NAME - ARYA ROKADE
URN – 2020-B-14032002B
SUBJECT- FINANCIAL SERVICE
Summary of Fiscal Budget - 2022-23 (Broadcast on 1 February
2022)
The Union Budget seeks to complement macro-economic level growth with a focus on micro-
economic level all-inclusive welfare. 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:
• India’s economic growth estimated at 9.2% 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.
• Entering Amrit Kaal, the 25 yearlong lead up to India @100, the budget provides
impetus for growth along four priorities:
• PM Gati Shakti
• Inclusive Development
• Productivity Enhancement & Investment, Sunrise opportunities, Energy Transition, and
Climate Action.
• Financing of investments
PM Gati Shakti
• The seven engines that drive PM Gati Shakti are Roads, Railways, Airports, Ports, Mass
Transport, Waterways and Logistics Infrastructure.
• PM Adishakti National Master Plan
• The scope of PM Gati Shakti 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 PM Gati Shakti 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 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 Gati Shakti Cargo terminals for multimodal logistics to be developed during the
next three years.
• Parvatamma
• National Ropeways Development Program, Parvatamma to be taken up on PPP
mode.
• 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. Initial focus is
on farmer’s lands in 5 Km wide corridors along river Ganga.
• NABARD to facilitate fund with blended capital to finance start-ups for agriculture &
rural enterprise.
• ‘Kisan Drones’ for crop assessment, digitization of land records, spraying of insecticides
and nutrients.
• Ken Betwa project
• 1400 crore outlay for implementation of the Ken – Betwa link project.
• 9.08 lakh hectares of farmers’ lands to receive irrigation benefits by Ken-Betwa link
project.
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 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) programmed with 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.
• Start-ups will be promoted to facilitate ‘Drone Shakti’ and for Drone-As-A-Service
(Draa's).
Education
• ‘One Class-One TV channel’ programmed of PM Evid YA to be expanded to 200 TV
channels.
• Virtual labs and skilling e-labs to be set up to promote critical thinking skills and
simulated learning environment.
• High-quality e-content will be developed for delivery through Digital Teachers.
• Digital University for world-class quality universal education with personalize learning
experience to be established.
Health
• An open platform for National Digital Health Ecosystem to be rolled out.
• National Tele Mental Health Programmed’ for quality mental health counselling and
care services to be launched.
• A network of 23 tele-mental health centres of excellence will be set up, with NIMHANS
being the nodal centre and International Institute of Information Technology-
Bengaluru (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 Anga wadis to be upgraded to Saksham Anga wadis.
Har Ghar, Nal Se Jal
• Rs. 60,000 crores 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 Programmed
• Vibrant Villages Programmed for development of Border villages with sparse
population, limited connectivity and infrastructure on the northern border.
Banking
• 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
• 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 realise 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 a new legislation to enable States to
become partners in ‘Development of Enterprise and Service Hubs.’
Atma Nirbharta in Defence:
• 68% of capital procurement budget earmarked for domestic industry in 2022-23, up
from 58% in 2021-22.
• Defence R&D to be opened for industry, start-ups, and academia with 25% of defence
R&D budget earmarked.
• Independent nodal umbrella body to be set up for meeting testing and certification
requirements.
Sunrise Opportunities
• Government contribution to be provided for R&D in 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.
Energy Transition and Climate Action:
• Additional allocation of Rs. 19,500 crores for Production Linked Incentive for
manufacture of high efficiency solar modules to meet the goal of 280 GW of installed
solar power 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.
• 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.
• Outlay for capital expenditure stepped up sharply by 35.4% to Rs. 7.50 lakh crore in
2022-23from Rs. 5.54 lakh crore in the current year.
• 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.
Mobilizing 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 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
• 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
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
Fiscal Management
• 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 in current year: 6.9% of GDP (against 6.8% in Budget Estimates)
• Fiscal deficit in 2022-23 estimated at 6.4% of GDP
Summary of Changes in Direct Tax in Union Budget
2022-23
➢ Income tax: There is no change in income tax rates for individuals and corporations.
➢ Surcharge on Long Term Capital Gains (LTCG): Currently, the surcharge on LTCG on listed
equities and equity mutual funds is capped at 15%. The surcharge on other LTCG is 25% if total
income is between Rs 2 crore and Rs 5 crore, and 37% if it is above Rs 5 crore. The budget
proposes to cap these at 15%.
➢ Tax on virtual digital assets: Income from the transfer of cryptocurrencies and non-fungible
tokens will be taxed at the rate of 30%. Any loss incurred from such transfers cannot be set off
against any other income or carried forward to subsequent years.
➢ Updating return of income: Taxpayers will be permitted to file an updated return of income
within two years of the assessment year. They will have to pay 25% penalty on tax and interest
due if it is filed in the year after the assessment year, and 50% penalty in the second year.
➢ Co-operatives: Alternate minimum tax for co-operatives will be reduced from 18.5% to 15%.
Surcharge will be reduced from 12% to 7% for co-operatives whose total income is between
one crore and ten crore rupees.
➢ Tax relief to persons with disability and their parent/ guardian: The parent or guardian of a
differently-abled person can take an insurance scheme for such person. The present law
provides for deduction to the parent or guardian only if the lump sum payment or annuity is
available to the differently abled person on the death of the subscriber i.e., parent or guardian.
The budget now allows the payment of annuity and lump sum amount to the differently abled
dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the
age of sixty years.
➢ New companies and start-ups: New domestic companies engaged in manufacturing have
an option to pay tax at 15% (without claiming any deductions) if they start manufacturing by
March 31, 2023. Certain types of start-ups have an option for tax holiday for three out of the
first ten years if they incorporate by April 1, 2022. Both these deadlines have been extended
by one year.
Summary of Changes in Indirect taxes in union budget 2022-23
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 percent – conducive to the growth of domestic sector and
‘Make in India’.
➢ Certain exemptions for advanced machineries that are not manufactured within the
country shall continue.
➢ A few exemptions introduced on inputs, like specialized 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.
➢ Simplifying the Customs rate and tariff structure particularly for sectors like chemicals, textiles
and metals and minimize disputes; Removal of exemption on items which are or can be
manufactured in India and providing concessional duties on raw material that go into
manufacturing of intermediate products – in line with the objective of ‘Make in India’ and
‘Atmanirbhar Bharat’.
o Sector specific proposals
Electronics
➢ 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.
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
export of jewellery through e-commerce.
➢ Customs duty of at least Rs 400 per Kg to be paid on imitation jewellery import – To
disincentivize import of undervalued imitation jewellery.
Chemicals
➢ 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 – This will help in enhancing domestic value
addition.
MSME
➢ Customs duty on umbrellas being raised to 20 per cent. Exemption to parts of umbrellas
being withdrawn.
➢ Exemption being rationalized 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 unaffordable prices
of metal in larger public interest.
Exports
➢ To incentivize 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.
➢ Tariff measure to encourage blending of fuel
➢ Unblended fuel to attract an additional differential excise duty of Rs 2/ litre from the 1st of
October 2022 – to encourage blending of fuel.
IMPACT OF THE BUDGET ON 5 INDUSTRIAL SECTOR
OIL AND GAS
IMPACT: A better infrastructure connectivity will provide significant impetus on oil and gas
projects, with refineries being set up in the south India, and pipelines and city gas projects
across the country. In addition, new highways and EV and battery swapping push will provide
a great avenue for retail growth for oil marketing companies to increase retail outlets and
offerings to customers. Differential duty on unblended fuel to incentivize bio-fuel blending will
be a boost to oil and gas companies which are already transitioning to new energy areas,
renewables, and greener power to decarbonize their operations. This will open additional
avenues of financing and support for green projects taken up by oil companies in biofuels and
green hydrogen as well. (KPMG)
BANKING
IMPACT: The budget proposals are aimed at boosting credit growth of both banks and non-
banking financial companies (NBFCs), with schemes announced across various sectors
including affordable housing, transportation and logistics, and electric vehicles (EVs), etc. With
1.5 lakh post offices coming under core banking, more than 35 crore post office deposit
accounts will come into the mainline banking and payments system. The proposal for 75 digital
banking units in 75 districts is a small step but a definite push towards digital banking. ‘Digital
Rupee’ is another step towards the government’s adoption of digital as means of transaction
banking. (KPMG)
AUTO
IMPACT: A policy for battery swapping will aid in reducing the upfront ownership cost of EVs,
thereby driving customer preference towards such vehicles. This policy is also expected to
encourage private sector to develop sustainable and innovative business models for ‘Battery
or Energy as a Service’. Further, interoperability standards will build efficiency in operation of
charging infrastructure for EVs. The government will facilitate special mobility zones for EVs as
well as push for clean tech and electric vehicles in public transport. These changes, along with
recently announced production linked incentives (PLI) for EVs, would give the necessary fillip
to EV revolution in India. The extension of concessional Income tax regime of 15% for new
domestic manufacturing facility setup, up to 31 March 2024, is a welcome move and would
help attract new investment in manufacturing of EVs and its components. The incentives
announced for start-ups could also be a booster for EVs. (KPMG)
HEALTHCARE / PHARMA
Impact: The government has extended the benefit of concessional tax regime for
manufacturing companies. The government has also considered the pharmaceutical sector
as one of the sunrise opportunities sectors that will benefit from future supportive policies,
among other things. The government, however, did not consider the long-standing
demand/expectation of industry to incentivize research and development needed to enable
India to move from being an incremental innovator to becoming a global player in innovative
drugs. (EY)
REAL ESTATE
IMPACT: From a policy perspective, the allocation to the PM Awas Yojana and the intent to
reduce time for obtaining construction approvals as well reduce the cost of capital for
consumers, credit guarantee of ₹50,000 for the hospitality sector are all welcome measures.
The proposal to replace the Special Economic Zone (SEZ) Act with legislation that would permit
states to partner in creating enterprise and service hubs and the push for digitization of land
records are also laudable. The budget has also proposed the rationalization of tax withholding
provisions relating to purchase or rental of properties and including units of Real Estate
Investment Trusts (REITs) within the bonus stripping/ dividend provisions. (EY)
