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What do the financial announcements mean for you?

Finance Minister Nirmala Sitharaman tabled the Union Budget 2022-23 on 1 February, a day after the start of the Budget Session of Parliament.

Like last year, Sitharaman presented the Union Budget in a paperless format. She arrived at Parliament carrying a tablet encased in a red sleeve bearing India’s national emblem.

This post: What do the financial announcements mean for you?

The budget comes amid growing concerns over rising income inequality and plummeting employment rates. The Finance Minister did not make an announcement on the income tax bracket, despite expectations. There is no change in the standard deduction. Currently, a salaried individual can claim a standard deduction of up to INR 50,000 only from salary income.

But there were a lot of interesting sops, centring on revised ITR window, NPS, start-up, ECLGS scheme as well as new areas such as digital currency.

Major announcements of Union Budget 2022-23

Digital currency to be taxed

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Image: Courtesy of shutter_speed/@sspeed/Unsplash

Perhaps the biggest announcement in Budget 2022-23 was in the area of digital assets.

The government has long been discussing the fate of cryptocurrency in India. Last year, the government signalled that it intends to regulate digital currencies instead of banning them outright. The yet to be presented Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, is a step in that direction.

In her Budget speech, Sitharaman announced that the transfer of digital assets will attract a 30 percent tax. She also said that a new digital rupee using blockchain technology will also be introduced by the Reserve Bank of India (RBI) this fiscal.

The Finance Minister reportedly said that the decision will give a major boost to the economy.

Sitharaman, however, added that digital assets cannot be mentioned as a replacement of any other income and one percent TDS will be charged further on payments made using digital assets to keep track of transactions.

“No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition,” she said.

The Finance Minister also said that gifts received in the form of cryptocurrencies will also attract the same tax.

The decision of the government is being interpreted as an official nod to digital currencies.

The minister’s announcement also follows the government’s earlier decision of introducing its own digital currency on blockchain technology. The government’s plan on private cryptocurrencies, however, remains unclear.

Though details will emerge with time, the announcement has been welcomed by digital investors and certainly ends ambiguities regarding crypto investments in India.

Speaking to ANI following the Budget, Congress MP Shashi Tharoor, who otherwise criticised the overall Budget calling it a “damp squib”, appreciated the decision on digital currency.

“Very clear that as far as digital currency is concerned, the government was heading in that direction. To the best of my knowledge, a reasonable proposition. I don’t think we’ll be criticising that. But we’re more concerned about lack of substance for common citizens in Budget,” he told ANI.

The taxes and duties

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Image: Courtesy of Scott Graham/@homajob/Unsplash

The Finance Minister proposed an increase of employees’ tax deduction limit to 14 percent on the employer’s contribution to the NPS account for both the Centre and State government employees. The current rate is 10 percent.

According to Sitharaman, the proposed increase will help bring state government employees at par with Central government employees and will help in social security benefits of the former.

Sitharaman also announced that the income tax returns can now be revised to rectify mistakes and omissions. This includes revising the return with declared income not reported.

According to the announcement, the changes can be made through a one-time window till two years from the end of the assessment year on payment of tax.

The surcharge on long-term capital gains on any asset has been capped at 15 percent.

“Long term capital gains to be subject to surcharge only at 15 percent for all assets as against graded surcharge. Currently, this is available only for listed shares and units of mutual funds,” said the Finance Minister.

Sitharaman announced tax reliefs for parents or guardians of differently-abled persons. Now, such parents or guardians can take an insurance scheme for the differently-abled person.

“The present law provides for a deduction to the parent or guardian only if the lump-sum payment or annuity is available to the differently-abled person on the death of the subscriber i.e. parent or guardian,” the Finance Minister said.

“There could be situations where differently-abled dependants may need payment of annuity or lump sum amount even during the lifetime of their parents/guardians. I propose to thus allow the payment of annuity and lump sum amount to the differently-abled dependent during the lifetime of parents/guardians, i.e., on parents/ guardians attaining the age of sixty years,” she added.

Among the few things that get cheaper in the Budget are polished diamonds, imitating jewellery and gemstones following the reduction in the custom duty to 5 percent. Also cheaper are domestic electronic wearables and mobile phone chargers following duty concessions in certain mobile phone parts. Umbrellas are set to become costlier as the government hiked the duty to 20 percent.

The two-part Budget session

The Budget Session of Parliament commenced with President Ram Nath Kovind’s address on 31 January.

The first part of the session will continue till 11 February. The second part will be held from 14 March to 8 April.

Hero and Featured images: Courtesy of rupixen.com/@rupixen/Unsplash

Source: Harta Chisinau
Category: Your Money

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