Union Budget 2022-23: India Towards It's Resilient Amrit Kaal

Feb 10, 2022 in Management

8 MIN READ

union-budget-2022-23-india-towards-its-resilient-amrit-kaal

Ms. Nirmala Sitharaman, Union Finance Minister, delivered the Union Budget to the Lok Sabha last Tuesday. In it, she outlined the current government's vision for India's Amrit Kaal over the next 25 years, imagining India at 100.

The Finance Minister began her presentation of the budget by expressing her sympathy for the devastating effects of the pandemic on India's population and economy. She went on to say, "India's strong resilience has been reflected in the recovery of India's economy." As for this year, it is expected that the country's economic growth will be 9.2 per cent, the highest among all large economies.

The government will focus on these three specific goals in Amrit Kaal's 25-year vision –

  1. Complementing the macro-economic level growth focus with a microeconomic level all-inclusive welfare focus,
  2. Promoting digital economy & fintech, technology-enabled development, energy transition, and climate action, and
  3. Relying on a virtuous cycle that begins with private investment and ends with the public capital investment that helps crowd-in private investment.

This year's budget was based on some common goals. However, if you want to learn more about how the Union Budget for 2022-2023 is assisting MSMEs, start-ups, and manufacturing industries, you should read the article below.

Key points for MSMEs, Start-ups, and Manufacturing industries in the Union's 2022-2023 budget.

  1. The PM GatiShakti National Master Plan, a new transformative approach to economic growth and sustainable development, was launched. It focuses on the Indian economy's seven engines for economic transformation, seamless multimodal connectivity, and logistical efficiency. Roads, Railways, Airports, Ports, Mass Transportation, Waterways, and Logistics Infrastructure are the seven engines that propel PM Gati Shakti's plan. The government sees these seven engines, which play complementary roles with Energy Transmission, IT Communication, Bulk Water & Sewerage, and Social Infrastructure, as a force that will propel the Indian economy forward in unison.
PM GATI SHAKTI PLAN
  1. The Railway Budget focused on popularising the concept of 'One Station-One Product,' which will benefit local businesses and supply chains. In 2022-23, 2000 km of railway network under the Atmanirbhar Bharat scheme will be brought under Kavach, a world-class indigenous technology that will increase capacity. In addition, over the next three years, 400 new Vande Bharat trains will be built. Over the next three years, 100 PM Gati Shakti Cargo terminals for multimodal logistics will be built. Contracts for the implementation of Multimodal Logistics Parks at four locations will be awarded in 2022-23 through the PPP model.
  2. In order to formalise the economy and improve entrepreneurial opportunities for all, particularly the MSME sector, the government plans to connect the Udyam, e-Shram, NCS, and ASEEM portals. This new initiative will turn these portals into live databases of G2C, B2C, and B2B services. These services will include credit facilitation, skilling, and recruitment.
Udhyam
  1. The Finance Minister announced that the Emergency Financing Linked Guarantee Scheme (ECLGS) will be extended until March 2023. Furthermore, ECLGS guarantee cover has been increased by Rs. 50,000 crores, bringing the total protection to Rs. 5 lakh crores. Over 13 million MSMEs have benefited from the ECLGS scheme, which has provided much-needed additional credit during the pandemic. As a result, this new extension will ensure that MSMEs and the services sector continue to be supported.
  2. In addition to the ECLGS extension, the government is revamping the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme to benefit Micro and Small Enterprises by providing them with additional credit worth Rs. 2 lakh Crores. The CGTMSE scheme will receive the funds it requires, which will aid in the expansion of job opportunities in the Indian economy.
CGTMSE
  1. The Raising and Accelerating MSME Performance (RAMP) programme will be implemented over a five-year period with a budget of '6,000 crore. This will assist the MSME sector in becoming more resilient, competitive, and efficient.
  2. The budget for 2022-2023 also focuses on promoting the startup sector in order to facilitate the Drone Shakti and Drone-As-A-Service (DrAAS) programmes.
  3. This budget also intends to address the issue of setting up charging stations for electric vehicles (EV), which is difficult to scale in congested urban areas. The battery swapping policy will be implemented to assist with this issue. Further interoperability standards will be developed. Furthermore, the private sector will be encouraged to develop long-term, innovative business models for 'Battery or Energy as a Service.' All of these initiatives will help to improve the efficiency of the EV ecosystem.
  4. The Centre for Processing Accelerated Corporate Exit (C-PACE) will be established to assist corporations in voluntary winding down as quickly as possible. The goal is to speed up the process so that it can be completed in less than six months, rather than the current two years.
  5. The Special Economic Zones Act will be repealed and replaced by the Development of Enterprise and Service Hubs Act. It will allow the states to participate in this new law as partners. Furthermore, it will cover all large existing and new industrial enclaves in order to maximise the use of available infrastructure and boost export competitiveness.
SEZ ACT
  1. To assist India's manufacturing sector in meeting the ambitious target of 280 GW of installed solar capacity by 2030. The government intends to boost domestic manufacturing by allocating an additional Rs. 19,500 Crores for the Production Linked Incentive for the manufacture of high-efficiency modules, with a preference for fully integrated manufacturing units from polysilicon to solar PV modules.
Solar Panels

Key update points in the Union's 2022-2023 budget's Direct and Indirect Taxes section.

  1. The Finance Minister has introduced new Updated Return functionality to assist Indian taxpayers in filing more accurate and error-free income tax returns. This new Update Return must be filed within two years of the end of the relevant assessment year. However, it only needs to meet one condition pay additional tax on this return. Assessors will be able to declare previously unreported income with the help of this new feature.
Updated Return (ITR)
  1. The Alternate Minimum Tax paid by cooperatives has been reduced from 18.5 percent to 15 percent in order to provide a level playing field for cooperative societies and businesses. Furthermore, the surcharge on cooperative societies has been reduced from 12% to 7% for those with total revenue of more than Rs. 1 Crore but less than Rs. 10 Crores.
  2. The government frequently states that "start-ups have emerged as drivers of growth for our economy." So, in order to give startups a boost in this pandemic, the tax benefit for qualifying startups will be extended until March 31, 2023, from the date of incorporation. Tax breaks for startups for three consecutive years out of ten years were proposed in this scheme.
  3. In the previous Union Budget, the government provided a concessional tax regime of 15% tax to newly incorporated domestic manufacturing companies in order to assist them in becoming capable of competing in the global competitive business environment. As a result, the deadline for beginning manufacturing or production under Section 115BAB has been extended by one year, from March 31, 2023, to March 31, 2024, in order to provide more support.
  4. To assist the entrepreneurial community of the AOP consortium. The government is assisting in lowering the fee difference on work contract execution between individual businesses and AOPs by lowering the Surcharge from 37% to 15%.
  5. In order to prevent tax evasion, the Finance Minister has stated that no loss can be set off against undeclared income discovered during search and survey operations.
  6. In order to support the government's goal of improving the Ease of Doing Business in India, the FM announced that SEZ Customs Administration will be fully IT-driven and will operate on the Customs National Portal. These modifications will be implemented by September 30, 2022.
Ease of Doing Business
  1. To assist the electronics industry in the local manufacturing of wearable gadgets, hearing devices, and electronic smart metres, customs duty rates will be calibrated to create a graded rate structure. Duty exemptions will also be provided for portions of transformers in mobile phone chargers, camera lenses in mobile camera modules, and a few other items in order to encourage domestic production of high-growth electronic products.

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  1. To encourage the Gems and Jewellery sector, customs duty on cut and polished diamonds and gemstones will be reduced to 5%; customs duty on simply sawn diamonds will be eliminated. Furthermore, by June of this year, a simplified regulatory framework will be implemented to facilitate the export of jewellery via e-commerce. In addition, to discourage the import of low-value imitation jewellery, imports of fake jewellery will be subject to a customs duty of at least Rs. 400 per kg.
  2. The duty on certain critical chemicals, such as methanol, acetic acid, and heavy feedstocks for petroleum refining, is being reduced to help India's chemical industry. Furthermore, the duty on sodium cyanide, for which there is ample domestic capacity, is being raised, which will help boost its domestic value addition.
  3. Various changes were proposed in the budget to support India's MSME sector. Among them are –
MSME

• Exemptions for agri-sector implements and instruments made in India are being reduced.

• The customs duty on umbrellas has been raised to 20%. Exempt are parts of umbrellas that are being phased out.

• The customs duty exemption for steel scrap from last year has been extended for another year to assist MSME secondary steel makers.

• Certain anti-dumping and countervailing duties on stainless steel and coated steel flat items, alloy steel bars, and high-speed steel are being cancelled in the public interest in order to address the current high metal prices.

  1. To encourage exports, exemptions are being offered on embellishment, trimming, fasteners, buttons, zipper, lining material, selected leather, furniture fittings, and packaging boxes. Furthermore, duties on certain inputs are being reduced in order to increase shrimp aquaculture exports.

Conclusion

Ms. Nirmala Sitharaman, Finance Minister, introduced the Union Budget 2022-2023 with the goal of improving India's standing in the Ease of Doing Business. And it is focusing on Start-ups, MSMEs, and Domestic Manufacturing Companies to make it possible and achieve the Digital India goal in all aspects. So, in this context, this budget makes significant efforts, and we hope that it will contribute to the digitalization of India, which is our primary goal at TranZact.

Read more about - Digital India: Why Businesses should Go Digital?


TraZact

TranZact is a team of IIT & IIM graduates who have developed a GST compliant, cloud-based, inventory management software for SME manufacturers. It digitizes your entire business operations, right from customer inquiry to dispatch. This also streamlines your Inventory, Purchase, Sales & Quotation management processes in a hassle-free user-friendly manner. The software is free to signup and gets implemented within a week.