Major Highlights of the Union Budge...
This Finance Minister Nirmala Sitharaman unveiled the Union Budget 2021-22 on the first day of...
Learning » Latest News » Budget »
The Finance Minister had announced Union Budget 2022 on 1st Feb 2022 wherein no changes were made to the existing tax structure, which disappointed a few on the other hand, there were some other announcements made that can boost the economy as we advance. This article is an attempt to perform a budget analysis from the perspective of Indian investors, companies and a common man.
What grabbed the eyeballs of many was the announcement of the upcoming central bank digital currency. The Finance Minister announced that the Reserve Bank shall introduce India’s own central bank digital currency in 2022-23. Moreover, in this financial year, surcharge on LTCG will be capped at 15%. This rule will apply to all assets. Till now, it only applied to listed equity shares and units of equity oriented fund. This will bring the tax on the sale of unlisted shares at par with the listed shares sale.
Further, the FM also announced that any income from transfer of virtual digital asset shall be taxed at 30%. This has come as a bad news for crypto investors whereas in countries such as the UAE and Thailand, tax rates have been reduced to become more crypto-friendly. No deduction will be permitted while calculating income except acquisition cost, and investors cannot set off losses from any other income. This comes after we had witnessed great investments being made in 2021, and the crypto market in India was booming. Considering these mega investments in this sector, investors are expected to face the burden of taxes. The impact is expected to be heavy on investors who have invested to a great extent, and some of them have also incurred losses due to recent dip in the market.
Another concern is 1% TDS on buying virtual digital asset, subject to stipulated thresholds. Due to the taxation aspect, many small investors may shift to mutual funds considering that the tax rate on mutual funds is less as compared to cryptos in India.
However, the pros of crypto tax is that at least the cryptos are not banned in India and the government can generate a good income in the form of tax.
The start-ups that are incorporated by end of March 2023 will have the advantage of deduction of 100% profits. Further domestic manufacturing companies incorporated up to the end of March 2024 can enjoy the beneficial rate of 15%. This provides an extension of the existing facility.
As a new step, one will be able to witness rise in the basic custom duty rates in the next four years. This is intended to support phased local making of wrist wearables, hearables, smart electric meters and their components.
However, there would be 10% TDS on the benefits or prerequisites of more than 20k rupees received during a business or profession. Another notable thing is that over 350 exemptions relating to customs duty no longer exists and few other exemptions will be phased out soon.
The Budget 2022 has announced a reduction in import duty on cut and polished diamonds and gemstones from 7.5% to 5%. Also, the duty on sawn diamond has been brought to nil which has come as a good news for consumers of such products.
On the other hand, custom duty on imitation jewellery has been raised to high of 20%, which will make it dearer.
One of the key highlights of the budget was that the taxpayers can file an updated return on payment of taxes within 2 years from the end of the relevant assessment year (AY). Further extension will also be given if taxpayers fail to meet the deadline for filing belated or revised returns.
Another notable point is that if a person receives payment from his/her employer or any other source for covid treatment then such payment will be non-taxable. Further, the payment received by the kin of Covid casualty, will be non-taxable. However, it will be subject to the aggregate limit of 10 lakh rupees for the payment obtained from sources other than the employer.
Another announcement that will bring state government staff at par with central government employees is that they are eligible for employer contribution deduction to NPS up to 14% of salary.
A piece of news that can worry some is that the updated returns will amount to the payment of 50% of extra tax of one’s liability. Apart from this, no loss can be set off against undisclosed income found during searches or surveys.
Every year after the Union Budget is announced, market analysts and financial experts sit and analysis the hits and misses of the budget. This year some believe that few sectors got prominence, but some announcements didn’t live up to the expectations. In a nutshell, India has big ambitions for the next 25 years and the Union Budget 2022 lays down the road map going forward.
Read our Article:An overview of the 2022 Budget