Curious to know more about the offerings or relaxations that we may expect from the annual financial statement for the coming year? The General Public of India always expects that the government will present them with the statement having maximum facilities and tax rebates. We will have a look at the expectations for Budget FY 2022-23 in this very interesting article.
The government will soon present the most awaited statement of every financial year. The Union Budget working for the financial year 2022-23 was started from 15 December 2021. The Finance Minister Nirmala Sitharaman has initiated the pre-budget consultations with different groups of stakeholders. To understand this better, let us first understand more about the budget statement and its components. Also, we will have a look at the highlights of the Budget FY 2021-22 and will know more about the recommendations for the Budget FY 2022-23.
Table of Contents
- 1 What is the Union Budget?
- 2 Highlights of Last Year Budget FY 2021-22
- 3 Expectations for the Budget FY 2022-23
What is the Union Budget?
The government presents the Union Budget every year on the 1st of February. In more clearer and technical terms, you can also refer to the Union Budget as the annual financial statement. According to Article 112 of the Constitution, the statement in which the government presents the estimated receipts and expenditures for that particular financial year is known as a budget. A financial or a fiscal year runs from April 1st to 31st March according to the budget.
The Union Budget FY 2022-23 will be presented by the Finance Minister Nirmala Sitharaman this year on February 1 around 11 am. Under Prime Minister Narendra Modi-led government, this budget will be the fourth and the most awaited budget. Other people contributing to the formulation of this year’s budget include the Finance Secretary TV Somanathan, Revenue Secretary Tarun Bajaj, and Economic Affairs Secretary Ajay Seth.
Components of the Union Budget
There are two parts of the Union Budget:-
- Revenue Budget– Revenue Budget consists of revenue receipts and revenue expenditures. Tax receipts and non-tax receipts are further divisions of revenue receipts. Revenue expenditure involves the day-to-day functioning of the government. It includes the expenditure on the services offered to citizens. Overall, the revenue budget includes transactions of repetitive nature.
- Capital Budget– Capital Budget consists of capital receipts and capital expenditures. Capital receipts include transactions like payments made by the government to the public, foreign governments, etc. The RBI contributes a major part to the capital receipts. The expenses incurred on the development of healthcare, education, technology, infrastructure, etc are Capital expenditures. Overall, the capital budget includes transactions that are not repetitive in nature, such as a loan from RBI to the government.
The government usually presents the overall union budget as a deficit budget in India. A deficit budget means that the government expenditures will always be greater than government receipts. Through selling and borrowing bonds, the difference between the expenditures and receipts can be met.
Highlights of Last Year Budget FY 2021-22
The budget for FY 2021-22 revolved around six pillars, which were health and well-being, reactivate human capital, physical and financial capital and infrastructure, internal development of India, innovation, and R&D, and ‘Minimum Government’, ‘Maximum Governance’.
- The estimated expenditures were Rs 34,83,236 crores and the estimated receipts were Rs 19,76,424 crores.
- Nominal GDP increased by 14.4%.
- The capital expenditure assigned for FY 2021-22 was Rs.5.54 lakh crores.
- The Fiscal deficit was 6.8% in 2021-22.
Because of the current situation of the pandemic, FM emphasized the importance of the healthcare sector’s improvement and proposed a new scheme, PM Atmanirbhar Swasth Bharat Yojana, with a budget outlay of about Rs.64,180 crores.
- There was an increment in the FDI limits in the insurance sector from 49% to 74%.
- Disinvestment of two PSUs and one general insurance.
- For loans, marginal capital was required via the Stand-up India Scheme. It was reduced to 15% from 25% for SCs, STs, and women.
- For senior citizens above 75 years, whose only annual income sources are from pension and interest, will be exempted from filing Income Tax Returns.
- IT assessment proceedings time limit was reduced from 6 years to 3 years, except in the serious tax evasion cases. In these cases, provided that the concealment of income is greater than 50 lakhs, the time limit can be upto 10 years.
- Customs duty was rationalized on copper, gold, textiles, and silver.
- On dividend income, the advance tax was applied.
- The tax-free income generated from employees provident fund will be limited upto Rs 2.5 lakhs. The PF contribution will not be allowed as a deduction for the employer if the employee’s PF contribution was deducted but not deposited by the employer.
- Mission POSHAN 2.0 was announced with the aim of promoting nutritional outcomes in over 112 districts.
- Jal Jeevan Mission Urban announced to aim for better water supply all over the country, with an outlay of 2.87 lakh crores.
- There was the introduction of Urban Swachh Bharat Mission 2.0 with an outlay of Rs 1.41 lakh crores over a period of 5 years.
Expectations for the Budget FY 2022-23
The Union Budget has a lot of hopes for the general public of India. While recovering from the pandemic is still a major concern, the Indian government can also focus on infrastructure development, healthcare development, income tax, provident fund, GDP and other important aspects. Because of the new COVID-19 variant Omicron, there is a renewed threat to the economy and livelihood of India. In the Budget 2022-23, it’s expected that more money will be spent on capital projects and healthcare programmes to help India become more integrated into the global supply chain. Moreover, here are some offerings that we may expect from the budget 2022.
- The Finance Minister has committed to draw more attention towards demand generation, job creation, and stabilizing the Indian economy.
- Additional government financial assistance and reforms concerning import alternatives are projected to enhance self-reliance and domestic manufacturing in the MSME sector in this year’s budget 2022-23. Incorporating green energy into MSMEs’ programmes will also aid in the creation of a sustainable economy and reduce domestic reliance on imported energy.
Estimated Numeric Data
- The economic advisory committees suggested that the nation’s growth can be up to 7.5%.
- Also, there are plans to utilize the extra revenue for building more assets in Budget 2022.
- MSMEs contribute around 30% to India’s GDP. As MSMEs are the second-largest employment generators, they are expecting the government to decrease the compliance burden in every aspect such as taxes, loans, audits, etc.
- A larger outlay on capital expenditure is one of the primary expectations of the budget 2022-23. In the latest Budget, a total of Rs 5.54 lakh crore was budgeted, up 26% over FY21’s 4.39 lakh crore.
- As Omicron cases in India are growing day by day. There are chances that the government shall phase out income tax deductions, incentives, and exemptions on direct taxes. This will help the general public to save more money and face the new COVID-19 variant.
- Measures could be proposed to lower the tax litigation and increase compliance through increased transaction scrutiny in the budget 2022-23.
- There is a chance that excise duties on petroleum items will be reduced
- Staff who work from home should be given an additional reduction of Rs 50,000 in the form of a “work from home” allowance. A rise in the standard deduction limit under Section 16 of the Income Tax Act from Rs 50,000 to Rs 1 lakh is also expected.
- Tax benefits on house loans, both for interest and principal repayment, are projected to be extended by Rs 50,000 each, up from the current limits of Rs 2 lakh and Rs 1.5 lakh, respectively.
- Given that the PPF maximum was left undisturbed in the last Budget. It is also predicted to grow under 80C from Rs 1.5 lakh in the budget 2022-23.
- Due to a new threat of Omicron variant to India. The government is likely to contribute a major part to the development of healthcare infrastructure.. The government shall focus majorly on mass vaccination. Also, the healthcare sector shall improve healthcare funding through medical subsidized loans. The government may introduce and allocate land for new hospitals etc.
- The healthcare sector may extend the National Health Protection Scheme.
- Primary Health Centers and Community Health Centers shall introduce more trauma centers.
- Also, we might also expect 100% health insurance coverage.
- The FHRAI, hospitality industry body, has asked the Finance Minister for capital support and assistance from the banks and NBFCs in the Budget 2022-23. They have also requested for a loan moratorium or the redesigning of the loan structure to support the industry that has been immensely affected by the pandemic.
- The Indian government shall be likely to focus also on infrastructure improvement. The Budget 2022 shall include the development of major public roads, railways, highways, and expressways and you can expect more expressways in the budget that can ease your traveling.
The Bottom Line
This year Budget FY 2022-23 shall be likely to be affected by the COVID third wave. The major concern this year will be how to face the Omicron which is the new variant of COVID-19. This new variant is more infectious and resistant to vaccines because of which the government may focus more on healthcare development and mass vaccination of the entire public falling in each age group. In lieu of the Omicron threat, the government may offer rebates on direct taxes to give a chance to the people to save more money.