets in order to keep track of transactions.

Income from transfer of digital assets to be charged 30% tax

Ending the ambiguity over the taxation of gains stemming from investments in cryptocurrency, Union Finance Minister Nirmala Sithraman on Tuesday, announced that gains from such investments will be levied at 30 per cent. Bitcoin, the most prominent cryptocurrency, was up in trading. However, losses on account of such investments will not be allowed to be set off. This will provide the much needed clarity to investors in various cryptocurrencies. Earlier, the government had also announced the introduction of a digital rupee based on the blockchain technology.

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Budget 2022

Sitharaman proposes increase of employees’ tax deduction limit to 14%

Nirmala Sitharaman proposed during the presentation of the Union Budget that the tax deduction limit for both Centre and state government employees be increased from 10% to 14% in order to help state government employees’ social security benefits and bring them on par with those of the Central government.

“Corporate surcharge to be reduced from 12% to 7%,” she added. I propose that any income derived from the transfer of any virtual digital asset be taxed at a rate of 30%. Except for the cost of acquisition, no deduction in respect of any expenditure or allowance shall be allowed when computing such income.

Budget 2022-Railways: 400 energy-efficient Vande Bharat trains on track

According to Finance Minister Nirmala Sitharaman, India will produce 400 new, energy-efficient Vande Bharat trains over the next three years. Aside from that, she said, the rail sector will develop “One Station One Product,” which will leverage local produce carried on the railways, with a focus on farmers. Railways will also roll out postal railways for parcel carriage, giving a boost to a new business area while introducing new products.

Economic Survey: Key challenges and concerns for Indian economy

Despite a projected 9.2 percent increase in GDP in FY22 to pre-pandemic levels, the Indian economy faces a slew of structural challenges that existed prior to the pandemic as well as new challenges brought on by Covid-19. The most significant headwind is inflation. According to the Survey, supply chain disruptions and slow economic growth have contributed to the rise in inflation. The withdrawal of stimulus in developed economies in the coming fiscal year is likely to have an impact on capital flows into the country.

Fiscal deficit estimated at 6.9 per cent: Nirmala Sitharaman

Given the government’s additional committed expenditure allocations over and above the previous year’s Budget figures, there were concerns that the government would likely miss its fiscal deficit target. However, the Finance Minister has announced only a minor deviation: instead of a budget target of 6.8 percent of GDP in 20221-22, the fiscal deficit is expected to be 6.9 percent. The Centre expects to reduce its deficit to 6.4% next year, in line with the glide path of consolidation.

Govt to set up independent system operator in natural gas transmission sector

To ensure unbiased allocation of natural gas transportation capacity, the government has announced the establishment of an independent system operator in the natural gas transmission sector for booking and coordination of common carrier capacity.

Ujjwala scheme extended to one crore more households

FM announced that the Ujjwala scheme, which is aimed at providing clean cooking fuel to poor households through LPG connections, would be extended to a further one crore households.

Budget proposes a Digital Rupee using blockchain

The budget proposes that the RBI issue Digital Rupees using blockchain and other technology beginning in 2022-23.

Capital expenditure raised, but concern over ability to spend

The Union Budget has increased the allocation for capital expenditure in 2022-23 to Rs 7.5 lakh crore, up from Rs 5.5 lakh crore in 2021-22. Given the continued sluggishness of private-sector investment, the government hopes that the continued emphasis on increasing public capital spending will help crowd in private-sector investment. However, there is some concern about one’s ability to spend. According to CGA data, the Centre’s capital spending has not increased at the expected rate in the current fiscal year.

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