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The good, bad and ugly of Budget 2022 for investors, companies and common man
Budget 2022 made no change to the existing income tax structure, leaving the common man and some other sections disappointed. There, however, were steps that could turn out to be a major boost for the economy as a whole, going forward.
Some measures introduced in the Budget would make for good news to India's investors, companies and the common man, while some of them can be seen as coming pain points for these sections. Here's a round-up:
Investors community
In a budget without any remarkable good news for the individual, the announcement of the upcoming central bank digital currency (CBDC) garnered some attention.
FM Sitharaman announced that the RBI will introduce India's own central bank digital currency in FY2022-23.Also, this financial year, surcharge on long-term capital gains (LTCG) will be capped at 15 per cent, a rule that will be applicable to all assets. Until now, it applied only to listed equity shares and units of equity-oriented fund.
This essentially brings tax on sale of unlisted shares on a par with sale of listed shares.
The bad news for crypto investors is that any income from transfer of virtual digital asset will be taxed at 30% from now on. This will include gifting too. No deduction will be allowed while computing income except cost of acquisition. Investors also can't set off losses from any other income.
Another pain point is 1% TDS on purchase of virtual digital asset, subject to stipulated thresholds.
Businesses & Companies
Startups incorporated by March 31, 2023 will have the benefit of deduction of 100% profits.
Domestic manufacturing companies incorporated up to March 31, 2024 will enjoy the beneficial rate of 15%. This is basically an extension of an existing facility.
Under a new measure, the next four years will see a raise in the basic custom duty rates — a move aimed at supporting phased local making of wrist wearables, smart watches, hearables, smart electric meters and their components.
One paint point for them is that there will now be a 10% TDS on the benefits or perquisites over Rs 20,000 received in course of a business or profession.
That apart, more than 350 customs duty exemptions are now now longer there. Also, another 40-odd exemption will be phased out.
Consumers
Budget 2022 cut import duty on cut and polished diamonds and gemstones to 5 per cent from 7.5% earlier. Besides, the duty on sawn diamond was brought to nil. This is a good news for the buyers of these items.
As for pain points, customs duty on imitation jewellery was raise to higher of 20% or Rs 400/kg, which will make them dearer.
Taxpayers
Taxpayers will now be given 3 years from the end of the relevant fiscal to update tax return and pay additional tax, if any. Also, extension will be available if they miss the deadline for filing belated or revised returns.
Another good news is that payment received from employer or any other source for Covid treatment has been made non-taxable.
Also non-taxable is payment received by kin of Covid dead. This will, however, be subject to the aggregate limit of Rs 10 lakh for that received from sources other than employer.
State government staff are now eligible for deduction of employer contribution to NPS up to 14% of salary. This rule will bring them on par with central government employees.
As for pain points, updated returns will now come with payment of extra tax of up to 50% of one's liability, which is likely to be a worry for some.
Besides, no loss can now be set off against undisclosed income unearthed by searches or surveys
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