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Union Budget FY22
1. Union Budget FY22
10/10 for Intent; Execution needed
This presentation does not contain any investment advice or equity research.
“Progress lies not in enhancing what is, but in advancing toward
what will be.”
—Khalil Gibran (Lebanese Thinker Poet, 1883-1931)
2. Key message
• Intent for reform clear
• Growth preferred over fiscal control
• Capital expenditure on building infrastructure to be main stay of growth
• Incremental progress on making tax administration transparent and efficient
• Need of new economy getting recognition
• Aggressive monetization of public sector assets
• Long Term (5-6yr) Plans make a comeback
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3. Core Ideas
• Health and Wellbeing of citizens - Preventive healthcare, better sanitization and clean
water
• Physical & Financial Capital, and Infrastructure – investment in building physical and
financial infrastructure.
• Inclusive Development for Aspirational India – Recognition of the needs of new economy
• Reinvigorating Human Capital – Modern education policy
• Innovation and R&D – National Research Foundation to research ecosystem in country
• Minimum Government and Maximum Governance – Aggressive disinvestment;
administrative reforms; easier and transparent tax administration
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4. Some key development proposals
• Rs. 64180cr to develop capacities of primary, secondary, and tertiary care Health Systems,
strengthen existing national institutions, and create new institutions, to cater to detection and cure
of new and emerging diseases.
• Universal water supply in all Urban Local Bodies; and liquid waste management in 500
AMRUT cities. (Rs. 2,87,000cr in 5yrs)
• The Urban Swachh Bharat Mission 2.0 (Rs. 1,41,678cr over 5years).
• Mega Investment Textiles Parks (MITRA) Scheme to be announced in addition to PLI.
• A Development Financial Institution (DFI) with Rs20000cr initial capital to be set up. The
institution to have Rs5trn loan book in 3yrs.
• Proposal to set up National Monetization Pipeline. DFC to be monetized after commissioning in
June 2022.
• Rs. 3.05trn for upgrade of power distribution infrastructure. (5yrs)
• Hydrogen Energy Mission in 2021-22 for generating hydrogen from green power sources.
• Asset Reconstruction Company and Asset Management Company to be set up to consolidate
and take over the existing stressed debt.
• National Research Foundation to be set up to develop research ecosystem in the country. (Rs.
50000 over 5years)
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5. Other key proposals
• Rs. 35000 allocated for Covid-19 vaccination. More to be allocated if needed.
• Private sector may be allowed to own and operate 20000 city busses under PPP mode.
• Private players to be allowed to manage and operate major Ports.
• Proposal to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities
Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single
Securities Markets Code.
• Proposal to introduce an investor charter as a right of all financial investors across all financial
products.
• FDI limit in insurance sector increased to 74% from present 49%.
• Rs. 20000 cr allocated for recapitalization of public sector banks.
• Clear roadmap for privatization of CPSE. Proposal to take up the privatization of two Public
Sector Banks and one General Insurance company and IPO of LIC in FY22. Rs. 1.75trn to be
raised from disinvestment in FY22.
• Social security benefits will extend to gig and platform workers. Minimum wages will apply to all
categories of workers, and they will all be covered by the ESIC.
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6. Key tax proposals
Personal income tax
• Assesses above 75yr of age having only pension and interest income need not file return, if TDS
covers their full tax liability.
• Dividend income to be considered for advance tax only when announced. For FPI, TDS on
dividend to be at lower treaty rate.
• ULIPs Premium over Rs2.5lac in a year to be treated at par with Mutual Fund Investment.
• Interest on contribution to Provident Funds on contribution exceeding Rs2.5/year to be
taxable.
• The additional deduction of `1.5 lakh shall therefore be available for loans taken up till 31st
March 2022, for the purchase of an affordable house.
• IT Returns to come pre filled with salary, interest, dividend and capital gain of listed securities.
• Person in whose case TDS/TCS of Rs50,000 or more has been made for the past two years and
who has not filed return of income, the rate of TDS/TCS shall be at the double of the specified rate
or 5%, whichever is higher.
• Proposal to increase safe harbor limit from 10% to 20% for specified primary sale of residential units.
Business taxation
• Further affordable housing projects can avail a tax holiday for one more year – till 31st March, 2022.
Tax exemption to be notified for Affordable Rental Housing Projects.
• For assesses carrying 95% or more transactions digitally, Tax Audit would be needed only if
turnover exceeds, Rs10cr.
• Eligibility for claiming tax holiday for start-ups extended by one more year - till 31st March, 2022.
• TDS of 0.1% required on purchase transaction exceeding ` 50 lakh in a year, provided the
supplier’s turnover exceeds rs10cr.
• TDS requirement on dividend paid to Trusts (REITs/InVits) in whose hand dividend is not taxable.
• Provisions for Equalization Levy on ecommerce players rationalized.
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7. Other key proposals
Miscellaneous
• Time limit for reopening of assessment reduced to 3yrs from present 6yrs. Re-opening for
serious tax evasion to be made more objective and system driven.
• Dispute Resolution Committee to be set up for small assesses and Settlement Commission to be
wound up. ITAT to also go faceless.
• Time limit for completing assessment reduced to 9months from the end of relevant assessment year.
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