Budget 2022…a calm and collected gateway to “Amrit Kaal”

It was calm and collected with some “feel good” changes. Nothing drastic!

It was based on 4 pillars of:

1. PM Gati Shakti
2. Inclusive Development
3. Sunrise opportunities
4. Financing of Investments.
    

PM Gati Shakti includes a national plan for strengthening infrastructure for the next phase of development. Outlays to facilitate faster movement of people and goods driven by Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.

Inclusive Development aims at macro-economic level growth with a micro-economic level all-inclusive welfare focus “sabka vikaas”

Sunrise opportunities which focus on productivity enhancement and investment, ,energy transition, and climate action would include areas like promoting chemical free farming, digitisation of farming practices , skill development, digitising health programmes, housing for all, “water for all” Anytime anywhere post office savings”, clean and sustainable mobility towards a greener future, and  Ease of business 2.0”, and more importantly “Ease of living”

Financing of Investments  would mean enhanced public capital investments, Green bonds, finance for sunrise sectors such as Climate Action, Deep-Tech, Digital Economy, Pharma and Agri-Tech, and introduction of the Digital Rupee,

Start-ups found reasonable mention in the budget in terms of tax SOPs, financing focus in the sunrise and agriculture sector. Some start-up specific areas include

• Blended Capital through NABARD to finance start-ups for agriculture & rural enterprise, relevant for farm produce value chain. The activities for these start-ups will include support for FPOs, machinery for farmers on rental basis at farm level, and technology including IT-based support
• Promotion of Start-ups to facilitate ‘Drone Shakti’ through varied applications and for Drone-As-A-Service (DrAAS).
• Defence R&D will be open for industry, start-ups and academia with 25% of defence R&D budget earmarked. Encouragement to take up indigenous production for India’s defence requirements in collaboration with DRDO.
• An expert committee to suggest appropriate measures to be undertaken to promote, Venture Capital and Private Equity ecosystem in India.
• Extension of Tax sops to start-ups by one year. Eligible start-ups established incorporate after 2016 before 31.3.2022 had been provided a tax incentive for 3/10 years from incorporation. It is proposed to extend the period of incorporation of the eligible start-up by one more year, that is, up to 31.03.2023 for providing such tax incentive.
• Parity in the surcharge on the capital gains on listed equity shares and the surcharge on other long term capital gains including on sale of unlisted shares at 15% aimed at boosting the start-up community.

Some sensible measures to promote ease of business and ease of living include:

• Trust based voluntary compliance by permitting taxpayers to file an updated tax returns on payment of additional tax within 2 years from the end of assessment year, shifting focus to compliance and collection rather than punitive action.
• Recognition of virtual digital assets as a taxable assets class means that crypto and all things block chain will find road map to a regulatory framework rather than an outright ban. Income from transfer of any virtual digital asset shall be taxed at 30%+surcharge and cess, a 1% TDS on transfer of virtual digital assets and gift in the hands of the recipient shall be taxed at 30%. This is progressive! Once they tax it, they will regulate it!   
• To reduce repeated litigation,  in case of identical questions of law across assesses pending in appeal before the jurisdictional High Court or the Supreme Court (court), the filing of appeal by the department shall be deferred until the decision  by such a court
• No changes to corporate taxation, tax slabs, wealth tax or inheritance tax, nothing to spook the markets here!

Budget 2022 therefore ruffled no feathers and paved the way to transition to FY 2023 with stability.

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