The Finance Minister of India presented the Union Budget for the financial year 2022–23 on 1 February 2022 (Budget).
The Budget lays the foundation and provides a blueprint to steer the economy over the Amrit Kaal (the best and the most auspicious time) – from India@75 years to India@100 years (since independence). It continues to build on the vision drawn in the Union Budget of 2021–22. Its fundamental tenets reflect the Government’s intent, strengths, and challenges.
Some key highlights of the Budget are:
- India’s economic growth is estimated at 9.2%, to be the highest among all large economies. The Government’s productivity linked incentive (PLI) schemes in 14 sectors are expected to create 6 million new jobs and expected to have the potential to create an additional production of INR 30 lakh crore approx. USD 400 billion during next 5 years.
- The four pillars on which the Government’s impetus towards growth over the 25 years’ plan are:
- PM GatiShakti (infrastructural development for Roads, Railways, Ports, Airports, Mass Transport, Waterways and Logistics);
- Inclusive Development;
- Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and Climate Action; and
- Financing of Investments.
- With regard to the above, the roadmap would include:
- Digital Currency – Introduction of the digital rupee (Central Bank Digital Currency) – using blockchain and other technologies by the Reserve Bank of India (India’s central bank and banking sector regulator) in 2022-23;
- Urban Planning – Through modernization of building by-laws and implementation of Town Planning Schemes and Transit Oriented Development, along with providing a battery swapping policy for setting up charging stations in urban areas;
- Telecom Sector – Through providing auctions for 5G spectrum in 2022, to help set up a strong ecosystem for 5G as part of the PLI scheme;
- Sunrise Opportunities – Through providing Government contribution for research and development in Sunrise Opportunities like Artificial Intelligence, Geospatial Systems and Drones, Semiconductors and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy and Clean Mobility Systems;
- Energy Transition and Climate Action – Through additional allocation of INR 19,500 crores (approx. USD 2.6 billion) for PLI for manufacture of high efficiency solar modules to meet the goal of 280 GW of installed solar power by the year 2030;
- Gujarat International Finance Tec-City (GIFT), India’s first International Financial Services Centre (IFSC) – World-class foreign universities and institutions to be allowed in the GIFT IFSC. Also, an International Arbitration Centre to be set up for timely settlement of disputes under international jurisprudence;
- Accelerated Corporate Exit – Through establishment of Centre for Processing Accelerated Corporate Exit (C-PACE) for speedy winding-up of companies;
- Export Promotion – Special Economic Zones (SEZ) legislation is being considered to be replaced by a new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’;
- Agriculture – Facilitated by deployment of ‘Kisan Drones’ for crop assessment, digitization of land records, spraying of insecticides and nutrients, promotion of chemical-free natural farming;
- Skill Development – Through promotion of start-ups to facilitate ‘Drone Shakti’ and for Drone-As-A-Service (DrAAS);
- Education – Through establishing a Digital University for world-class quality universal education with personalised learning experience;
- Health – Through rolling-out an open platform for National Digital Health Ecosystem; and
- Micro, Small and Medium Enterprises – Facilitated through providing additional credit under Emergency Credit Linked Guarantee Scheme extended up to March 2023.
- Certain other key steps include:
- issuance of Sovereign Green Bonds for mobilizing resources for green infrastructure;
- introduction of new ‘Updated Return’ for direct taxes which would allow the assessee to declare income missed out earlier within 2 years from the end of the relevant assessment year, on payment of additional tax;
- to provide a level playing field between cooperative societies and companies, Alternate Minimum Tax paid by cooperatives is proposed to be brought down from 18.5% to 15% along with a reduction in surcharge;
- to further incentivize eligible start-ups, the period to avail tax benefits is proposed to be extended by 1 year, up to 31 March 2023;
- for companies opting for incentives under concessional tax regime, the last date for commencement of manufacturing or production under section 115BAB of the Income-tax Act, 1961 is proposed to be extended by 1 year i.e., from 31 March 2023 to 31 March 2024;
- introduction of taxation of virtual digital assets, where any income from transfer of or gift of any virtual digital asset is proposed to be taxed at the rate of 30%;
- to greatly help in reducing repeated litigation between taxpayers and the tax department, in cases where question of law is identical to the one pending in a High Court or the Supreme Court of India, the filing of appeal by the tax department would be deferred till such question of law is decided by the court;
- customs administration of SEZs is proposed to be fully information-technology driven with a ‘Customs National Portal’ which is proposed to be implemented by 30 September 2022;
- it is proposed to calibrate customs duty rates to enable domestic manufacturing of high growth electronic items, wearable devices, hearable devices and electronic smart meters; and
- it is proposed that public investment would continue to pump prime private investment and demand in 2022-23 and accordingly, the outlay for capital expenditure is proposed to be stepped up sharply by 35.4% to INR 7.50 lakh crore (approx. USD 100 billion) in 2022-23.
The Ministry of Finance, Government of India’s press release on the “Highlights of the Union Budget 2022-23” may be accessed at: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1794165.
Detailed particulars regarding the Budget may be accessed at: https://www.indiabudget.gov.in/.