Finance Minister Nirmala Sitharaman on Tuesday unveiled a bigger Rs 39.45 lakh crore Budget, with higher spending on highways to affordable housing with a view to fire up the key engines of the economy to sustain a world-beating recovery from the pandemic.
While she primed up spending on infrastructure to create jobs and boost economic activity, Sitharaman did not tinker with income tax slabs or tax rates.
Her Budget for the fiscal year beginning April 2022 proposed a massive 35 per cent jump in capital expenditure to Rs 7.5 lakh crore, coupled with the rationalisation of customs duty, an extension of time for setting up new manufacturing companies and plans for starting a digital currency and tax crypto assets.
Just like last year, the Budget gave a big boost for infrastructure spending -- from 5G spectrum auction, expanding national highways by 25,000 kms, inter-linking of rivers and manufacturing of 400 new generation Vande Bharat trains.
"The overall sharp rebound and recovery of the economy is reflective of our country's strong resilience," she said in her Budget speech in the Lok Sabha, vowing to lay the foundation for faster growth.
The Budget prioritised economic expansion over fiscal consolidation.
"This Budget continues to provide the impetus for growth," she asserted.
The fiscal deficit, which unexpectedly rose to 6.9 per cent of the GDP for the current fiscal year ending March 31, 2022, is projected to come down to 6.4 per cent next year and 4.5 per cent by 2025-26.
India's economy is projected to grow by 9.2 per cent in the current fiscal before slowing to 8-8.5 per cent in 2022-23 (April 2022 to March 2023). It had contracted by 6.6 per cent in the fiscal year ended March 31, 2021.
The Budget's "approach is driven by seven engines," Sitharaman said, listing roads, railways, airports, ports, mass transport, waterways and logistics infrastructure as the key areas.
"All seven engines will pull forward the economy in unison", complemented by energy transmission, IT communication, water and sewerage sector and social infrastructure, she said.
The Budget proposals laid the foundation for strengthening of different sectors like transportation and logistics sectors (Gati Shakti), banking and fintech (75 digital units to be set up), agriculture, EV sector (battery swapping policy), among others.
On the direct tax front, to further ease compliances for taxpayers, a new IT return system will be introduced and litigation will be reduced by restricting appeal rights of revenue authorities for consecutive years.
It marginally increased the time limit to commence production by March 31, 2024 for units opting for the beneficial corporate tax rate of 15 per cent.
To provide impetus to trust-based governance as a concept, an updated tax return system has been introduced wherein a taxpayer can file a tax return upon payment of specified taxes within 2 years from the end of the relevant assessment year.
She unveiled a proposal to introduce digital currency by the RBI and said digital assets will be taxed at 30 per cent with no deduction for any expenditure except the cost of acquisition of such asset.
To give a boost to the start-up community, she capped the surcharge on long-term capital gains at 15 per cent now.
As a push to promote exports, the SEZ Act will be replaced with a new legislation and states shall become partners for development of infrastructure.
In tandem, reforms are also proposed to be undertaken in the Customs administration of SEZs, with facilitation related changes to be made.
From an indirect tax perspective, the concessional rate on capital goods imports under Project Import Scheme is proposed to be withdrawn, to promote domestic industry and imports will be taxed at 7.5 per cent now.