Union Budget 2022: NRI income from royalty: Rationalisation of a surcharge being introduced

Effect of on the Common Man of Budget 2022

By Taresh Bhatia

The Union Budget 2022 was presented today by Finance Minister Nirmala Sitharaman . With her fourth budget presentation, she laid emphasis on infrastructure to boost the economy of the country.

A summary of the budget given by certified financial planner Taresh Bhatia. The top “must-know” points for the common man and is demystified in a simple language.

The Union Budget 2022 was presented today at 11 am by Finance Minister Nirmala Sitharaman. With her fourth budget presentation, she emphasized infrastructure to boost the country’s economy.

Here is a summary of the top “must-know” points for the common man, and is demystified in a simple language, as my emphasis.

  1. FY 22 to see economic growth of 9.2 %
  2. LIC IPO coming shortly
  3. Roads to be increased by 25000 km.
  4. 400 new Vande trains to be launched to come up in the next three years.
  5. 100 new cargo terminals to come up in the next three years.
  6. 80 Lakh affordable houses will be completed at Rs. 44,000 crores under PM Awas Yojna.
  7. Make in India to generate 60 lakh new jobs.
  8. Rs. 60,000/-crores allocated for drinking water supply to 62 lakh people:
  9. Housing projects allotted for Rs. 48,000/- crores
  10. Direct payment of the MSP value to the farmers’ accounts
  11. ECLGS to be extended up to March 2023, guaranteed cover extended by another Rs 50,000 crore
  12. One class One TV channel program of PM e-Vidya to be expanded from 12 to 200 TV channels. This will help students affected by school closures amid the pandemic:
  13. A national mental health training program will be set up to include 23 mental health centers across India.
  14. 2 lakh Anganwadis to be upgraded to create a better environment for early childhood education
  15. 100% of 1.5 lakh post offices will come on the core banking system
  16. E-passports with embedded chips and futuristic tech will be rolled out in 2022-2
  17. Modernization of building bye-laws.
  18. Battery swapping policy will be brought out and interoperability standards formulated to promote e-vehicles
  19. A completely paperless end-to-end online e-bill system for use by central ministries for procurement:
  20. Use of surety bonds as a substitute for bank guarantees to be allowed in govt procurements
  21. Animation, visual effects, gaming, and the comics task force to be set up to recommend ways to help build domestic capacity to serve markets and global demand
  22. Spectrum auctions to be held in 2022 for 5G rollout
  23. 5% of universal service obligation fund to go on technology and solutions for extending broadband and e-services to rural India.
  24. Defense R&D will be opened up to the private sector and start-ups.
  25. Rs 19,500 crore for production linked incentive to manufacture high-efficiency modules to facilitate 280 GW installed capacity by 2030
  26. Financial support to be given to SC/ST farmers who want to get into agro-forestry
  27. The outlay for capital expenditure stepped up sharply by 35.4%
  28. Green bonds to be issued for green infra proceeds in public infra projects which reduce carbon footprint.
  29. Digital rupee, backed by blockchain to be introduced by RBI.
  30. For 2022-23, the allocation is Rs 1 lakh crores to assist the states.
  31. Sovereign Green Bonds to be part of government’s borrowing program in FY23:
  32. Tax benefit for those dependent differently-abled and those with a critical illness.

Direct tax:

New Updated tax returns. To file an updated tax return within two years from the end of the relevant tax assessment year. Should reduce tax regulations. Some taxpayers may have realized some mistakes in filing tax returns.

18 % tax paid by corporate societies reduced to 15 %

From 12 % to 7 % tax rate Cooperatives: Surcharge reduced to 7% for those with income between Rs 1 crore – 10 crores

NPS: Tier 1: 10 % allowed up to now. Central and state to deduct 14 % for state govt employees. Employer contribution for state government tax deduction brought at par with the central government for NPS

Incentives for startups eligibility to go on until March 31, 2023. Tax incentives for eligible startups to extend for one more year.

Any income from any transfer of any virtual digital asset shall be taxed at 30%, and no deduction allowed, except purchase. Also, no other transaction expense is allowed. A new TDS to be introduced at 1% on transfer of cryptocurrencies. A gift of virtual digital tax will be introduced. (Note: It will be Effective from the coming financial year)

NRI income from royalty: Rationalisation of a surcharge being introduced.

Long Term Capital Gains surcharge – to be capped at 15%

Health and Education Cess to be disallowed from expenditure:

Deterrence of tax evasion. Undisclosed income checked—No set-off allowed against losses.

Rs. 20,000/- transaction to attract TDS.

No Changes in Income Tax Act 1961 Section 80C, 80D saw no changes in rebates or exemptions.

Indirect taxes

Aspirations were high. GST council took care of the IT-driven dream of India. GST revenues are buoyant despite pandemic. The Gross GST collection for Jan ’22 is Rs 1,40,986 crores, the highest since the inception of GST. Taxpayers deserve applause for the cause of paying taxes.

FM says blending of fuel is a priority. Unblended fuel to attract higher duty from October 22

  1. Concessional customs duty on capital goods to be phased out, the initial rate of 7.5% to be imposed
  2. Customs duty on cut and polished diamonds and gemstones to be reduced to 5%
  3. Customs duty on a diamond and precious stones reduced to 5%
  4. Duty on Umbrella raised to 20%. Exemptions to parts will also go.

The top eleven-point from the budget as my Analysis are:Overall a tremendous progressive budget! From the last budget, no changes in tax structure no new taxes are good signs. Growth is the focus of the overall economy of the country. A bold and a brilliant budget to move the economy of the country.

The emphasis was not on any taxes but expenditures of the government.

Overall, corporates spend more, and the government take care of whatever they can.

Pushing the start-ups is a good step.

Being a Covid hit country, no new cess or tax is reasonable satisfaction.

Taxing cryptocurrency is a new move! Cryptocurrency being taxed with TDS brings in more transparency in any transactions in the country, which was a big loophole till now.

The National Pension System- NPS offers retirement benefits for the common person and tax benefits under the Income Tax Act 1961. Here, the budget proposes to increase the contribution by the state government from the current 10 % to 14 % is a positive move. This will bring more retirement funds to the state government employees.

Long Term Capital Gains surcharge – to be capped at 15%. A small concession given.

Not a very Populist budget: The common person was expecting some sops in Income tax, but the minister remained completely silent on that front.

Private sector participation is encouraged by a growth-oriented budget.

Overall, as a financial planner, My views on personal finance are summed as:

I was looking forward to some new announcements in the Income-tax 80c section.

For example, ELSS, PPF, insurance benefits should have been moved to new sections from 80c.

NPS benefit should have been increased. Health premium section 80 D should have been increased.

Some rebates in income tax were also expected. But none happened.

No Changes in the Income Tax slabs, housing loans benefits. The mutual fund industry was also expecting many new changes.

No change is sometimes a good move. In a budget for a country coming out of Covid, these moves are only good for the country overall. So, remain invested and continue on your financial goal-linked investments. Stay away from cryptocurrency! Not that tax has been also announced. Keep a clear view of the income tax rebates, exemptions, and all capital gains implications. Looking at the overall economic growth projections, stay positive.

Credits: By Taresh Bhatia. Taresh is a Financial Freedom Specialist, Qualified as CERTIFIED FINANCIAL PLANNER PRO, MBA, and is the Principal Officer in a SEBI Registered Investment Advisory firm- Advantage Financial Planners LLP (SEBI RIA)