Key Highlights of the Budget for FY 2022-23:
- GDP growth expected at 9.2 % in the current fiscal FY2021-22.
- Focus on four pillars of development — PM Gatishakti, inclusive development, productivity enhancement, energy transition climate action and Financing of investments.
- Significant boost to the capex spending at Rs 7.5 lakh crore in FY23, an increase of over 35% from FY22.
- Fiscal Deficit at 6.4% of the GDP (Rs 16.61 lakh crore) in FY23, compared with the revised estimate of 6.9% in FY22 (15.91 lakh crore). Gross borrowing is estimated at Rs 14.95 lakh crore in FY23 while it has been revised downwards for FY22 from 12.06 lakh crore to 10.47 lakh crore.
- FY23 total expenditure seen at Rs 39.45 lakh crore. Total Receipts other than borrowing seen at Rs 22.84 lakh crore.
- Disinvestment target has been revised from a budgeted Rs 1.75 lakh core for FY22 to Rs 78,000 crore in FY23 indicating the government likely to proceed with the LIC IPO during this fiscal. For the upcoming fiscal FY23, disinvestment target has been pegged at a realistic Rs 65,000 crore.
- States will be allowed 4% fiscal deficit to GDP in FY23.
- Issuance of sovereign green bonds for funding green infrastructure. Sovereign green bonds will be part of government’s borrowing programme in FY23. Proceeds to be deployed in public sector projects.
- The Budget proposes to allocate additional Rs.19,500 crore for PLI for manufacturing high-efficiency solar modules with priority on fully integrating manufacturing of various components.
- Schemes on Low Income Housing + Tap Water in Homes sustained.
- Current coverage of Har Ghar Nal Se Jal is 8.7 crore of this 5.5 crore households were provided tap water in last two years itself. Allocation of Rs 60,000 crore has been made to this scheme in 2022-23. Housing projects allotted Rs 48,000 cr for FY23 under PM Housing scheme.
Announcements on Taxation:
- Taxpayers can file an updated return on payment of taxes within two years from the end of relevant assessment year. The new provision will ensure voluntary tax filing and reduce litigation.
- 30% tax on proceeds of virtual/digital assets with no deductions other than cost of acquisition. No set off permitted against other income. 1% TDS to be levied on payments made on transfer of digital assets. Digital rupee will be issued using blockchain and other technologies, to be issued by RBI starting 2022-23.
- Minimum Alternate Tax rate for cooperatives at 18.5% has been reduced to 15% to bring it with parity of the rate for corporates. Also, the surcharge for cooperatives has been reduced to 7 % from 12 % for total income ranging between Rs 1-10 crore.
- The Budget has also extended the timelines for benefits under the new corporate tax regime. The government had announced a 15% corporate tax rate for newly incorporated manufacturing companies till March 31, 2023, which has now been extended till March 31, 2024.
- Deduction for employer contribution to NPS increased to 14% from 10% earlier for State govt employees on par with central govt employees.
The budget is a continuation of the existing government policies and holds no negative surprises or major announcements. The Government has continued with its policy to support economic growth, with its spending focused on increased capital expenditure. At the same time, the Government continues down the fiscal consolidation path but very gradually, notwithstanding the fragile economic recovery, thus reducing fiscal deficit from a revised 6.9% in FY22 to 6.4% in FY23 which is higher than the market expectations. It plans to bring down the fiscal deficit below 4.5% by FY2025-26. The disinvestment targets are scaled down to a more realistic levels in the upcoming fiscal.