Union Budget 2022-23: Tax Highlights

The Union Budget 2022-23 has come at a crucial time as the Indian Economy is attempting its best to bounce back from the clutches of Inflation and unlock quick growth. Amidst the third wave of Covid-19, this budget fixates the FY23 growth at 8-8.5%.

So, in the union budget, our finance minister – Nirmala Sitharaman – had a lot of things to say that could strengthen the entire ecosystem and the economy of India. The FM announced the allowance of a tax Deduction on the employer’s contribution up to 14% in regards to the state government employees. And then, there is also a new reform to update the ITR.

Also, the FM said that the 2022-23 budget focuses on bringing post offices together on the core banking system. With this, PO account holders will get to make online transactions and transfer to other Bank accounts via net banking.

Ahead of this budget, taxpayers were anticipating the announcement pertaining to income tax Slabs and Rates changes. In this post, let’s have a look at everything that was announced.

Customs Reforms

As per the finance minister, faceless customs have a stance in Ease of Doing Business and PLI. There is a proposal to apply a moderate tariff of 7.5%. Moreover, customs duty on the polished and cut diamonds has a dip to 5%. Other than that, custom duty on critical chemicals and jewellery has decreased as well. On the contrary, custom duty on umbrellas has increased to 20%, with exemption to umbrellas’ parts being withdrawn.

Proposal to Decrease Minimum Alternative Tax for Co-Op

The government has also proposed to decrease the surcharge on co-operative societies. at par with the corporate, this percentage has been decreased from 12% to 7% for those who have Income between Rs. 1 crore to Rs. 10 crores.

Highest Gross GST Collection

The finance minister announced that the gross GST collection for January 2022 was the highest since its inception. Despite the COVID-19 pandemic, the collection seems to be buoyant at Rs. 1,40,985 crores.

Tax Deduction Limit Hiked

A tax deduction limit increased to 14% on employers contributions to NPS for state government employees from 10%. The intention behind it is to help the social security advantages of state government employees and create a balance between central and state government employees.

No Changes in the Tax Structure

Going contrary to the expectations, there were no modifications or alterations done to the income tax slab and the corporate tax rates in the 2022-23 budget. Not just that but the finance minister also didn’t increase standard deduction, which was prevalently expected, keeping in mind the increased inflation levels and the impact of covid-19 on the middle class section. It has to be mentioned that currently, the standard deductions are at Rs. 50,000.

New Provision to File Updated Return

The FM has proposed a new provision to file an updated return on the additional tax payment. This can be filed within two years of filing the ITR. This way, tax payees will get to declare any income, even if they would have missed it out earlier.

Income Tax on Digital Assets

As per the finance minister, virtual digital assets will have a tax regime as well. Anybody earning an income from the transfer of such assets will have to pay a tax of 30%. This also includes the gifted digital assets. There are some no costs allowed, except the cost of acquisition. Also, 1% TDS is mandatory as well. Those who were expecting to set off losses will have to face disappointment as it is not allowed.

Relief for the Differently-Abled

The budget has brought some relief for the differently-abled as well. There is a proposal to allow a lump-sump and a payment annuity amount to the dependents of differently-abled, during the lifetime of guardian or parent reaching the age of 60 years.

Finance for Rural Enterprise Startups

The government has said that the funds will be facilitated via National Bank for Agriculture and Rural Development (NABARD) to finance agriculture and rural enterprise startups that are relevant for the farm produce Value Chain. These startups shall support the Farmer Producer Organization (FPOs) and offer tech to farmers.

Launch of Digital DESH e-Portal

The government is aiming to reorient skilling programs. To skill, upskill and reskill the youth, a digital DESH e-portal will be launched. Other than that, the One Class, One TV Channel will get an increment to 200 TV channels to offer supplementary education in regional languages for classes 1-12.

Extension of ECLGS Scheme

The Emergency Credit Line Guarantee Scheme (ECLGS) that the FM had introduced in 2020 to help Micro, Small, and Medium Enterprises (MSMEs) has got an extension till March 2023. The guarantee cover has also been expanded by Rs. 50,000.

Alongside this, it was also said that the MSME portals, such as Aseem, NCS, e-shram and Udyam, will get interlinked to widen the scope. Now, they will operate as portals that have live organic databases Offering G-C, B-C & B-B services, like improving entrepreneurial chances, credit facilitation, and more.

Creation of 6 Million Jobs

The PM Gatishakti is one of the transformative approaches that gets driven by seven varying engines for transformation and growth. Through Make in India, the FM has assured the creation of six million jobs. Also, the Gati Shakti master plan for expressways will get formulated in 2022-23.

By Himanshika Sharma

Himanshika has been working in the field of content writing for almost 7 years now. Her hold in research and content development is strong. Himanshika is a regular content contributor at Fincash where she writes an array of finance related articles.