Budget 2022: No change in personal income tax, new crypto tax and other highlights

Finance Minister Nirmala Sitharaman tabled the Union Budget for 2022-23 in parliament on Tuesday. She outlined a number of proposals in an attempt to accelerate economic growth but didn’t offer any relief to the salaried middle class and left the personal income tax slabs unchanged.

In a significant proposal that likely means the government’s intention to recognize digital currencies, the budget proposed to bring cryptocurrencies and non-fungible tokens (NFTs) under the tax net. Here are the main highlights.

Taxation

• Existing tax benefits for startups, which were offered redemption of taxes for three consecutive years, to be extended by one more year.
• Long-term capital gains on listed equity share units subject to maximum surcharge at 15%.
• Tax deduction limit increased to 14% from 10% on employers’ contribution to NPS account of state govt employees.
• Cap on transfer of long-term capital gains at 15%.
• Budget proposes 30% tax on income from virtual digital assets.
• Loss of income from virtual digital assets cannot be offset against other assets.
• Gift of cryptocurrencies to be taxed at receiver's end.
• TDS of 1% on payment made for transfer, above a monetary threshold.
• No change in personal income tax rates
• Taxpayers can file an updated return on payment of taxes within two years from the end of assessment year.
• The new provision will ensure voluntary tax filing and reduce litigation, says FM.
• Alternate Minimum Tax for cooperative societies to be cut to 15%.

Fiscal moves

• Allocation of Rs 7.5 lakh crore (up 35.4% YoY) as capital expenditure for next fiscal year.
• Fiscal deficit target set at 6.4% for FY23.
• FY23 total expenditure seen at Rs 39.45 lakh crore.
• Total receipts other than borrowing seen at Rs 22.84 lakh crore.
• India to launch sovereign green bonds.
• 5G spectrum auctions to be conducted this year.
• ECLGS scheme extended till March 2023, guaranteed cover extended by Rs 50,000 crore.

Urban development

• For urban capacity building, modernization of building bylaws, town planning schemes and transit-oriented development will be implemented.
• Centres of Excellence will be established with an outlay of Rs 250 crore for urban sector development.

Transport and technology

• Digital Rupee to be rolled out by 2023.
• ePassports will be rolled out in 2022-23 for convenience in overseas travel.
• Battery Swapping Policy will be brought out and inter-operational service will be formulated.
• 'One Nation, One Registration' will be established for anywhere registration to facilitate ease of living and doing business.
• Private sector will be encouraged to create sustainable and innovative business models for battery and energy as a service, improving the efficiency in the EV ecosystem.
• Scheme for design-led manufacturing to be launched for 5G ecosystem as part of PLI scheme to enable affordable broadband and mobile communication in rural and remote areas.

Defence

• Defence R&D will be opened up for industry, startups and academia with 25% of defence R&D budget.
• Private industry will be encouraged to take up the design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV model.
• Government earmarks 68% of capital procurement budget in defence for domestic industry in 2022-23, up from 58% this fiscal year.

Agriculture, rural development

• Use of Kisan drones will be promoted for crop assessment, digitization of land records, spraying of insect pesticides
• Rs 2.37 lakh crore worth of MSP direct payments to wheat and paddy farmers
• A fund with blended capital raised under co-investment model facilitated through NABARD to finance startups in agriculture and rural enterprises for farm produce value chain.
• All 1.5 lakh post offices will come on the core banking system, enabling online transfer of funds between post office accounts and bank accounts.
• This will be helpful especially for farmers and senior citizens in rural areas, enabling inter-operability, and financial inclusion.