Key Takeaways from the Union Budget 2022-23

Urmi Sengupta,  Pramit Pratim Ghosh |Updated on: August 1, 2022

India's first post-vaccination union budget 2022 comes bearing an agile approach to accelerate sustainable economic growth of the nation. The budget that has been held in Lok Sabha today is majorly focused on fast-tracking economic development, enabling businesses growth, and creating employment opportunities.   

The Finance Minister Nirmala Sitharaman delivered the shortest budget speech that focused on laying the foundation and providing the blueprint of the economy over 'Amrit Kal' of the next 25 years – from India at 75 to India at 100. With a focus on key sectors like agriculture, healthcare, MSMEs, and infrastructure, here's what the 2022-23 union budget looks like:  

No changes in tax slab  

The union budget has proposed a number of measures to provide relief for taxpayers:   

• To ensure a seamless tax filing procedure, the union budget has provided a one-time window to correct omissions in ITRs filed
• Taxpayers who have made errors in filing their returns can file updated returns by payment of taxes within 2 years of the relevant Assessment Year
• For salaried individuals, there have been no changes in the income tax slab for 2022-23
• The budget also focused on bringing tax deduction parity between central and state governments on NPS contribution by increasing the tax deduction limit from 10% to 14% to help the social security benefits of state government employees
• Introduced taxation of virtual/digital assets wherein any income from transfer of virtual assets shall be taxed at 30%

GST changes

• Recipient can avail input tax credit with respect to supply only if such credit has not been restricted in GSTR-2B, this implies that ineligible credit is not allowed to be taken
• The time limit for availment of input tax credit by businesses in respect of any invoice or debit notes pertaining to a financial year has been extended till 31st November of the following financial year
• Extension in time limit to issue credit notes till 30th November of next financial year
• GSTR-1/ GSTR-3B rectification allowed till 30th November
• Two-way communication filing process in GST is revoked and a new process of communication to the recipient is to be announced
• The new change to allow transfer of amount available in electronic cash ledger of a registered person to the electronic cash ledger of a distinct person

Additionally, there are other amendments announced pertaining to GST in the budget 

MSME sector

Focusing on the development of the MSME sector, the Union Budget for 2022-23 has announced several measures. It has extended the Emergency Credit Line Guarantee Scheme (ECLGS) until March 2023. Earlier, the ECLGS provided a credit boost to more than 130 lakh MSMEs that helped tackle the pandemic's adverse impact.   

To further provide relief to the MSME sector, the central government has extended the ECLGS program by another Rs 50,000 crore - taking the cumulative amount to Rs 5 lakh crore. The additional amount is reserved exclusively for the hospitality and its related MSMEs.   

Additionally, the Centre will infuse capital to revamp the credit guarantee trust for MSMEs, which is expected to facilitate additional Rs 2 lakh crores for MSMEs and increase employment opportunities. The Centre will launch the Raising and Accelerating MSME Performance (RAMP) program with a fund of Rs 6,000 crores over the next 5 years to make the MSME sector more resilient, competitive, and efficient. The budget document also stated that the customs duty exemption given to steel scrap last year was extended for another year to enable MSME secondary steel producers.

For startups  

The union budget 2022-23 that aims at enabling sustainable and agile economic development has provided tax benefits for startups. So far, startups founded between 1st April 2016 – 31st March 2021 were eligible for tax exemptions, which has now been extended to 31st March 2023. This implies that startups that have been founded within the stipulated timeline will be able to avail 100% tax rebate on profits made in 3 years within 10 years of operations, provided their overall turnover does not shoot over Rs 25 crore in a fiscal.

Other key takeaways 

• Increased the capital expenditure for FY23 at Rs 7.5 lakh crore, about 2.9% of GDP - a 35.4% boost   
• The fiscal deficit target has been set at 6.4% for FY23 to ensure that the government meets the target comfortably  
• National Highways Network will be expanded by 25,000 km in FY23
• To enhance the competitiveness of exports, new legislation will replace the SEZ Act that will encompass all large existing and new industrial enclaves
• To tap on the upcoming cryptocurrency market, the RBI will issue digital currency using blockchain
• India will issue sovereign green bonds - a debt instrument for funding green infrastructure
• Launched e-passports in 2022-23 with biometric data
• To provide faster resolution of bankrupt companies, the union budget has proposed amendments that would help enhance the resolution process's efficiency
• Alternate minimum tax to be reduced o 15% for cooperative societies