Nirmala Sitharaman, Finance Minister (FM) of India, introduced the Union Budget 2022 in Parliament on Tuesday. Nirmala Sitharaman while presenting the Budget, said that the country’s economic growth for the current fiscal year is estimated to be approximately 9.2%. Here are some of the key highlights of the Budget 2022-23.
ECONOMY AND FINANCE
- The fiscal deficit now stands at 9.5 percent of GDP, with a forecast of 6.8 percent in 2021-22.
- Proposal to enable states to borrow up to 4% of their gross domestic product this year.
- The SEBI Act, the Depositories Act, and two additional statutes will be integrated into a single Unified Securities Market Code.
- Proposed increase in the foreign direct investment (FDI) quota from 49 percent to 74 percent
- For bank depositors, deposit insurance has been extended from Rs 1 lakh to Rs 5 lakh.
- Proposal to repeal the 2008 Limited Liability Partnership Act
- This year, two PSU banks and one general insurance business will be disinvested.
- LIC’s initial public offering (IPO) will take place this fiscal year.
- The strategic sales of BPCL, IDBI Bank, and Air India are expected to be finalized soon.
- Govt to pay Rs 2.37 lakh crore towards procurement of wheat and paddy under MSP operations.
- The Centre will promote Kisan Drones, chemical-free natural farming, public-private partnerships for the delivery of digital and high-tech services to farmers across the country during the financial year 2022-23, FM Nirmala Sitharaman said while presenting Union Budget 2022.
- A fund under the co-investment model will be facilitated through NABARD to finance startups for agriculture and rural enterprise relevant for the farm produce value chain.
- On the procurement of agri-crops, the FM said the government’s procurement of wheat and paddy at the minimum support price (MSP) during 2021-22 will cover 1,208 lakh tonnes from 163 lakh farmers. “Rs 2.37 lakh crore will be the direct payment of MSP value to their accounts,” she said.
- Implementation of the Ken Betwa Linking project at an estimated cost of Rs 44,605 crore to be taken up with irrigation benefits to 9 lakh hectare farmland, drinking water to 62 lakh people, 103 MW hydropower, and 27 MW solar power generation: Nirmala Sitharaman
The income tax slabs in the personal income tax category were not changed in the Budget 2022-23. In addition, contrary to popular belief, FM Sitharaman did not increase the standard deduction limit. The standard deduction is presently set at Rs 50,000, and increasing it would have put more money in the pockets of taxpayers.
She proposed a new provision permitting taxpayers to file an updated return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year.
The corporate tax rate was also set at the same level in Budget 2022. For newly constituted manufacturing units, however, the concessions rate of 15% has been extended for another year.
In her Budget speech, FM Sitharaman said there has been remarkable progress made in the Goods and Services Tax (GST) regime, but still, a few challenges remain. “Gross GST collection in January at record Rs 1,40,986 crores; this has been possible due to rapid economic recovery,” she said in Lok Sabha.
Presenting the Budget 2022, FM said the next target of the government is to create 60 lakh jobs in 5 years. The productivity linked incentive in 14 sectors for achieving the vision of “AtmaNirbhar Bharat” has received an excellent response, with the potential to create 60 lakh new jobs, and additional production of 30 lakh crore during the next 5 years, FM Sitharaman said.
ECLGS Scheme for MSMEs: The scheme has been extended to March 2023 and expanded, with an added cover of Rs 50,000 crore. The total cover is now at Rs 5 lakh crore.
- Udyam, e-shram, NCS and ASEEM portals to be interlinked.
- 130 lakh MSMEs provided additional credit under Emergency Credit Linked Guarantee Scheme (ECLGS)
- 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 an outlay of Rs 6000 Crore to be rolled out.
TAX DEDUCTION LIMIT
To put state government workers on line with central government employees, the tax deduction threshold on the employer’s contribution to the National Pension System would be enhanced to 14 percent from 10%.
GATI SHAKTI MASTER PLAN
The PM Gati Shakti National Master Plan is propelled forward by seven engines: roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure. In FY23, the Gati Shakti Master Plan for expressways will be finalized, and during the following three years, 100 new freight ports will be created. In FY23, the national highway system will be extended by 25,000 kilometers.
TAXATION ON CRYPTOCURRENCIES, VIRTUAL ASSETS
Any profit earned through the transfer of a virtual digital asset will be taxed at a rate of 30%. There are no deductions for any expenses or allowances other than the acquisition cost. TDS at 1% over a certain monetary threshold. Losses incurred from the selling of virtual digital assets cannot be offset by other sources of income.
- Digital rupee: India to introduce a digital rupee issued by the RBI in FY23.
- Digital bank- Scheduled Commercial Banks to set up 75 Digital Banking Units (DBUs) in 75 districts.
5G ROLL OUT
Finance Minister Nirmala Sitharaman said in her speech that 5G mobile services will be rolled out within 2022-23. According to reports, 5G services will be launched in major cities including Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, and Ahmedabad to begin with.
HOUSING & WATER
- Rs 48,000 crores allocated for completion of construction of 80 lakh houses under PM Awas Yojana in rural and urban areas in the year 2022-23.
- The budget allocation for the Department of Drinking Water and Sanitation is a massive 67,221.12 crores. The FM also announced an allocation of nearly Rs 60,000 crores for the Har Ghar Jal scheme, which would give tap water to about 3.8 crore Indian families.
TRANSPORTATION INCLUDING RAILWAYS
- 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.
- Railway Ministry to be allocated Rs 140367.13 crore – Rs 20,311 crore more than the revised figures of the previous fiscal.
- National highways network to be expanded by 25,000km in 2022-23.
- Highways expansion to cost Rs 20,000 crore in 2022-23.
- One Station One Product concept to help local businesses & supply chains will be popularized.
SOVEREIGN GREEN BONDS & CLIMATE
“As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be immobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy,” said finance minister Nirmala Sitharaman while presenting the Union Budget 2022-23.
- Additional allocation of Rs. 19,500 crore for Production Linked Incentive for the manufacture of high-efficiency solar modules to meet the goal of 280 GW of installed solar power by 2030.
- Five to seven percent biomass pellets to be co-fired in thermal power plants
- Four pilot projects to be set up for coal gasification and conversion of coal into chemicals for the industry.
- To boost self-reliance and reduce reliance on imports of defense equipment, 68 percent of the capital procurement budget for defense has been earmarked for domestic industry.
- Defense R&D to be opened up for industry, startups, and academia with 25% of defense R&D budget earmarked.
- Independent nodal umbrella body to be set up for meeting testing and certification requirements.
EDUCATION & SKILLING
- ‘One class-One TV channel’ program of PM eVIDYA to be expanded to 200 TV channels.
- Virtual labs and skilling e-labs to be set up to promote critical thinking skills and a simulated learning environment.
- High-quality e-content will be developed for delivery through Digital Teachers.
- Digital University for world-class quality universal education with a personalized learning experience to be established.
- Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched to empower citizens to skill, reskill or upskill through online training.
- Startups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-Service (DrAAS).
- An open platform for National Digital Health Ecosystem to be rolled out.
- ‘National Tele Mental Health Programme’ for quality mental health counseling and care services to be launched.
- A network of 23 tele-mental health centers of excellence will be set up, with NIMHANS being the nodal centre and the International Institute of Information Technology- Bangalore (IIITB) providing technical support.
SOLAR PV MODULES
To facilitate domestic manufacturing of 280 gigawatts of installed solar capacity by 2030, an additional allocation of Rs 19,500 crore for PLI for manufacturing of high-efficiency modules with priority to fully integrate manufacturing units to solar PV modules will be made: FM
DUTIES ON INDUSTRY
- According to the budget, changes will be implemented in the Customs Administration of Special Economic Zones, which will be totally IT-driven and operate on the Customs National Portal, with an emphasis on increased convenience and primarily risk-based inspections. This change must be completed by September 30, 2022.
- Customs duty rates are being calibrated in the sector of electronics to give a graded rate structure to aid local manufacture of wearable gadgets, hearable devices, and electronic smart meters. Duty exemptions are also available for portions of transformers used in mobile phone chargers, as well as camera lenses used in mobile camera modules and a few other products.
- The customs duty on some crucial chemicals, such as methanol, acetic acid, and heavy feedstock for petroleum refining, is being slashed, while the duty on sodium cyanide, which has sufficient domestic capacity, is being increased.
E-passports using embedded chips and futuristic technology will start rolling out in FY23 to make overseas travel more convenient. For the convenience of citizens “The issuance of e-Passports, using embedded chip and futuristic technology will be rolled out in 2022-23 to enhance the convenience of citizens in their overseas travel,” she stated.
INSOLVENCY AND BANKRUPTCY
The Budget also proposes that the Bankruptcy & Bankruptcy Code be amended to improve the effectiveness of the resolution process and ease cross-border insolvency resolution. The Code’s major goal is to help distressed corporate debtors. “Necessary amendments in the Code will be carried out to enhance the efficacy of the resolution process and facilitate cross-border insolvency resolution,” Ms. Sitharaman said.
Broadly Government is considering a few steps to implement:
- establishing a framework for cross-border insolvency based on the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law”),
- requiring banks and financial institutions to rely on only records with the information utility (registered with the Insolvency and Bankruptcy Board of India) to demonstrate a corporate debtor’s default, and that National Company Law Tribunals (“NCLTs”) consider this sufficient evidence to initiate a corporate insolvency resolution process (“CIRP”), in order to reduce the time taken for CIRP admission.
- Simplify the provisions relating to improper trading and avoidable transactions, by explicitly stating that proceedings against improper trading and avoidable transactions can continue even after approval of a resolution plan, changing the look-back period, and correcting various drafting inconsistencies in the IBC, and
- permitting NCLTs to approve or reject resolution proposals within a thirty-day timeframe, and 5. allowing for an out-of-court closure of a voluntary liquidation process prior to dissolution, in the same way as a voluntary liquidation process is undertaken.
- – Sahid Ahamed,
- Student Editor, LawDIKTAT