Budget 2022: Highlights

The Finance Minister of India Smt. Nirmala Sitharaman, presented the Union Budget 2022 on 01 February 2022, at the Parliament. This year while presenting the union budget 2022, the finance minister said that the country is expected to see a growth of 9.27% in the coming year.  The Finance Minister said, India is celebrating Azadi ka Amrit Mahotsav and it has entered into Amrit Kaal, the 25-year-long leadup to India@100. Here are some important points every UPSC and other competitive exams aspirant must know. So, candidates are advised to go through each point discussed below very closely. There may be a question in the UPSC, CDS and other competitive exams from the union budget2022 – 2023.

Four pillars of Union budget

The four pillars of development on which the Union Budget 2022 is focusing are:

i) Inclusive development

ii) Productivity enhancement

iii) Energy transition 

iv) Climate action

The Finance Minister in the Union Budget 2022 speech informed that the Productivity Linked Incentive (PLI) 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 an additional production of  Rs 30 lakh crore during the next 5 years.

Estimated Growth & development

The Union Budget 2022 states that India’s economic growth is estimated at 9.2% to be the highest among all large economies.

60 lakh new jobs are 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.

Entering Amrit Kaal, the 25 year-long lead up to India @100, the budget provides an impetus for growth along with four priorities:

1. PM GatiShakti
2. Inclusive Development
3. Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and Climate Action.
4. Financing of investments

Know about History of union budget and important facts.

Union Budget 2022-23: Highlights

The key highlights of the budget are as follows:

PM GatiShakti National Master Plan

• The seven engines that drive PM GatiShakti are Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics Infrastructure.
• The scope of PM GatiShakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency.
• The projects pertaining to these 7 engines in the National Infrastructure Pipeline will be aligned with the PM GatiShakti framework.

Road Transport

• National Highways Network to be expanded by 25000 Km in 2022-23.
• Rs 20000 Crore to be mobilized for National Highways Network expansion.

Multimodal Logistics Parks

• Contracts to be awarded through PPP mode in 2022-23 for implementation of Multimodal Logistics Parks at four locations.

Railways

• One Station One Product concept to help local businesses & supply chains.
• 2000 Km of the railway network to be brought under Kavach, the indigenous world-class technology and capacity augmentation in 2022-23.
• 400 new generation Vande Bharat Trains to be manufactured during the next three years.
• 100 PM GatiShakti Cargo terminals for multimodal logistics to be developed during the next three years.

Parvatmala

• National Ropeways Development Program, Parvatmala to be taken up on PPP mode in this Union Budget 2022.
• Contracts to be awarded in 2022-23 for 8 ropeway projects of 60 Km length.

Agriculture

• Rs. 2.37 lakh crore direct payment to 1.63 crore farmers for procurement of wheat and paddy.
• Chemical-free Natural farming to be promoted throughout the county. The initial focus is on farmer’s lands in 5 Km wide corridors along river Ganga.
• NABARD to facilitate fund with blended capital to finance startups for agriculture & rural enterprise.
• ‘Kisan Drones’ for crop assessment, digitization of land records, spraying of insecticides and nutrients.

Ken Betwa project

• Ken-Betwa linking project would be implemented costing almost INR 44,605 crore.
•  It would benefit 9.08 lakh farmers of the region with irrigation facilities, provide drinking water to 62 lakh people and generate power at around 103 MW (Hydro) and 27 MW (Solar).

MSME

• 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 a total cover of Rs 5 Lakh Crore.
• 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.

Skill Development

• Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched to empower citizens to skill, reskill or upskill through on-line training.
• Startups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-Service (DrAAS).

Education

• ‘One class-One TV channel’ programme 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 personalised learning experience to be established.

Health

• National Digital Health Ecosystem platform to be rolled out.
• ‘National Tele Mental Health Programme’ for quality mental health counselling and care services to be launched.
•  Network of 23 tele-mental health centres of excellence will be set up, with as nodal centre and International Institute of Information Technology-Bangalore  (IIITB) providing technology support

Saksham Anganwadi

• Integrated benefits to women and children through Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0.
• Two lakh anganwadis to be upgraded to Saksham Anganwadis.

Har Ghar, Nal Se Jal

• Rs. 60,000 crore allocated to cover 3.8 crore households in 2022-23 under Har Ghar, Nal se Jal.

Housing for All

• Rs. 48,000 crores allocated for completion of 80 lakh houses in 2022-23 under PM Awas Yojana.

Prime Minister’s Development Initiative for North-East Region (PM-DevINE)

• New scheme PM-DevINE launched to fund infrastructure and social development projects in the North-East.
• An initial allocation of Rs. 1,500 crore made to enable livelihood activities for youth and women under the scheme.

Vibrant Villages Programme

• Vibrant Villages Programme for the development of Border villages with a sparse population, limited connectivity and infrastructure on the northern border.

Banking

The Government is planning to give a push to Digital Currency. Digital rupee will be issued using blockchain and other technologies by the RBI starting 2022-23.

Emergency Credit Line Guarantee Scheme will be extended up to March 2023 and the guaranteed cover will be expanded by Rs 50,000 crore to cover an amount of Rs 5 lakh crore.

• 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-Passport

• e-Passports with embedded chip and futuristic technology to be rolled out.

Urban Planning

• Modernization of building bye-laws, Town Planning Schemes (TPS), and Transit-Oriented Development (TOD) will be implemented.
• Battery swapping policy to be brought out for setting up charging stations at scale in urban areas.

Land Records Management

Extremely User-Friendly

• Unique Land Parcel Identification Number for IT-based management of land records.

Accelerated Corporate Exit

• Centre for Processing Accelerated Corporate Exit (C-PACE) to be established for speedy winding-up of companies.

AVGC Promotion Task Force

• An animation, visual effects, gaming, and comic (AVGC) promotion task force to be set up to realize the potential of this sector.

Telecom Sector

• Scheme for design-led manufacturing to be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.

Export Promotion

• Special Economic Zones Act to be replaced with new legislation to enable States to become partners in ‘Development of Enterprise and Service Hubs’.

AtmaNirbharta in Defence:

• Government is committed to reducing imports and promoting AtmaNirbharta in equipment for the Armed Forces. 68 per cent of the capital procurement budget will be earmarked for domestic industry in 2022-23, up from 58 per cent in 2021-22.
• Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV model.
• An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements.

 Sunrise Opportunities

• Government support to Sunrise Opportunities like Artificial Intelligence, Geospatial Systems and Drones, Semiconductor and its eco-system, Space Economy, Genomics and Pharmaceuticals, Green Energy, and Clean Mobility Systems.
• Govt will contribute to its R&D

Energy Transition and Climate Action:

• Additional allocation of 19,500 crores for the manufacturing of solar modules to facilitate 280-gigawatt domestic power through solar plants by 2030. Five to seven per cent biomass pellets to be co-fired in thermal power plants:
• CO₂ savings of 38 MMT annually,
• Extra income to farmers and job opportunities to locals,
• Help avoid stubble burning in agriculture fields.
• The outlay in 2022-23 to be 2.9% of GDP.
• The outlay for capital expenditure stepped up by 35.4% to Rs. 7.50 lakh crore in 2022-23 from Rs. 5.54 lakh crore in the current year
• Four pilot projects to be set up for coal gasification and conversion of coal into chemicals for the industry
• Financial support to farmers belonging to Scheduled Castes and Scheduled Tribes, who want to take up agro-forestry.

Public Capital Investment:

• Public investment to continue to pump-prime private investment and demand in 2022-23.
• The 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.
• The outlay in 2022-23 to be 2.9% of GDP.
• ‘Effective Capital Expenditure’ of Central Government estimated at Rs. 10.68 lakh crore in 2022-23, which is about 4.1% of GDP.

GIFT-IFSC

• World-class foreign universities and institutions to be allowed in the GIFT City.
• An International Arbitration Centre to be set up for timely settlement of disputes under international jurisprudence.

Mobilising Resources

• Data Centres and Energy Storage Systems to be given infrastructure status.
• Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystems. Measures are to be taken to help scale up this investment.
• Blended funds to be promoted for sunrise sectors.
• Sovereign Green Bonds to be issued for mobilizing resources for green infrastructure.

Digital Rupee

• Introduction of Digital Rupee by the Reserve Bank of India starting 2022-23.

Providing Greater Fiscal Space to States

• The enhanced outlay for ‘Scheme for Financial Assistance to States for Capital Investment’:
• From Rs. 10,000 crores in Budget Estimates to Rs. 15,000 crore in Revised Estimates for the current year
• 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
• In 2022-23, States will be allowed a fiscal deficit of 4% of GSDP, of which 0.5% will be tied to power sector reforms

Budget Estimates & Expenditure

• Budget Estimates 2021-22: Rs. 34.83 lakh crore
• Revised Estimates 2021-22: Rs. 37.70 lakh crore
• Total expenditure in 2022-23 estimated at Rs. 39.45 lakh crore
• Total receipts other than borrowings in 2022-23 estimated at Rs. 22.84 lakh crore

Fiscal Deficit

• Fiscal deficit in the current year: 6.9% of GDP (against 6.8% in Budget Estimates)
• Fiscal deficit in 2022-23 estimated at 6.4% of GDP

Tax Proposals in the Indian Union Budget 2022

Both Centre and States govt employees’ tax deduction limit to be increased from 10% to 14% to help the social security benefits of state government employees and bring them at par with the Central govt employees.

Income from Long Term Capital Gains will be taxed at 15% and corporate surcharge would be reduced from 12% to 7%

Finance Minister announced a reduction of surcharge on unlisted shares from 28.5 per cent to 23 per cent. It will ease exits from startups and Unicorns by facilitating investor exits and investment churns.

Stable and predictable tax regime:

• Vision to establish a trustworthy tax regime.
• To further simplify the tax system and reduce litigation.

New ‘Updated return’

• Provision to file an Updated Return on payment of additional tax.
• Will enable the assessee to declare income missed out earlier.
• Can be filed within two years from the end of the relevant assessment year.

Cooperative societies

• Alternate Minimum Tax paid by cooperatives brought down from 18.5 per cent to 15 per cent.
• To provide a level playing field between cooperative societies and companies.
• Surcharge on cooperative societies reduced from 12 per cent to 7 per cent for those having a total income of more than Rs 1 crore and up to Rs 10 crores.

Tax relief to persons with disability

• 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.

National Pension Scheme Contribution Parity

• Tax deduction limit increased from 10 per cent to 14 per cent on employer’s contribution to the NPS account of State Government employees.
• Brings them at par with central government employees.
• Would help in enhancing social security benefits.

Extension of Incentives for Start-ups

• Period of incorporation extended by one year, up to 31.03.2023 for eligible start-ups to the avail tax benefit.
• Previously the period of incorporation was valid up to 31.03.2022.

Incentives under concessional tax regime

• 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.

Taxation of virtual digital assets

• The specific tax regime for virtual digital assets was introduced.
• Any income from the transfer of any virtual digital asset is 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 the cost of acquisition.
• Loss from the transfer of virtual digital assets 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 assets at the rate of 1 per cent of such consideration above a monetary threshold.
• Gift of virtual digital assets also to be taxed in the hands of the recipient.

Litigation Management

• In cases where a question of law is identical to the one pending in the High Court or Supreme Court, the filing of appeal by the department shall be deferred till such question of law is decided by the court.
• To greatly help in reducing repeated litigation between taxpayers and the department.

Tax incentives to IFSC

• 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 the lease of the ship.
  • Income received from portfolio management services in IFSC.

Rationalization of Surcharge

• Surcharge on AOPs (a consortium formed to execute a contract) capped at 15 per cent.
• Done to reduce the disparity in surcharge between individual companies and AOPs.
• Surcharge on long term capital gains arising on transfer of any type of assets capped at 15 per cent.
• To give a boost to the startup community.

Health and Education Cess

• Any surcharge or cess on income and profits is not allowable as business expenditure.

Deterrence against tax-evasion

• No set-off, of any loss to be allowed against undisclosed income detected during search and survey operations.

Rationalizing TDS Provisions

• Benefits passed on to agents as business promotion strategy taxable in hands of agents.
• A tax deduction is provided to the person giving benefits if the aggregate value of such benefits exceeds Rs 20,000 during the financial year.

Indirect Tax Proposals in the Indian Budget 2022

• GST revenues are buoyant despite the pandemic – Taxpayers deserve applause for this growth.

Special Economic Zones

• Customs Administration of SEZs to be fully IT-driven and function on the Customs National Portal – shall be implemented by 30^th September 2022.

Customs Reforms and duty rate changes

• Faceless Customs has been fully established. During the Covid-19 pandemic, Customs formations have done exceptional frontline work against all odds displaying agility and purpose.

Project imports and capital goods

• Gradually phasing out of the concessional rates in capital goods and project imports; and applying a moderate tariff of 7.5 per cent – conducive to the growth of the domestic sector and ‘Make in India’.
• Certain exemptions for advanced machinery that are not manufactured within the country shall continue.
• A few exemptions were introduced on inputs, like specialised castings, ball screw and linear motion guide – to encourage domestic manufacturing of capital goods.

Review of customs exemptions and tariff simplification

• More than 350 exemption entries proposed to be gradually phased out, like exemption on certain agricultural products, chemicals, fabrics, medical devices, & drugs and medicines for which sufficient domestic capacity exists.
• Simplifying the Customs rate and tariff structure particularly for sectors like chemicals, textiles and metals and minimise disputes; Removal of exemption on items which are or can be manufactured in India and providing concessional duties on the raw material that goes into the manufacturing of intermediate products – in line with the objective of ‘Make in India’ and ‘Atmanirbhar Bharat’.

Sector-specific proposals in Union Budget 2022

Electronics

• Customs duty rates to be calibrated to provide a graded rate structure – to facilitate domestic manufacturing of wearable devices, wearable devices and electronic smart meters.
•  Duty concessions to parts of the 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.

Gems and Jewellery

• 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 the 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.

Chemicals

• Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feedstocks for petroleum refining being reduced; Duty is being raised on sodium cyanide for which adequate domestic capacity exists – This will help in enhancing domestic value addition.

MSME

• Interlinking of Udyam, e-shram, NCS and ASEEM portals
• Emergency Credit Linked Guarantee Scheme (ECLGS):
• Additional credit to 130 lakh MSMEs
• It will be extended up to March 2023.
• Guarantee cover to be expanded by Rs 50000 Crore to Rs 5 Lakh Crore.
• Additional credit of Rs 2 lakh crore for Micro and Small Enterprises to be facilitated under Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
• Raising and Accelerating MSME performance (RAMP) programme to be rolled out with outlay of Rs 6000 Crores.

Exports

• To incentivise exports, exemptions are 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.

Tariff measures to encourage the blending of fuel

• Unblended fuel to attract an additional differential excise duty of Rs 2/ litre from the 1^st of October 2022 – to encourage the blending of fuel.

Note: You can download the Union Budget 2022 documents as PDF from here.