Budget 2022 Expectations: Clarity on crypto taxation, hike in 80C limit, duty rationalisation on EVs
New Delhi, Jan 30: As Finance Minister Nirmala Sitharaman presents her fourth Union Budget on February 1 all eyes would be on how the government balances out populist measures while walking the tightrope of fiscal consolidation. While Indian corporates are expecting some key announcements which will enable them to reset their growth agenda, individual taxpayers are expecting some more disposable income in their hands to invest and consume more.
As India works towards a USD 5 trillion economy by 2025, and with just 2 days to go for 2022-23 Budget, here are the top five market expectations on direct and indirect taxes.
DIRECT TAXES:
1. 80C deduction available up to Rs 1.5 lakh a year be revised upwards significantly;
2.
To
make
the
optional
concessionary
tax
regime,
which
came
into
effect
from
April
2021,
more
acceptable,
raise
the
threshold
Rs
15
lakh
income
for
laying
peak
30%
tax
rate;
3.
As
Web
3.0
unfolds,
crypto-assets
encompassing
a
wide
array
of
digital
assets
like
nonfungible
tokens,
wrapped
asset
token
etc,
will
gain
tremendous
traction.
it
is
being
expected
that
a
specialised
regime
for
taxation
of
cryptocurrency
will
be
introduced
in
the
budget.
4.
The
burden
of
the
long-term
capital
gains
tax
(LTCG),
introduced
vide
Finance
Act
2018,
has
somewhat
dented
investor
confidence.
Major
economies
do
not
have
LTCG
tax.
In
India
too,
it
is
expected
that
LTCG
on
the
sale
of
Indian-listed
equity
shares
will
be
exempted
as
it
would
boost
investment
through
the
stock
exchange.
5.
Corporates
are
expecting
that
the
entire
amount,
or
an
appropriate
proportion
of
expenditure
incurred
for
helping
the
society
and
employee
welfare
during
COVID-19
will
be
allowed
as
deductible
expenditure.
Also,
the
government
is
expected
to
reduce
the
tax
rates
for
companies
engaged
in
R&D
activities
to
15
per
cent
or
less
and
allow
weighted
deduction
on
in-house
R&D
expenditure.
INDIRECT TAXES:
1.
Rationalisation
of
Customs
duty
structure
for
EV
and
ancillary
components,
renewable
energy
generation
devices
and
related
components
is
likely.
2.
Sector-specific
concessions
for
semi-conductor
manufacturers
with
focus
on
exports
is
expected.
3.
Budget
allocations
for
the
expansion
of
the
PLI
scheme
for
sectors
such
as
leather
and
laminates;
additional
incentive
schemes
will
also
lure
companies
into
setting
up
additional
manufacturing
in
sectors
that
were
not
the
focus
in
previous
budgets
and
help
reverse
the
impact
of
the
pandemic.
4.
The
government
is
already
reviewing
400
customs
duty
exemptions
(as
announced
in
the
previous
budget).
The
final
list
is
expected
to
be
proposed
as
part
of
the
2022
budget
and
industry
is
awaiting
it
so
that
there
is
no
adverse
impact
on
trade
as
a
result
of
this
exercise.
5.
Extension
of
customs
duty
exemption
on
goods
imported
for
testing,
and
setting
up
of
a
customs
dispute
resolution
forum,
ease
compliances
under
customs,
and
integration
of
the
current
ICEGATE,
DGFT
and
SEZ
online
portal
into
a
common
digital
platform.
EXPERTS TAKE:
Nangia Andersen India Chairman Rakesh Nangia said notably, the top end of businesses, as well as the upper-middle class, is doing sufficiently well, despite the indelible impact left by the covid crisis. "India is witnessing real consumption problem as the less affluent segments have still not come out of their distressed situations.
The budget's key focus must be to enable the ecosystem around job, income, and demand creation. There is also a need to address various challenges including the most important consideration viz. data protection faced by relatively newer sectors like telemedicine, tele lawyering and ed-tech," Nangia said.
Deloitte India Partner Gokul Chaudhri said the budget is expected to provide relief to lower and middle-income earners with disposable income impacted due to inflation. Also, India has agreed to do away with equalisation levy (EL) and follow the multilateral solution in the form of Pillar 1 and 2 agreed between 137 member countries working at the OECD Inclusive Framework.
"It is expected that the budget will introduce a necessary legislative framework to facilitate implementation of these and also lay down a road map for stakeholder consultation," Chaudhri added.
AMRG & Associates Senior Partner Rajat Mohan said while the middle class expects higher disposal income to counter intensifying inflation, large corporates anticipate stability in tax structure, MSME desires availability of extra liquidity to fund business growth, and foreign investors expect a conducive business environment for long-term strategic investments from Budget 2022-23.
Nangia Andersen LLP Partner-Indirect Tax Samir Kapadia said if the Government earnestly wants to promote India as a manufacturing hub and pursue the policy of Atma Nirbhar Bharat, then the Government needs to take some pragmatic measures.
"These measures, among other things may require, rationalizing the rate of primary inputs /intermediaries one hand; and on the other hand, increase the rate of finished products to provide a tariff protection to promote domestic manufacturing in India," Kapadia added.
Dhruva Advisors LLP Partner Sandeep Bhalla said the Media and Entertainment sector requires mammoth investments in digitisation, technology set up and distribution network.