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The Finance Minister, Shri Nirmala Sitharaman, is set to announce the big Indian Budget 2022 on
Tuesday, 1st February 2022. With a few days left, many Indian citizens and businesses are eager
to find out what changes are in store for them in the upcoming financial year FY 2022-23.
The previous year’s Union Budget theme was mainly focused on stimulus packages, healthcare, and rural infrastructure development. Whereas, in the current year, it is expected that the Budget may continue to focus on economic recovery with some relief to the common man amid the Omicron variant scare.
Union Budget 2022 Announced by
Nirmala Sitharaman (Finance Minister)
Parliament of India
Budget 2022 date
1st February 2022 (Tuesday)
Bharatiya Janata Party
The internet is flooded with many expectations from various stakeholders in the upcoming Budget. Expectations like will the government announce some income tax relief? Will e-invoicing under GST be extended to small biz? Will the stimulus be extended to real estate, or the major focus would be healthcare again?
1. Clarity on cryptocurrency taxation
While the government is waiting on the cryptocurrency bill, much-needed clarity is expected on its taxation in the upcoming Union Budget 2022. There are various concerns about the taxation of crypto, its classification, applicable tax rates, TDS/TCS and GST implications on the sale and purchase of cryptocurrencies, etc., which we are hoping will be clarified during the budget session.
2. New tax regime
The Finance Ministry may revise the personal income tax slab in this year’s Budget. Many experts believe that the two tax regimes still confuse the common man. The government may consider increasing the highest tax slab to Rs.20 lakh from Rs.15 lakh or allow certain deductions to make the new regime more enticing. Also, for businesses, removing the current limitation of ‘once in a Lifetime Migration’ from one tax regime to another is expected to offer them better flexibility in choosing different tax regimes.
3. Section 80C and Section 80D limits
Section 80C and Section 80D limits are certainly expected to be increased this year as they have been the same for so long. Also, high direct tax collection during this fiscal year may help with the upward revision of these limits. A higher deduction under Section 80C may be permitted for the Equity-Linked Savings Scheme (ELSS), or a separate limit can be defined to encourage more mutual fund investments in India. Further, a special COVID expense related deduction may be allowed under Section 80D or 80DDB to provide tax relief for COVID-19 patients and their families.
4. Standard Deduction and Work from Home Allowance
Budget 2021 did not
provide any major relief to the salaried
Budget 2022 may introduce tax-free work from home allowances for salaried employees.
Allowing deductions for such expenses will raise the take-home salary, ultimately
creating demand for goods and services in the country. With many companies considering a
hybrid working culture even after the pandemic, the income tax department is expected to
provide some tax-exemptions for expenditures incurred while working from home.
Also, no deduction is available for expenses incurred for personal growth like taking a course, improving skills, etc., from the salary income. These expenses are usually a part of working life, and the government should offer tax benefits for such expenditures. Due to the high direct tax collection this fiscal year, there may be a scope to increase tax deduction limits. For instance, the standard deduction available to those with salary income may be raised to Rs.1 lakh. This may be adjusted for inflation every year.
5. Deduction for COVID treatment
An additional COVID expense related deduction is expected under Section 80D or 80DDB to provide tax relief for COVID-19 patients and their families. We all witnessed that COVID not only impacted the physical health of the families, but it also greatly impacted the financial health of the families due to medications and hospitalisations expenses. Many state governments and other institutions came forward to offer assistance to the families in these times. The Finance Ministry may consider allowing the out of pocket expenses on COVID treatment to be allowed as a deduction
1. Reducing the e-invoicing applicability limits.
The government is expected to announce a reduction in the e-invoicing threshold turnover
limit to apply below Rs.50 crore, maybe above Rs 25 crore. It brings more transparency
in recording sales, reduces errors, improves compliance, makes businesses more agile and
weeds out regulatory delays in supply chain operations. Reducing the limits will benefit
the newly onboarded small or medium businesses and the Large enterprises who partner
with these small and medium businesses. It will ensure they claim accurate and genuine
ITC or input tax credits. It will ensure that all B2B invoices are timely uploaded to
GSTN via the IRP.
Moreover, it will allow small and medium businesses to leverage invoice discounting as an alternate, safe and faster financing option, thus increasing the flow of working capital to businesses. The initial cost will be incurred for this system setup and testing. The government should provide sufficient time and the necessary resources before launching e-invoicing for small taxpayers above the expected Rs.25 crore limit.
2. Introducing a reverse charge based mechanism for pushing GST compliance
The government should introduce a new reverse charge mechanism to improve overall GST
compliance, boost revenue collection, and ultimately expand the taxpayer base. Under
this, large taxpayers with turnover exceeding Rs.100 crore or Rs.500 crore will pay the
GST due to their small vendors (say, vendors with turnover less than Rs.5 crore)
directly to the government. The tax compliance burden for small businesses would be
drastically reduced. They can be mandated to file a quarterly or even half-yearly
statement declaring their revenues and paying the balance tax amount if any. Large
enterprises already have most of their documentation automated and would not face
On the other hand, large enterprises will smoothly claim the input tax credit and reduce their administrative burden of following up with small vendors.
3. Introduce a revised annual return for correcting any mistakes in the filing of GSTR-9
Introduce a revised annual return for correcting any mistakes in the filing of GSTR-9 return, especially for the B2B transactions. It will resolve a lot of issues.
1. Health sector
The healthcare sector is pushing the government to increase spending on genetic research. Experts in the field are further urging the government to Promote Genome Mapping projects and allocate funds to develop resources to monitor the genome-related health status of the population. Some such means include the promotion of public-private partnerships for Genome Mapping projects.
2. Real estate sector
The real-estate sector is still yet to get the push required to liquidate projects that have been stuck for a while. The general expectation is that this budget will Incentivise both the rental housing market and the affordable housing sector. Another measure that will help the sector’s recovery is a GST waiver on under-construction projects and raw materials like cement, etc. The incentivising of private investment in the affordable housing sector will also give the sector a much-needed boost.
3. Export/import duty on cotton
While the government has deferred the increase in GST rates, the textile industry is facing several challenges: the rising price of cotton due to the high level of exports. The sector has urged the government to introduce an export duty on cotton to check the prices. They also urge the government to remove the 5% import duty on raw cotton. This move will also help stabilise the costs and increase cotton imports into the country.
Finance Minister Nirmala Sitharaman will announce Union Budget 2022 on 1st February 2022 Tuesday.
Our country's Finance Minister, Nirmala Sitharaman, presented the Union Budget 2020 on 1st February 2020 and 1st February 2021. Coming Budget 2022 is also proposed to be presented by Nirmala Sitharaman on the 1st of February 2022.
The theme of the Budget usually means the main focus areas of the budget for that particular year. The previous year’s Union Budget theme was mainly focused on stimulus packages, healthcare, and rural infrastructure development. Whereas in the current year, it is expected that the Budget may continue to focus on the health and real estate sector, economic recovery, ease in compliance to businesses with some expected tax reliefs to the common man amid the Omicron variant scare.
The Budget allocation for FY 2021-22 is estimated to be around Rs. 65,000 crore.
The Budget is of 3 types: