With just three weeks to go before the Union Budget 2022 is announced, individuals and businesses wait with bated breath to see what reforms lie in store for the financial year ahead. Last year’s budget focussed mainly on healthcare, stimulus packages, and rural infrastructure development. This year, with Omicron looming, the budget expectations continue to circle economic recovery, ease of compliance, and some respite to the common man.
Here are some of the key expectations from Union Budget 2022:
The healthcare sector is pushing the government to increase spending on genetic research. Experts in the field are further urging the government to promote Genome Mapping projects and allocate funds to develop resources to monitor the genome-related health status of the population. Some such means include the promotion of public-private partnerships for Genome Mapping projects.
The real-estate sector is still yet to get the push required to liquidate projects that have been stuck for a while. The general expectation is that this budget will incentivise both the rental housing market and the affordable housing sector. One measure asked for is the decrease in TDS deductions on coworking space from 10% to 2%. Another measure that will help the recovery of the sector is a GST waiver on under-construction projects and raw materials like cement, etc. The incentivising of private investment in the affordable housing sector will also give the sector a much-needed boost.
The hospitality sector is still reeling from the effects of the pandemic. The sector is looking at new schemes to promote tourism and other incentives in the form of interest-free loans, subsidies, and a reduction in tax rates.
While the government has deferred the increase in GST rates, the textile industry is facing several challenges, one of which is the rising price of cotton due to the high level of exports. The sector has urged the government to introduce an export duty on cotton to check the prices. They also urge the government to remove the 5% import duty on raw cotton. This move will also help stabilise the costs and increase cotton imports into the country.
The service sector has been instrumental in providing employment opportunities and is a major contributor to the GDP. The Bombay Chamber of Commerce and Industry (BCCI) has recommended that the concessional rate of tax at 15% available to manufacturers also be extended to the service sector.
The crypto industry has been long awaiting the Cryptocurrency Bill to be passed detailing the regulatory compliances surrounding cryptocurrencies and the taxability under direct and indirect tax laws. The industry has also urged the government to amend existing tax laws to include crypto assets. Budget 2022 could see some key announcements with regard to the taxability of cryptocurrencies in India.
Expectations from businesses
Several companies have spent on COVID-19-related expenses over the past year in the form of employee payouts, corporate social responsibility expenditure, donations to government relief funds, etc. These companies are pushing for the COVID-19-related expenditure to be fully tax-deductible this year.
Micro, Small & Medium Enterprises (MSMEs) expect financial support from the government and reforms surrounding import substitutes to promote self-reliance and boost domestic manufacturing. Including green energy as part of the policies formulated for MSMEs will also help create a sustainable economy and decrease domestic reliance on energy imports.
Businesses are also hoping for a more straightforward GST rate structure and the overall simplification of GST compliances in the upcoming budget.
What does the common man expect from Union Budget 2022?
Though it has been several years since the basic exemption limit was raised, it is unlikely that Union Budget 2022 will see any changes in either the basic exemption limit or the tax rates. However, there could be an increase in the deduction limits. One such deduction limit expected to increase is Section 80D covering medical insurance premiums paid. Tax experts are also pushing the government to provide a tax deduction on COVID-19-related medical expenditures incurred by those affected.
Another deduction expected to increase is the housing loan interest paid under Section 24. Currently, at Rs.2 lakh per annum, it is minute compared to the home loans sanctioned, especially in urban areas. Taxpayers expect to see an increase in this limit in the upcoming budget.
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Athena is a globe-trotter whose aim is to see 30 countries before she’s 30. When she’s not travelling, she’s busy planning her next trip. She’s a Chartered Accountant by profession with a keen focus on GST. She writes by day and reads by night.