🧾Budget 2022: Explained
Here's a summary of all the important policies that were announced in the Budget this year!
The much-anticipated Budget 2022-23 is finally here. And so are we to break it down for you.
It dictates everything from how much taxes you will pay to the country’s economic growth. So let’s begin with the blockbuster announcements!Â
Digital Rupee
This year's budget emphasised a lot on digitising the entire ecosystem.
And this digital push would be incomplete without a digital rupee.Â
Yes, after several meetings and a lot of back and forth the government has finally announced a Blockchain-based central bank digital currency which will be launched by the RBI in FY2023!Â
If you're not sure whether that's a good thing or not, you can read more about CBDCs here.
Crypto Tax
This is the portion of the Budget that most people were looking forward to. Almost everyone had expected that the government would clarify how cryptocurrency taxation works. And it did!
Any income made from virtual digital assets (cryptocurrencies and NFTs) will now be taxed at a 30% rate.Â
If you sell cryptos, you will pay tax and if you gift cryptos, the receiver of the gift will pay tax.
Plus when you sell cryptos, you will receive payment after a 1% deduction of TDS.
Wait, there's more. Earlier, people could offset some of their losses with their gains. What this roughly means is if you gained Rs. 10,000 from mutual funds and lost Rs. 5,000 from stocks, you could offset the loss and pay taxes only on Rs. 10,000-Rs. 5,000= Rs. 5,000. And a lot of losses if left unadjusted, could even be carried forward to off-set in the next year.
But you can no longer do those things with virtual digital assets. While your profits will be taxed, you won’t be able to take advantage of losses.
Why such strict rules? Probably because the government wants people to adopt its digital currency and it can’t outright ban the umpteen currencies that have cropped in. And what can be regulated, can at least be made difficult to adopt, no?
What this move also means is that crypto will now become more of a store of value and not something that you use for day-to-day transactions.
In other tax news, the government has given taxpayers some breathing space - they can now file an updated return on taxes within 2 years from the end of the relevant assessment year. But this clause has a lot of riders. Let’s say you wouldn’t want to use this option ever.
However, there has been no change in personal tax rates or increase in exemptions. Keep paying taxes as you were!
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PM GatiShakti Plan
India aims to become a $5 trillion economy by 2025 and to achieve this, it needs to boost up its infrastructure development massively. And the government knows this. So, the Budget announcement began on this note.
Finance Minister Sitharaman announced that under the PM GatiShakti Plan, the government would be majorly boosting road, railway, airport and other transportation infrastructure.
Under this plan, 25,000 kilometres of National Highways will be built as compared to 13,327 kilometres constructed in 2020-21.
But to achieve this goal, 70 kilometres of roads need to be constructed every day. For context, this number was 36.5 kilometres in 2020-21. So, will India be able to meet this goal?
It's not just the roads that are getting revamped, Indian Railways is also getting a major investment boost so it can keep up with demand. For this, 400 new-generation Vande Bharat trains will be manufactured in the next three years.
India also plans to introduce 100 new cargo terminals in three years and improve the metro systems.
Agriculture
Everyone's new focus seems to be on natural, organic things. And now the government is also hopping on this trend. So, chemical-free farming will be promoted, especially along the Ganga.
The government also wants to focus on agri-tech to boost farmers' yield, especially on Kisan drones which can help them with land digitisation and crop assessment.
The government is also working hard on reducing imports. So, it will introduce new schemes to improve the production of oilseeds.
It will also procure 1,208 lakh metric tonnes of wheat and paddy from 163 lakh farmers and in exchange, make direct payments of Rs. 2.37 lakh crores to their accounts. But this number is a little below last year’s. In 2021-22, the government had procured 1,302.61 metric tonnes of wheat and paddy from farmers. This was the highest procurement ever!
Small Industries
The government has expanded the Emergency Credit Line Guarantee Scheme by Rs. 50,000 crores to a total of Rs. 5 lakh crores till March 2023.Â
The scheme, launched last year to allow banks and NBFCs to extend credit to pandemic-hit micro, small, and medium enterprises (MSMEs) has so far helped over 140 lakh MSMEs.
The expansion will further help MSMEs to get more credit easily and allow them to grow.
The government will also launch Raising and Accelerating MSME Performance programme, which will have an outlay of Rs. 6,000 crores over the next five years to make MSMEs more efficient and stronger.
After the huge Covid setback, will these efforts suffice?
Education
The pandemic continues to hamper the education of children, especially those in villages and remote areas.
So, the government is expanding its 'One Class, One TV' program from 12 channels to 200 channels to provide education for classes 1-12 in regional languages.
The government is in full favour of going digital. So, it will be launching a digital portal called DESH-Stack. This portal aims to skill, upskill, or reskill citizens so that they can easily find new job opportunities. The portal will also allow them to find relevant jobs and opportunities.
Fingers crossed for good execution.
Mental Health
The pandemic has taken a toll on our mental health. And now, the government is finally focusing on the mental well-being of people.
It is launching a network of 23 tele-mental health centres (which will allow you to talk to professionals remotely) to help people deal with any mental health problems.
Financial Inclusion
The government has decided to bring in 1.5 lakh post offices under the banking sector.
People will now be able to access their post office accounts through ATMs and net banking, making it easy for those in rural areas to access bank accounts.
Capital Expenditure
Since the government wants to ramp up infrastructure development, it is pledging to drop some serious cash this year.
Capital expenditure this year will increase 35.4% to Rs. 7.5 lakh crores from Rs. 5.541 lakh crores last year.
The government's Effective Capital Expenditure is set to be around 4.1% of the GDP.
This will be a huge boost to the economy. But will this increase our fiscal deficit? Also, the government has spent less than 50% of the budget this year. So, will it be able to actually spend all this money?
There you have it, that's the Budget 2022-23 round-up. Let us know if you liked the new policies the government introduced and if you had predicted any of these.
P.S. Here’s the entire Budget speech if you want to read it!
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