The Union Budget is the annual budget of the Indian Republic. It is presented every year in the month of February generally by the Union Finance Minister. On this page, you can read all about what a budget is, and what the Union Budget 2022-23 talks about. This is an important topic for the UPSC exam.
Union Budget – Introduction
The Union Budget is also known as the Annual Financial Statement. Article 112 of the Constitution of India lays down that it is a statement of the estimated expenditure and receipts of the Government for a particular year.
The Budget keeps the account of the finances of the government for the fiscal year (from 1st April to 31st March).
The Budget is presented on 1st February (until 2016, it was presented on the last working day of February) so that it can materialise before the commencement of the new financial year which starts on 1st April.
In 2017, a 92-year-old tradition was broken when the railway budget was merged with the Union Budget and presented together.
The Budget has to be passed by the Lok Sabha before it can come into effect.
In the Union Budget, the disbursements and receipts of the government comprise the various types of government funds in India namely, the Consolidated Fund of India, the Contingency Fund and the Public Account.
The Union Budget 2022-23 seeks to complement macro-economic level growth with a focus on micro-economic level all-inclusive welfare. The budget aims to lay a strong foundation to steer the Indian economy towards Amrit Kaal for the next 25 years, from India at 75 years to India at 100.
Union Budget 2022 focusses on 4 pillars:
Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action
Financing of Investments
Union Budget 2022-23: Top Economic Indicators
9.2 percent expansion in GDP in FY22
8−8.5 percent projected GDP growth for FY23
The revised Fiscal Deficit in the current year is estimated at 6.9 percent of GDP.
Enhance multimodal connectivity through the expansion of roadways by 25,000 km
Inclusion of 2,000 km of rail network under indigenous technology
Develop eight ropeway projects and 100 cargo terminals
International Arbitration Centre
International Arbitration Centre to be set up; and foreign universities permitted to operate in GIFT City.
Amendments to the Insolvency and Bankruptcy Code
To enhance the resolution process, including for cross-border insolvency.
To establish a centre to reduce the process of voluntary winding up of companies to six months
Launch of digital rupee using blockchain and other technologies in FY22-23
Scheduled Commercial Banks to set up 75 digital banking units
Extend the core banking system to post offices
Tax on Virtual Digital Assets
All virtual digital assets will be taxed at 30 per cent rate, while digital gifting will also be charged per the same rates on the receiver’s end.
Committee to govern different processes
A committee or task force to be set up for urban planning, augmenting the Animation, Visual Effects, Gaming, and Comic sector, and reviewing the regulatory framework governing venture capital and private equity investments
5G spectrum auction proposed in FY22 along with the launch of a design-led manufacturing scheme (as part of the PLI scheme);
Contracts to be awarded for laying optical fibre in remote areas through Public-Private Partnership
Infrastructure status accorded to data centres and energy storage systems to facilitate credit availability
Issuance of sovereign green bonds which will help reduce carbon intensity
Set-up of government-backed funds for climate action, tech-based and agricultural initiatives
Battery swapping policy
Battery swapping policy and interoperability standards to be formulated
Additional INR 195 billion to be allocated to PLI for manufacturing solar PV modules
Emergency Credit Line Guarantee Scheme for MSMEs
The Emergency Credit Line Guarantee Scheme for MSMEs extended up to March 2023 with an additional guarantee cover of INR 500 billion for hospitality and related enterprises
Special Economic Zone Act
Special Economic Zone Act to be replaced with new legislation to enable the States’ partnership in the development of enterprise and service hubs, optimally utilise the available infrastructure, and enhance export competitiveness
Production Linked Incentive (PLI) Scheme of the Centre has the potential to create 60 lakh new jobs during the next five years.
A scheme for design-led manufacturing will be launched to build a strong ecosystem for 5G as part of the PLI scheme.
For facilitating domestic manufacturing, an additional allocation of Rs 19,500 crore for PLI scheme for manufacturing of high efficiency (solar) modules.
Empowerment of women
Schemes such as Mission Shakti, Mission Vatsalya, Saksham Anganwadi and Poshan 2.0.
Allocation of Rs 60,000 crore will be made under ‘Har Ghar Nal Se Jal’ scheme to cover 3.8 crore households in 2022-23.
PM GatiShakti National Master Plan will encompass the seven engines for economic transformation, seamless multimodal connectivity and logistics efficiency.
The seven engines include roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure.
To facilitate better movement of people and goods, The National Highways Network will be expanded by 25,000 km in FY23
400 new gen Vande Bharat trains to be manufactured in the next 3 years
Railways will develop new products and logistic services for small farmers and MSMEs
‘One Station- One Product’ concept will be promoted to help local businesses and supply chains built on a hub and spoke model
2,000 km of network to be brought under a new scheme, Kavach – for safety and capacity augmentation
Union Budget 2022-23: Top Tax Highlights
No change to corporate or personal income tax rates
Revised Income Tax return policy
Taxpayers now have a two-year window to correct errors and file a revised income tax return for the relevant assessment year
Tax holiday extended for start-ups incorporated up to 31 March 2023 and for new manufacturing companies commencing operations by 31 March 2024
surcharge or cess
Retrospective amendment to deny the deduction of any surcharge or cess paid on income and profits
Virtual digital assets (VDA):
Gains taxed at 30 percent; deduction allowed only for the cost of acquisition;
Benefit of set-off and carry forward of losses not available;
Deemed gift tax provisions to apply; tax deduction at source (TDS) at 1 percent introduced.
International Financial Services Centre (IFSC)
Income-tax exemption expanded to, inter alia, specified income of non-resident from lease of a ship to IFSC units;
Income of a nonresident from the transfer of specified derivative instruments
Concessional tax regime
Concessional tax regime on foreign-sourced dividends to be withdrawn from FY22
Alternate minimum tax
Cooperative societies pay 18.5% alternate minimum tax and companies pay 15%. From now on the cooperatives too will have to pay only 15%