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Union Budget Highlights | Budget enhances government spending, levies 30% tax on transfer of digital assets

FM said that this year's Budget would continue to provide impetus to growth. The economic recovery is benefitting from public investments and spending.

Published: 31st January 2022 09:23 PM  |   Last Updated: 01st February 2022 04:12 PM   |  A+A-

Finance Minister Nirmala Sitharaman. (Photo | ANI)

Finance Minister Nirmala Sitharaman. (Photo | ANI)

By Online Desk

Finance Minister Nirmala Sitharaman has finished presenting her fourth budget - the second during the pandemic . 

The big announcements have been the promise to enhance government spending by 35% and announcing a 30% tax on transfer of digital assets.

The highlights of Union Budget 2022 with expert comments in The New Indian Express' live coverage below:

03:53 Feb 1

A budget that leaves the entire burden of driving growth in the hands of the private sector

Our expert, Professor Anil Sood, Co-founder, Institute of Complex Choices, has this analysis to share:

It was heartening to see the budget presentation outline the government's goals for India@100, which is twenty-five years from now.

The government intends to achieve higher inclusive growth through leveraging technology and enabling energy transition and climate change. The government also expects to play an enabling role in driving growth through private investment. It is indeed possible to achieve the goal of higher, inclusive growth in the long run, as India still is a young country.

While productivity was mentioned as a key objective, I would have also liked the government to redefine the Production Linked Incentive Programme to Productivity and Value-creation Linked Incentive Programme. We need to accelerate people and capital productivity and value-creation through innovation at a much faster rate so that we can export to advanced economies. If not, our industry would continue needing the crutches in form of import tariffs.

The government has announced an ambitious capital expenditure programme budgeted at Rs 7.50 lakh crore, which is an increase of 24.5% over the revised budget. The change is explained by the increased allocation for Ministry of Road Transport, Department of Telecom and Railways. We have an additional item of nearly Rs 90,000 crores in the form of other grants/loans/transfers to states, which in all probability is the additional reform-linked loan that the Finance Minister talked about in her speech. If we exclude that, the increase in the central government expenditure will be about 15%. We would need to ask ourselves, if the government will be able to spend the money allocated for capital expenditure during the current year. As of November, the actual expenditure was only 49.4% of the budget.

Staying with the last year, the aggregate revised expenditure is higher by 8.2%, compared to the budgeted expenditure. But after removing the payment for Air India debt and increase in fertilizer and food subsidy of Rs. 160,000 crores, the increase is only 3.6%.
 
The increase in aggregate budget expenditure for the next year is a miserly 4.6%. I guess that the government is assuming that the economy is back on track, and it does not need its support anymore. The increase in revenue expenditure, other than interest cost, is an even more miserly increase of 0.86%. In effect, the central government expenditure will shrink in real terms. Even if we remove the food subsidy (where we may have some effect of accounting adjustment from the previous years) and interest amounts from our calculations, the increase is still 4.8%, lower than the expected growth in GDP at 11.1%. In other words, the central government's relative contribution to India's economy is expected to shrink. All this in a year when the net tax revenue is expected to grow by 9.6%.

It seems that the fiscal hawks have had their say. Consequently, we will either end up risking the nascent recovery or the households and MSMEs will have to deal with another year of low depleted savings and indebtedness.
A review of the detailed expenditure for the next year too does not inspire confidence, as the increase in defense, agriculture, and health is 4.6%, 2.5% and 0.8%, respectively. Rural development budget is expected to make do with lower expenditure (-0.30%). Only major sector that is expected to see a large increase (18.5%) in expenditure is Education.

If we look at the total transfers to states, the increase is once more 0.52%. Loans of Rs 159,000 crores towards GST compensation are now being replaced by loans state capital expenditure of Rs 100,000 crore. The states' share in taxes has gone up by 9.65%, about the same rate as the increase in the Centre’s tax revenue. Since the state governments too have suffered revenue losses (property tax, vehicle registration taxes, etc.), we have a situation once more where the entire burden of driving growth is expected to the shouldered by the private sector – households, MSMEs and large corporations. Are the households and MSMEs in a position to shoulder the responsibility? I hope so.

04:19 Feb 1
03:52 Feb 1

PM Modi hails 'people-friendly and progressive' budget

Welfare of the poor is an important aspect of the Union Budget which is full of possibilities for more investments, infrastructure and jobs, Prime Minister Narendra Modi said. Calling the budget "people-friendly and progressive", Modi said it has brought new confidence to usher development in the midst of one the most terrible calamities in 100 years, a reference to the COVID-19 pandemic. (READ MORE)

03:40 Feb 1

Directionless budget: Bhupesh Baghel

It is a directionless Budget. It doesn't have anything to offer to farmers, women, and the youth. This Budget says nothing about doubling farmers' income and the smart city project: Chhattisgarh CM Bhupesh Baghel.

Image

02:37 Feb 1
02:10 Feb 1

Nothing for middle class, poor in Union Budget: Rahul Gandhi

Congress leader Rahul Gandhi on Tuesday dubbed the Union Budget for 2022-23 as a "zero-sum budget", saying it has nothing for the salaried, middle class and the poor.

02:02 Feb 1

Rajnath welcomes announcement for defence sector

Defence Minister Rajnath Singh described as an "excellent move" the proposal in the Union Budget to set aside 25 per cent of the defence R&D budget for start-ups and private entities in the financial year 2022-23.

Singh also welcomed Sitharaman's announcement that 68 per cent of the defence capital procurement budget would be allocated towards procurement from domestic industry.

01:52 Feb 1
01:36 Feb 1

Budget is betrayal of salaried, middle classes: Congress hits out at Modi government

The Congress on Tuesday accused Finance Minister Nirmala Sitharaman and Prime Minister Minister Narendra Modi of betraying the country's salaried and middle classes by not announcing any relief measures for them in the Union Budget. (READ MORE)

01:18 Feb 1

It's an astonishingly disappointing Budget: Tharoor

Extremely disappointing, a damp squib! There seems to be absolutely nothing in this Budget. It's an astonishingly disappointing Budget. When you listen to the speech, no mention of MGNREGA, of Defence, of any other urgent priorities facing the public: Congress MP Shashi Tharoor

01:16 Feb 1
01:15 Feb 1

In view of the pandemic, I propose to extend the period of incorporation of eligible start-ups by one more year up to 31-3-2023 for providing tax incentives: Finance Minister Nirmala Sitharaman

12:55 Feb 1

No change in personal income tax rates in Budget 2022

There was no change income tax slabs in the personal income tax category in the Budget unveiled on Tuesday. The corporate tax rate too was kept at the same level. However, concessional rate of 15 per cent has been extended by one year for newly incorporated manufacturing units.

12:42 Feb 1

Key takeaways: Government promising to enhance spending, 30% tax on digital assets

As Professor Anil Sood had mentioned, the decision to increase the capital outlay by 35% - from Rs 5.54 lakh crore this year to Rs 7.5 lakh crore next year - was heartening. Now for that enhanced government spending to happen too.

The other big announcement was the 30% tax on transfer of any digital assets. Cryptocurrency investors will be looking at this long and hard and also scanning the fine print to see if there is any devil in the details.

Professor Sood also welcomes the increased investment in public transport and the announcement of formation of Committee for formulating the urban development policy.

Supplementary teaching through technology is a welcome step, particularly if we are able to leverage TV, he adds.

12:38 Feb 1

Capex increase of 37% has pushed up the market , cement stocks , infra stocks . Nifty up 1.4% at 17856, notes Ram Sahgal, who covers markets for The New Indian Express.

12:34 Feb 1

Customs duty on diamonds

Customs duty on cut and polished diamonds, gems to be reduced to 5 per cent, says Finance Minister.

12:27 Feb 1

January 2022 recorded highest ever gross GST collections

The gross GST collections for the month of January 2022 are Rs 1,40,986 crores which is the highest since the inception of GST: Finance Minister Nirmala Sitharaman.

12:20 Feb 1

Professor Anil Sood welcomes the 30% tax on digital assets (cryptocurrencies), terms it a step in right direction. He also welcomes the decision to bring the surcharge on LTCG (Long Term Capital Gains) to the same level.

12:13 Feb 1

Tax announcements

  • Taxpayers can file updated returns within 2 years from relevant assessment year 

  • Alternate minimum tax for cooperative societies down to 15%  

  • Tax deduction limit for state government employees to NPS raised to 14% from 10% 

  • 30 per cent taxation on transfer of any virtual digital asset 

  • Co-operative surcharge to be reduced from 12% to 7%

12:12 Feb 1
12:10 Feb 1

Digital rupee.

Digital rupee using blockchain and other technology to be issued by RBI starting fiscal 2023.

12:09 Feb 1

While we wait to review the details, the budgeted expenditure increase over the revised estimate seems less than 5%, says Professor Anil Sood.

12:02 Feb 1

It is heartening to see the capital outlay being increased by 35% - from Rs 5.54 lakh crore this year to Rs 7.5 lakh crore next year., says Professor Anil Sood.

12:01 Feb 1

Natural farming

Finance Minister Nirmala Sitharaman said natural farming will be promoted along the Ganga river corridor.

11:56 Feb 1
11:46 Feb 1

The benchmark Sensex surged 1.23 per cent or 712.81 points at 58,726.98

11:40 Feb 1

E-passports with chips

E-passports with embedded chips will be rolled out in 2022-23, says Finance Minister.

11:39 Feb 1

Markets missing IT?

There is an extensive focus on leveraging information technology in the budget, observes Professor Anil Sood. Equity markets don't seem to have realised this. IT stocks don't seem to be trending in line with the announcements.

11:35 Feb 1

Drone Shakti gets a boost

A "Drone Shakti" programme has been announced for startups dealing with drone technology.

11:34 Feb 1

Banking and Insurance

FM announces 75 digital banking units in 75 districts by scheduled commercial banks

11:31 Feb 1

80 lakh homes to be completed under PM Aawaz Yojna, says the Finance Minister.

11:25 Feb 1

Education

A digital University will be established. The PM eVidya programme will be expanded to 400 channels. Also, 2 lakh aanganwadis will be upgraded.

11:24 Feb 1

'Extension of Emergency Credit Line Guarantee Scheme a good idea'

Extension and expansion of ECLGS (Emergency Credit Line Guarantee Scheme) is a good idea given that the economy is yet to recover the losses caused by the pandemic, states Professor Anil Sood.

11:24 Feb 1

Infrastructure development plans

  • National Highways to be expanded by 25,000 km.

  •  400 new Vande Bharat trains to be introduced

  • 2,000 km under Kawach programme.

  • 400 new generation Vande Bharat plans.

  • 100 PM Gati Shakti cargo terminals.

  • PM development initiative for the northeast to fund infra and social development projects.

11:20 Feb 1

11:15 Feb 1

Paperless budget

Finance Minister Nirmala Sitharaman is using a digital tablet to present the Union Budget 2022-23 in a paperless format just like the last year. (READ MORE)

11:15 Feb 1

Paperless budget

Finance Minister Nirmala Sitharaman is using a digital tablet to present the Union Budget 2022-23 in a paperless format just like the last year. (READ MORE)

11:13 Feb 1

25-year vision for job creation and privatisation

Sunitha Natti says the Finance Minister has hit the ground running. Ten minutes into the speech, she touches upon what we needed to hear, about job creation and privatisation. Importantly, she has laid a long-term vision, not for 10 years , but for a quarter century.

Professor Anil Sood too says it is good to see the Finance Minister starting her address by presenting the vision for India@100. But he goes on to note that at this stage, Ms Sitharaman has not  talked about innovation. He hopes we will see that also as part of vision@100.

11:11 Feb 1

India's economic growth in current fiscal is highest among all large economies: FM

11:09 Feb 1

FM Nirmala Sitharaman talks about pandemic

FM Sitharaman begins the budget presentation by expressing empathy with those who were hit by Covid, health-wise and economically.

11:06 Feb 1

FM rises to present Union budget 2022

(Photo | Twitter/@PIB)

11:05 Feb 1

Before her speech, Finance Minister had called on President Kovind

FM Sitharaman calls on President Kovind before presenting the Union Budget 2022-23. 

(Photo | Twitter/@rashtrapatibhvn)

10:55 Feb 1

Nine points to ponder over

Professor Anil Sood, who will be sharing covering expert comments through the budget, says he will be evaluating the budget against the following premises:

1. Successive economic surveys have failed to outline India’s economic reality and have consequently created a narrative where equity market growth is confused with economic well-being. The latest Survey’s reliance on high-frequency data may end up creating even more noise.
 
2. We must recognise that India is a low value-adding agriculture dependent economy that faces significant natural as well as economic Uncertainty
 
3. We must envision to build an economy where the business does not need subsidies even for creating low value-adding jobs and the households don’t need income support for meeting their basic needs.
 
4.  From a medium to long-term perspective, we must incentivise Productivity and Value-Creation and discourage Lazy Manufacturing; build the National Innovation System that goes beyond focusing on Global Rankings.
 
5.   From short to medium-term perspective, we need enhanced Social Security for rural as well as urban India and tax relief for middle-income families.
 
6. Reorient our Resource Mobilisation Strategy to incentivise productive investment and not speculative investment and increase progressiveness in the Indirect Tax Structure
 
7. Uncertainty is the Source of Profit, but it can also cause anxiety and result in stalling an economy, as we have seen in the past. We, therefore, must work with the objective of raising the level of earnings and reducing the volatility of the earnings for households as well as the business.
 
8.  I would like the finance minister to unequivocally state that the government would play an active role in building India’s ability to grow and not be a bystander anymore.
 
9. The Indian government must use its status of risk-free borrower to invest and help people build the ability to take risk, as we have no conclusive evidence that deficit-funded public investment is bad.

10:19 Feb 1

WATCH | Finance Minister reaches at the Parliament

10:18 Feb 1

Budget for world's fastest growing economy: Key numbers to be watched

Here are the key numbers to watch out for in the Budget for 2022-23, which is widely expected to boost spending towards policies that create jobs, boost manufacturing, helping rural and agri-economy and infrastructure creation. (READ FULL STORY HERE)

10:16 Feb 1

Sensex, Nifty open higher ahead of Budget presentation

The 30-share Sensex was trading 603.39 points or 1.04 per cent higher at 58,617.56, and the broader Nifty rose 159.25 points or 0.92 per cent to 17,499.10. (READ FULL STORY HERE)

09:23 Jan 31

So, what can the Finance Minister do for taxpayers?

Our pre-budget analysis had this to say: Thanks to Sitharaman's FY20 Budget, taxpayers now have two choices, but this only created administrative complexity, and the Budget is expected to smooth out the kinks. This is essential to increase compliance and broaden the tax base. Only when this happens, the next step of rationalizing tax slabs becomes realistic and doable, perhaps next year or just in time for 2024 general elections. While at it, Sitharaman must also ease compliance for taxpayers, who have been facing inexplicable technical glitches, besides clarity on equalisation levy, and on cryptocurrencies.  


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