Key Highlights of Union Budget 2022-23

The Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman tabled the Union Budget 2022-23 in Parliament today.

The key highlights of the budget are as follows:

Economy

India’s economic growth estimated at 2% to be the highest among all large Economies.
60 lakh new jobs to be created under the productivity linked Incentive Scheme in 14 Sectors.
PLI Schemes have the potential to create an additional production of Rs 30 lakh Crore.
National Highways Network to be expanded by 25000 Km in 2022-23. Rs 20000 Crore to be mobilized for National Highways Network Expansion.
2.37 Lakh Crore direct payment to Rs. 1.63 Crore farmers for procurement of wheat and paddy.
Udyam, E-Shram, NCS and ASEEM portals to be interlinked.
130 Lakh MSMEs provided additional credit under Emergency Credit Linked Guarantee Scheme (ECLGS)
ECLGS to be extended up to March 2023. Guarantee cover under ECLGS to be expanded by Rs 50000 Crore to total cover of Rs 5 Lakh Crore.
Rs 2 lakh Crore additional credit for MSME to be facilitated under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
Raising and Accelerating MSME performance (RAMP) programme with outlay of Rs 6000 Crore to be rolled out.
100 per cent of 1.5 lakh post offices to come on the core banking system.
Scheduled Commercial Banks to set up 75 Digital Banking Units (DBUs) in 75 districts.
e-Passports with embedded chip and futuristic technology to be rolled out.
Special Economic Zones Act to be replaced with a new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.
Additional allocation of Rs. 19,500 crore for Production Linked Incentive for manufacture of high efficiency solar modules to meet the goal of 280 GW of installed solar power by 2030.
Outlay for capital expenditure stepped up sharply by 35.4% to Rs. 7.50 lakh crore in 2022-23 from Rs. 5.54 lakh crore in the current year. Introduction of Digital Rupee by the Reserve Bank of India starting 2022-23.
Enhanced outlay for ‘Scheme for Financial Assistance to States for Capital Investment from Rs. 10,000 crore in Budget Estimates to Rs. 15,000 crore in Revised Estimates for current year. Further, Allocation of Rs. 1 lakh crore in 2022-23 to assist the states in catalysing overall investments in the economy: fifty-year interest free loans, over and above normal borrowings.

Direct Taxes

Provision to file an Updated Return on payment of additional tax. It will enable the assessee to declare income missed out earlier within two years from the end of the relevant assessment year.
Alternate Minimum Tax paid by Cooperatives brought down from 18.5 per cent to 15 per cent.
Surcharge on Cooperative Societies reduced from 12 per cent to 7 percent for those having total income of more than Rs 1 crore and up to Rs 10 crores.
Payment of annuity and lump sum amount from insurance scheme to be allowed to differently abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardian attaining the age of 60 years.
Tax deduction limit increased from 10 per cent to 14 percent on employer’s contribution to the NPS account of State Government employees.
Period of incorporation extended by one year, up to 31.03.2023 for eligible start-ups to avail tax benefit.
Last date for commencement of manufacturing or production under section 115BAB extended by one year i.e. from 31^st March, 2023 to 31^st March, 2024.
Any income from transfer of any virtual digital asset to be taxed at the rate of 30 per cent.
No deduction in respect of any expenditure or allowance to be allowed while computing such income except cost of acquisition.
Loss from transfer of virtual digital asset cannot be set off against any other income.
To capture the transaction details, TDS to be provided on payment made in relation to transfer of virtual digital asset at the rate of 1 per cent of such consideration above a monetary threshold.
Gift of virtual digital asset also to be taxed in the hands of the recipient.
Subject to specified conditions, the following to be exempt from tax
- Income of a non-resident from offshore derivative instruments.
- Income from over the counter derivatives issued by an offshore banking unit.
- Income from royalty and interest on account of lease of ship.
- Income received from portfolio management services in IFSC.
Surcharge on AOPs (consortium formed to execute a contract) capped at 15 per cent.
Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent.
Any surcharge or cess on income and profits not allowable as business expenditure.
No set off, of any loss to be allowed against undisclosed income detected during search and survey operations.
Tax deduction provided to person giving benefits, if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.

Indirect Taxes

Customs Administration of SEZs to be fully IT driven and function on the Customs National Portal – shall be implemented by 30th September 2022.
Faceless Customs has been fully established. During Covid-19 pandemic, Customs formations have done exceptional frontline work against all odds displaying agility and purpose.
Gradually phasing out of the concessional rates in capital goods and project imports; and applying a moderate tariff of 7.5 percent – conducive to the growth of domestic sector and ‘Make in India’.
A few exemptions introduced on inputs, like specialised castings, ball screw and linear motion guide to encourage domestic manufacturing of capital goods.
More than 350 exemption entries proposed to be gradually phased out, like exemption on certain agricultural produce, chemicals, fabrics, medical devices, & drugs and medicines for which sufficient domestic capacity exists.
Customs duty rates to be calibrated to provide a graded rate structure to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters.
Duty concessions to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items – To enable domestic manufacturing of high growth electronic items.
Customs duty on cut and polished diamonds and gemstones being reduced to 5 per cent; Nil customs duty to simply sawn diamond. To give a boost to the Gems and Jewellery sector. A simplified regulatory framework to be implemented by June this year – To facilitate export of jewellery through e-commerce. Customs duty of at least Rs 400 per Kg to be paid on imitation jewellery import – To disincentivise import of undervalued imitation jewellery.
Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining being reduced; Duty is being raised on sodium cyanide for which adequate domestic capacity exists to enhance domestic value addition.
Customs duty on umbrellas being raised to 20 per cent. Exemption to parts of umbrellas being withdrawn. Exemption being rationalised on implements and tools for agri-sector which are manufactured in India
Customs duty exemption given to steel scrap last year extended for another year to provide relief to MSME secondary steel producers
Certain Anti- dumping and CVD on stainless steel and coated steel flat products, bars of alloy steel and high-speed steel are being revoked – to tackle prevailing high prices of metal in larger public interest.
To incentivise exports, exemptions being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes.
Duty being reduced on certain inputs required for shrimp aquaculture – to promote its exports.
Unblended fuel to attract an additional differential excise duty of Rs 2/ litre from the 1st of October 2022 – to encourage blending of fuel.