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Union Budget 2022-23

Powering sustained growth

Sanjeev Krishan, Chairman, PwC in India

Budget 2022 paves the way for India’s formal entry into the digital currency domain by introducing distributed ledger technology enabled digital currency and making it a legal tender.

Sanjeev Krishan, Chairman, PwC in India

Union Budget 2022–23, presented by the Finance Minister, builds on the vision set out in the previous budgets and provides a blueprint for steering the economy towards a sustained high-growth trajectory in the 25-year-long lead-up to India @100.

The budget provides a framework for growth by focusing on four key themes: (i) public investment for building modern infrastructure under PM Gati Shakti; (ii) inclusive development; (iii) productivity and investment, sunrise opportunities, energy transition, and climate action; and (iv) financing of investment. Additionally, the Finance Minister has announced several tax and regulatory measures which should go a long way towards removing difficulties faced by taxpayers, reducing litigation, providing certainty and widening the tax base.

Key amendments to the Finance Bill, 2022 – Enacted

The Finance Bill, 2022 (Amended Bill) was passed by the Lok Sabha on 25 March 2022 with amendments to the original Bill that was tabled before the Lok Sabha on 1 February 2022. Subsequently, the Bill was affirmed by the Rajya Sabha without any further amendments and has now been enacted.

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Union Budget 2022-23 Analysis (PDFs)

Powering sustained growth: Union Budget 2022-23

This Budget has provided a blueprint for fueling India’s aspirations and expectations as the country commences its journey towards India@100. Explore our analysis and understand the implications on your business.

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Union Budget 2022-23: Key proposals for the Financial Services Sector

The proposals, announcements and amendments impacting various sectors demonstrates the Government's intent to develop digital infrastructure. 

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Vivek Prasad, Markets Leader, weighs in on the implications of the Union Budget 2022-23

"Budget 2022 highlights the government’s thrust on building a robust foundation for a pro-development, growth-oriented economy and provides a blueprint for a #FitForFuture India," says PwC's Vivek Prasad.

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Decode India Budget with PwC

Union Budget 2022-23 - Webcast - PwC India

Day: Tuesday
Date: 1 February 2022

Union Budget 2022-23 - Webcast - PwC India

6pm - 7pm IST


  • Sanjeev Krishan, Chairman, PwC in India
  • Sanjay Tolia, Chartered Accountant
  • Akhilesh Ranjan, Former member of CBDT
  • Pratik Jain, Chartered Accountant


Key announcements and Impact

  • The budget has announced the ‘National Tele Mental Health Programme’ which will include a network of 23 tele-mental health centres of excellence, with NIMHANS being the nodal centre.

  • Under the Ayushman Bharat Digital Mission, an open platform consisting of digital registries of various health providers and facilities will be rolled out. This National Digital Health Ecosystem will also include aspects around unique health identity and consent framework, and will assist in enabling universal access to health facilities.

  • Two hundred thousand Anganwadis (rural child care centres) will be upgraded to ‘Saksham Anganwadis’ with better infrastructure and audiovisual aids. They will be powered by clean energy and thus provide an improved environment for early child development.

  • Additional spending of INR 600 bn under the ‘Har Ghar, Nal Se Jal’ scheme to cover 38 m households.

Key takeaways

  • The pandemic revealed a silent mental health epidemic globally. It is estimated that at least one in eight Indians has a mental affliction. Mental health was hitherto an ignored area. The use of telemedicine to diagnose and treat such patients has proved to be highly effective, given the unobtrusive nature of the interaction which also maintains patient privacy. Given the shortage of mental health professionals, especially in rural areas, telemedicine will greatly enhance accessibility for patients requiring psychiatric help. Funding in Indian mental health start-ups has seen exponential growth of 4-5x in the last year.

  • The National Digital Health Ecosystem  is an extension of the various initiatives announced under the Ayushman Bharat Digital Mission in the last couple of months. The digital health register will help create a comprehensive interoperable network to store and fetch health records. An open platform will encourage wider adoption and innovation encompassing start-ups, ensuring UPI-like adoption. It will be key to extend the coverage to the million-plus providers in the country and bring them on this platform. A start has to be made by integrating existing registries. This will need centre-state cooperation, health being a state subject.

  • One out of five start-ups in India has a healthcare linkage. The benefits in this budget will create an enabling environment for them to increase accessibility and affordability for the larger population.

  • Providing clean water under ‘Har Ghar, Nal Se Jal’ will help reduce the burden of communicable disease which still remains a major cause of daily-adjusted life years (DALY) (in the country. The prevalence of water, sanitation and hygiene (WASH) related diseases in India is greater than 5% for all outpatient visits and  hospital admissions.

  • Anganwadis are at the forefront of delivering healthcare, especially in rural areas. Upgrading these Anganwadis will enable last-mile delivery of quality care.

  • Extension of the concessional tax regime of 15% to newly incorporated domestic manufacturing companies will give a boost to domestic manufacturing in the medical devices and technology space.


By Joydeep K Roy, Partner and Leader, Insurance, PwC India

The insurance industry supports all other industries, provides risk mitigation for businesses, offers long-term savings and protection to families, and provides important long-term capital to infrastructure projects. Hence, the budget announcements have a direct impact on industry as well.

  1. Overall growth of infrastructure projects will automatically increase premiums for these projects[1] [2] . But the promulgation and introduction of surety bonds will open up a fresh stream of insurance revenue and capital and can even invite many specialised insurance companies to come to India with foreign capital.
  2. With the introduction of a core banking system (CBS) in post offices, they would also be able to provide a much-needed avenue for deep rural penetration of microinsurance, if properly implemented from the beginning as a strategic initiative. Postal insurance schemes should immediately be brought under the regulatory landscape like all other PSUs and then the real penetration can be measured and augmented suitably.
  3. Introduction of more technology in agriculture will lead to an increase in data quality and timeliness of its utilisation, leading to a much-needed impetus to agri insurance.
  4. India is a land of SMEs and MSMEs, with a lion’s share of the GDP being generated and managed through these small businesses. However, these are not really part of the formal economy, and reforms such as health and life benefits for employees, premises insurance, industrial injury and liability insurance should be looked at as an integral part of operations.
  5. All developed economies have a lower cost of distribution, but India needed a higher loading which would enable a whole profession of financial distributors to take products to the financially excluded. With the digital revolution, buying cycles and demand generation are changing considerably, and a regulatory push towards reducing distribution cost is only to be expected. However, caution needs to be exercised to avoid any drastic step which may hurt the entire drive for increased insurance penetration.

Key announcements and Impact

  • Continued focus on electric mobility with the announcement of a battery swapping policy and clean mobility zones in cities will push increased adoption of EV.
  • Commitment to expand highways by 25,000 km will be a demand catalyst for the commercial vehicle (CV) segment.
  • Enhanced spend on rural infrastructure and large outlay for MSP will ensure further rural economic growth. This will support demand for the two-wheeler and tractor segments in particular.
  • Extension of ECLGS to MSMEs will ensure continued liquidity for small businesses which will have a positive impact on capital purchases, including CVs.

Key takeaways

  • The PM Gati Shakti National Master Plan that focuses on multi-modal connectivity will reduce logistics cost and improve the transport network. This will have an indirect impact on the CV industry, with a positive impact on heavy trucks and light CVs.
  • Additional excise duty of INR 2/litre on unblended fuel to be imposed from 1 October 2022. This will encourage blending of fuel and we expect OEMs to further invest in clean and blended fuel engines.

Digital Rupee
RBI to introduce Digital Rupee using blockchain technology in 2022–23 Digital Rupee, a Central Bank Digital Currency, is expected to promote transparency, traceability and convenience. It can be interoperable with other global digital currencies and issued as legal tender backed by the Central Government in lieu of currency notes and coins.
Virtual digital assets The Government has proposed to launch a scheme for the taxation of virtual digital assets (e.g. cryptocurrencies, NFTs). Income from virtual digital assets to be taxed at 30%. Losses from the sale of virtual digital assets cannot be offset against other income. Gifts of cryptocurrencies to be taxed at the receiver’s end. This move formally brings virtual digital assets such as cryptocurrencies and non-fungible tokens under the tax net, thereby increasing the probability of virtual digital assets being recognised by the government. It also accelerates the probability of the crypto bill being formulated and approved. 
Financial support for the digital payment ecosystem  The financial support for the digital payment ecosystem announced in the previous Budget will continue in 2022–23. Last year, the FM had earmarked INR 1,500 crore for a proposed scheme that will provide a financial incentive to promote digital modes of payment in order to give a further boost to digital transactions. Part of this can be used for reimbursement of zero MDR fees for UPI and RuPay debit transactions (P2M).
Anytime–anywhere post office savings In 2022, 100% of 1.5 lakh post offices will shift to the core banking system. Getting the post offices on the core banking system is expected to increase access of these accounts to digital channels like net banking, mobile banking and ATMs, thereby increasing the number of digital payment transactions in the country.

Digital banking units
75 digital banking units to be set up across 75 districts The Government has proposed to set up 75 digital banking units in rural areas to enable all sections of society to get the benefits of digital payments innovation. This is expected to be in the form of digital kiosks which will be staffed and other banking services that can be provided.
Online e-bill system Government to introduce a completely paperless, online e-bill system to manage payments As a further step to enhance transparency and to reduce delays in payments, a completely paperless, end-to-end online e-bill system will be launched for use by all Central ministries for their procurements. The system will enable suppliers and contractors to submit their digitally signed bills and claims online and track their status from anywhere. There is a possibility of linking the payment gateway to this system to facilitate ease of payments fund flow.
Gujarat International Finance Tec-City (GIFT City) – payments business set-up World-class foreign universities and institutions will be allowed in the GIFT City to offer courses in various areas such as financial management and FinTech. To facilitate the availability of high-end human resources for financial services and technology, domestic regulations will not apply to these institutions. Government support for the development of a FinTech hub in GIFT City would provide smaller digital payments technology firms with a platform to explore and innovate more cost-efficient and easily adaptable financial products.

Tax insights

Promoting voluntary tax compliance and reducing tax litigation

  • Deferment of filing appeal by Revenue for an identical issue involving substantial question of law which is pending before the jurisdictional High Court/Supreme Court
  • Provision for filing updated income tax return within 2 years from end of relevant AY on payment of additional tax of 25%/50% on the tax and interest due on additional income subject to prescribed time limits

Tax on virtual digital assets

  • Introduction of a new scheme for taxation of virtual digital assets @ 30% without allowing any deduction except for cost of acquisition
  • Tax deducted at source applicable at the rate of 1% on transfer of virtual digital assets subject to prescribed threshold limit

Reliefs to start-up/ manufacturing companies

  • Start-ups incorporated upto 31 March 2023 eligible for tax incentives
  • New manufacturing companies commencing manufacturing/production upto 31 March 2024 eligible for a lower tax rate of 15% under section 115BAB

Provisions relating to deduction of business expenditure

  • Clarification regarding non-deductibility of education cess and surcharge as business expenditure retrospectively from 1 April 2005
  • No deduction allowed in respect of expenditure incurred on providing any benefit/perquisite which is in violation of law/regulation/rules/guidelines or to compound an offence, prohibited by law in/outside India
  • Provisions of section 14A to apply irrespective of the fact whether income accrued/arisen/received during the year

Change in the rate of tax/surcharge

  • Rate of surcharge in the case of certain association of persons to be capped at 15%
  • Rate of surcharge in the case of long-term capital gains on transfer of any assets restricted to 15%
  • Withdrawal of concessional tax rate of 15% on dividend received from foreign companies
  • No change in personal tax rates/slabs

Other tax updates

  • A person providing any benefit/perquisite arising from carrying out any business or profession u/s 28(iv) to deduct tax at source @ 10% on an amount exceeding INR 20,000
  • Prosecution provisions extended for non-compliance of tax collected at source

Goods and Services Tax

  • GST collections more than INR 1 lakh crore consistently since July 2021, with collections reaching the highest ever in January 2022 – upto INR 1.41 lakh crore achieved on account of rapid post-COVID economic growth and nation-wide drive against GST evaders and fake bills
  • Time limit to avail input GST credit and issuance of credit notes extended from 30 September to 30 November of the following financial year
  • Two-way communication process in return filing (between outward and inward supplies) initially envisaged under GST law now done away with
  • Amendment to allow transfer of amount available in electronic cash ledger between GST registrations of the same legal entity
  • Amendment to provide for levy of interest on input tax credit wrongly availed and utilised retrospectively from 1 July 2017
  • Extended time provided upto November 30 for rectification of errors in TCS return
  • GST compensation cess to be extended and would be applicable only till 30 June 2022

Special Economic Zones

  • SEZ Act to be replaced with a new legislation which will enable states to be partners in the development of the SEZ sector. The new legislation would focus on optimal utilisation of available infrastructure and augmentation of exports.

Customs duty

  • The changes in customs duties are made mainly with the objective of domestic capacity creation, providing a level playing field to MSMEs, easing the raw material supply-side constraints, enhancing ease of doing business and enabling policy initiatives such as PLIs and phased manufacturing plans.
  • Around 350 customs exemptions are being withdrawn and more than 40 customs exemptions relating to project imports and capital goods are proposed to be gradually phased out.
  • Legislative changes are being made to the powers and functions of an officer of customs so as to counter the Supreme Court ruling in the case of Canon India which held officers of the Director of Revenue Intelligence as not to be proper officers to undertake customs proceedings.
  • Amendment to provide that Advance Ruling under customs to be valid only for 3 years
  • Publishing of information submitted by importers and exporters before officers under customs law has now been made an offence under the customs law with an intent to protect such data.
  • To encourage paperless processing, it is proposed to use a common customs portal to serve notices, orders, etc., and act as a one-point digital interface for trade to interact with customs.
  • Exemptions are being introduced for duty-free imports by the handicraft, apparel and leather sector when exported within six months.
  • Customs tariff rates for import of textiles, chemicals and metal are being simplified by aligning the tariff rates with the existing exemption notifications, leading to withdrawal of such exemption notifications.
  • Import duty on certain inputs for manufacture of mobile phones, chargers and adapters is being reduced to boost domestic manufacture of mobile phones.
  • A phased manufacturing plan is being introduced for granting exemptions on import of certain inputs for use in the manufacture of wrist wearable devices, hearable devices and smart meters.
  • Import duty is being reduced on certain chemicals such as sodium cyanide, methyl alcohol and acetic acid.
  • Anti-dumping duties and CVD on certain steel products are being revoked considering the high cost of steel.
  • Unblended fuel to be subjected to incremental excise duty of INR 2 per litre to encourage use of blended fuel.

  1. Gains from virtual digital assets (VDAs), viz. crypto, etc., to be taxed at the highest rate of 30% without allowing any additional deduction (other than cost of acquisition) or set-off of any loss against such gains. Even gifting of VDAs to attract taxation in the hands of the recipient.
  2. Surcharge on long-term capital gain (LTCG) is restricted to 15% of tax in respect of transfer of an equity share or a unit of an equity-oriented fund/business trust. The budget proposed to extend the capping of the 15% surcharge on LTCG from any asset. Those taxpayers falling in the income bracket of more than INR 20 million stand to benefit.
  3. Presently, buyers of immovable property are required to deduct tax @ 1% on the sales consideration where the same exceeds INR 50 lakhs. An amendment has been made to deduct such TDS on the stamp duty value where the stamp duty value of the property is more than the actual sales consideration.
  4. A new updated return filing system is proposed wherein a voluntary updated return can be filed within 2 years from the end of the relevant Assessment Year (AY) on payment of additional taxes (25% or 50% of taxes and interest) and applicable interest and fee.
  5. Provisions have been enacted to give effect to the earlier announcements made in respect of COVID-related payments. Any payment received from an employer and/or any other person for medical treatment of COVID-19 is proposed to be fully exempt in the hands of the recipient individual. Further, any ex-gratia payment made to the family members of an employee within 12 months from date of death of such employee on account of COVID-19 is exempt from tax in the hands of the recipient family members without any limit (if paid by the employee of such person) and to the extent of INR 10 lakhs where paid by any other person.


Reaction to the Economic Survey

Sanjeev Krishan, Chairman, PwC in India

Economic Survey 2021–22 pegs India’s real GDP growth to be around 8–8.5% in 2022–23. This would uplift the country’s mood as this growth is not coming on a low base. Advance estimates already suggest a real GDP growth of 9.2% in 2021–22. On a pre-COVID base of 2019–20, this would be tantamount to 10% growth. While the Economic Survey acknowledges the prevailing uncertainty and the slippery slope ahead, the growth projection certainly reflects the resilience that is built in through major supply-side structural and process reforms.

Sanjeev Krishan, Chairman, PwC in India

Ranen Banerjee, Partner and Leader, Economic Advisory Services, PwC India

The Economic Survey has highlighted the agile approach to fiscal and monetary management that has been undertaken over the past years and recognises the risks faced by the Indian economy. Following the agile approach, the GDP is therefore projected to grow at a range of 8-8.5% rather than a specific percentage. This projection is possibly at the optimistic end of the spectrum given several underlying assumptions. The projections are based on assumptions that there will be no further debilitating pandemic related disruption, there will be a normal monsoon, global central banks will undertake an orderly withdrawal of global liquidity, oil prices will moderate to a range of USD 70-75/bbl during FY23 and global supply chains will ease gradually. It is quite likely that some of these assumptions may not hold and there could be other risks emerging from rising geopolitical tensions (that have not been stated in the assumptions). Therefore, we should realistically expect sub 8% GDP growth in FY23 and anticipate an agile approach to fiscal management in the Union Budget in the highly VUCA environment. The Finance Minister will be equipped with fiscal ammunition to aim for the projected economic growth rate under the given assumptions.

Ranen Banerjee, Partner and Leader, Economic Advisory Services, PwC India

Sectoral insights

Insurance sector expectations

By Joydeep K Roy, Leader, Insurance, PwC India, and Global Health Insurance Leader

  • Deposit Insurance Scheme: The financial relief of INR 5 lakh for deposits lost due to any disaster is not sufficient, but the absence of any scientific risk assessment and reserve creation prevents the Government from raising it without understanding the risks involved. The recent five-fold increase from earlier INR 1 lakh definitely addresses the concern of the large majority of depositors in the country. However, larger deposits will still be exposed to risk, and therefore, this scheme will not cover the entire gamut of customers.
    Ideally, with actuarially calculated scientific pricing, a reserve needs to be created (which can be easily taken out of the returns of the deposit) and can pay for the whole deposit guarantee with a minimum amount of risk carried by the depositor. It can also be a very positive step for the insurance industry if the entire exercise takes place as a public-private partnership (PPP).
  • Removal of GST from microinsurance: Much has been said on this topic and burdening the poor with GST does not help. Also, to incentivise term  and health insurance, it would be a welcome step to reduce the GST rate on them to 5%.
  • Insurance relief for road accidents: The Government should set aside 50% of the GST collected from all insurance policies for the solatium fund for insurance relief for those who are not covered in case of road accidents.
  • Realignment of tax deduction sections: Remove life insurance from Section 80C and reassign it to Section 80D, where one has health insurance. Increase the threshold by doubling the total tax relief of Section 80D. It would be better to separate life insurance from home loans and PPF in Section 80C.
    Include home insurance and accident insurance premiums under Section 80D.
  • Home structure insurance: Make home structure insurance compulsory for all houses greater than 200 sq. ft. since the underinsurance of structures makes buildings in India much more vulnerable to natural disasters.
  • Checking and validation: Build up insurance tracking (vehicle) in the RFID chip for FastTag to remove unnecessary checking and validation of insurance papers.

Start-up ecosystem expectations

By Amit Nawka, Partner, Deals and India Startup Leader, PwC India

  • Financing schemes: The Government could create specially designed financing schemes to support the start-up ecosystem. For example, supporting digital lending start-ups which have all faced stress during the pandemic.
  • Regulating crypto start-ups: Provide directional clarity on the framework to regulate the usage of cryptocurrencies and cryptocurrency start-ups.
  • ESOP taxation: A significant part of employee compensation in start-ups is through ESOPs. Moving the chargeability of tax to the date of sale of shares will help employees to eventually realise that cash consideration will be beneficial to them.
  • Overseas listing: Allow greater access to capital and provide further clarity on the regulations allowing the overseas listing of Indian companies, including relevant amendments to the income tax sections.

NBFC expectations

By Nitin Jain, Partner, Financial Services, PwC India

  • Increase avenues for refinancing: The Government could set up specific schemes or expand the lines of specialised lending institutions like the National Housing Bank (NHB) and Small Industries Development Bank of India (SIDBI) for non-banking finance companies (NBFCs) to avoid becoming too dependent on banks. A dedicated refinance window directly from the RBI can also help.
  • Permanent priority sector lending: Due to the pandemic, the RBI had mandated banks to lend NBFCs under priority sector lending. Making this permanent would help the sector in combating liquidity issues.
  • Easing process of fundraising: Making the process easier for the issuance of bonds or floating a special purpose vehicle (SPV) with initial capital infusion from the Government for raising funds by issuing bonds for small and medium-sized NBFCs. Considering the rising number of COVID-19 cases, the Government can consider extending the Emergency Credit Line Guarantee Scheme (ECLGS) scheme to the next fiscal year, which should help mitigate the impact on small and medium-sized firms.
  • Infrastructure for data democratisation: The Government can bring in legislative amendments for NBFCs to leverage the utility payments and land record database in the credit assessment process. A body on the lines of the National Payments Corporation of India (NPCI) can be set up for the lending infrastructure.
  • Regulatory framework for digital lending: Qualification criteria for digital lenders, short-term credit, partnership guidelines with loan service providers, data governance norms, transparency norms are all required to ensure an optimal business environment for digital lending.

Social sector expectations

By Ashok Varma, Partner and Leader, Social Sector, PwC India

Social sector expectations from Union Budget 2022-23 - PwC India
  • Livelihood
    Adequate fund allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme in the budget itself would help avoid mid-year disruptions due to exhaustion of funds. The budgetary allocation of INR 73,000 crore fell short within the first half of the current financial year, majorly impacting rural and migrant workers as payments were delayed at a time when there was no alternative source of livelihood for many.
    Impetus for strengthening  self-help groups (SHGs), the backbone of the National Rural Livelihood Mission (NRLM), to help them move beyond microfinance units to vibrant business units by effective implementation of schemes such as the National Rural Economic Transformation Project (NRETP) will provide start-up financing options, business sensitisation and digital financial integration to help scale-up women-led enterprises and engage better with the market.
    A special package to promote private partner/NGO-run livelihood centres acting as workforce service aggregators can help improve market linkages and provide recognition to the self-employed, especially in the informal sector.
  • Tribal welfare
    Fund allocation and utilisation for the Eklavya Model Residential School (EMRS) scheme should go beyond civil works. Dedicated multilingual teachers and incorporation of digital teaching pedagogy can be key factors in determining the success of the EMRS, especially during the pandemic. A package to distribute computing devices for digital learning to students can be helpful to bridge the digital divide (only 2.47% of STs and 3.37% of SCs own any computing device).
    The need of the hour is to go beyond the Indian Public Health Standards (IPHS) by establishing more tribal healthcare centres at a lower population ratio (one for every 3,000 people). Additionally, several initiatives such the Mobile Outreach Services (MOS) and periodic diagnostic camps which have been successful in pilot modes could be considered for scale-up at state and national levels.
  • Public health and nutrition
    With an unprecedented surge in inter-species disease interplay, the concept of 'One Health' needs to be implemented stringently. Information technology and data analytics platforms need to be leveraged to strengthen the fragile infectious disease surveillance system in the country. This calls for a quantum jump in funding for various components of the National Health Mission.
    To realise the gains envisioned under the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM ABHIM), there is a need to set up an institutional regulatory body for shaping up a holistic and horizontally strong public health system which is more responsive to the needs of the people. Scope for public-private partnership (PPP) needs to be defined at the planning, implementation and design thinking stages.
    There is a need to dedicatedly  address the double burden of malnutrition, i.e. underweight along with overweight and obesity. To bridge the disconnect between nutrition and agriculture, new schemes and incentive structures could be created through funding to build a food system that is sensitive to local nutritional outcomes.
  • Education
    The budgetary allocation for education is expected to be increased to implement progressive changes endorsed by the National Education Policy (NEP). This would be crucial to address reforms and reallocations around implementing the 5+3+3+4 structure. Having earmarked budgets for formative (Early Childhood Care and Education [ECCE]) and preparatory years within school education would be a prerequisite to achieve the target of universalisation of ECCE by 2030.
    Additional allocations and guidance for information and communication technology (ICT) for education – for both the establishment of infrastructure and capacity building – should be addressed to enable the smooth transition to futuristic pedagogical practices (which has become the current norm due to the pandemic). Measures to address the digital divide, which is adversely impacting the learning outcomes in poorer students, is a major expectation from the union budget.
    The mandate to provide vocational education under the Rashtriya Madhyamik Shiksha Abhiyan (RMSA)/Samagra Shiksha Abhiyan (to the secondary/higher secondary school students) under the NEP needs additional focus and funding. The funds could be assigned to the State Skills Mission and/or the State Rural Livelihood Mission (SRLM).

Renewable sector expectations

By Amit Kumar, Leader, Renewable, PwC India

Renewable sector expectations from Union Budget 2022-23 - PwC India
  • Renegotiation of tariffs: Some states have recently asked project developers to renegotiate the tariff discovered through bidding and as agreed in the Power Purchase Agreement (PPA) for renewable energy (RE). The expectation of the buyer is to reduce the tariff to current prevailing market discovered rates or lower. This would adversely affect the viability of these projects given these were installed at the prevalent market project costs. Besides making these projects unviable, this also adversely affects the investment scenario in the sector from Indian and global investors.
  • Imposition of taxes and duties on RE components: Increasing the Goods and Services Tax (GST) on RE products from 5–12% would increase the cost of project development. Further, Basic Customs Duty (BCD) of 25% on solar PV cells and 40% on solar modules would be applicable starting April 2022, which will increase the cost of projects dependent upon imported cells and modules.
  • Slow progress in award and implementation of tenders: The bids for large tenders have been notified. However, the pace of bid finalisation, tender award, and subsequent implementation of projects has been slow, which has hampered the capacity realisation on ground.
  • Amount overdue to RE generators: The amount overdue from discoms to RE generators has increased from INR 13,761 crore in March 2021 to INR 19,341 crore in December 2021. Delayed payments to generators is creating cash flow problems and affecting the financial viability of some of these projects.
  • High cost of finance: The sector, despite being well established,  incurs a high rate of interest when a project is financed. This is leading to increased cost and higher tariffs.
  • Electricity not covered under GST: The components involved in setting up a project attracts GST. However, the electricity supplied through it does not come under the ambit of GST and thus the tax outlay is not reimbursed.
  • Difficulty in seeking loan during construction phase: Some of the developers have highlighted the difficulties in seeking loans while the construction of a project is still underway. This compels the developer to avail financing from other sources at higher rates, leading to increased cost of projects.
  • Expensive cost of manufacturing: The country is promoting self-reliance in RE components such as solar cells, modules, storage, etc. However,  electricity required for manufacturing such components is procured at high cos, affecting the cost of production and hampering the growth of domestic manufacturing. 

Agriculture sector expectations

By Ajay Kakra, Leader, Food and Agriculture, PwC India

Agriculture sector expectations from  Union Budget 2022-23 - PwC India
  • Open data and innovation: Making open data available for the industry and start-up ecosystem for further innovation to solve issues in near real time and provide a transparent view of the vast and intricate food and agri supply chain is essential.
  • BaaS platform: The Government needs to play a proactive role in enabling a business-as-a-service (BaaS) platform for promoting innovation and upscaling food and agri micro, small and medium enterprises (MSMEs).
  • Impact of FinTech: Deeper penetration of financial services/FinTech services can act as an enabler for accelerating the growth of trade and transactions in the agriculture sector.
  • Ease of doing business: The Government needs to take more proactive measures to facilitate inclusion and ease of doing business for MSMEs.
  • DBT and small-value payments: An enabling framework to enable direct benefit transfer (DBT) and small-value digital payments in offline mode should be given further push.
Manufacturing sector expectations from Union Budget 2022-23 - PwC India

Manufacturing sector expectations

By Sudipta Ghosh, Leader, Industrial Products, PwC India

  1. The preferential 15% baseline tax regime applicable for the new manufacturing companies should be extended to existing companies, which undertake substantial expansion/renovation. This would help incentivise the existing companies undertaking significant expansions in the manufacturing sector.
    • Considering the adverse impact of COVID-19 on the manufacturing sector, the current time limit for commencement of new manufacturing should be extended from 31 March 2023 to 31 March 2025. This would help new investment proposals to enjoy the beneficial tax regime.
  2. Research and development (R&D) weighted deduction of 150% should be restored from the current 100% and made  applicable for in-house R&D by companies engaged in manufacturing of goods or articles or things. Incentivising R&D would encourage businesses to invest necessarily in R&D and remain relevant for the future disruptions.
  3. Measures need to be undertaken for micro, small and medium enterprises – enhancing the credit limit and providing access to finance which can steer growth and employment.
Infrastructure sector expectations from Union Budget 2022-23 - PwC India

Infrastructure sector expectations

By Manish Sharma, Partner and Leader (Infrastructure and Logistics), PwC India

  • Along with the increase in budget, the last few quarters have seen a focus on asset monetisation plans. We hope that the budget will also provide incentives to states for monetising their road assets.
  • We  hope to see increased allocation towards road safety and transport. Last year, the overall allocation was around 0.3–0.4% of the ministry’s budget, which needs to be substantially increased
  • The areas of Gati Shakti, road safety and intelligent transportation systems should get attention in the budget.
  • We expect a pipeline of future infrastructure projects to be undertaken through private sector participation along with their respective model for development.
  • The Government should undertake a revised approach to private sector participation in intercity passenger rail transport by ensuring a level playing field with the incumbent Indian Railways (IR).
  • We expect announcements on commercial policies and strategies to promote the adoption of a dedicated freight corridor by cargo that is currently moving on road.
  • The Government should take measures to accelerate the privatisation of IR goods sheds to improve efficiency and promote modal shift to rail.
  • We expect possible measures to promote energy-efficient and carbon-friendly technologies, processes and practices.
  • The Government should energise the railway start-up ecosystem to promote the rapid introduction of modern technologies.
  • Policy measures should be taken for promoting intra-city mobility in tier-II cities.
  • We expect to see another 8–10 additional public-private partnership projects in major ports this year under the asset monetisation agenda.
  • Financing challenge in the shipping sector has been a key impediment for ownership of vessels under the Indian flag. We expect shipping to be considered under the infrastructure sector or announcement of a mechanism to extend infrastructure status benefits towards it.
  • We expect the Government to push initiatives to promote coastal shipping, passenger/Ro-Pax movement on waterways for more holistic development of the maritime sector.
  • Allocation of a higher amount to RCS UDAN to promote regional air connectivity is expected.
  • We expect lowering of taxes on aviation fuel and bringing it under the GST regime.
  • Announcement of incentives for the maintenance, repair and overhaul (MRO) industry by lowering tax rates on imported parts for MRO.
  • The Government is expected to outline a broad roadmap for sustainable aviation or reducing emissions. Financial support to airlines in lieu of commitment towards reducing emissions could be considered.
  • We also expect the Government to extend the lower rate on withholding taxes for another year.

Payments: Expectations from the Union Budget

By Mihir Gandhi, Partner and Payments Transformation Leader, PwC India

  • Increasing the scope of the Payments Infrastructure Development Fund (PIDF) – its reach, usage and amount (current corpus is INR 614 crore and will be used for increasing penetration in rural and other underpenetrated areas)
  • Revising the pricing guidelines – reintroducing the merchant discount rate (MDR) for Unified Payments Interface (UPI) and RuPay debit cards (can be minimal)
  • Promoting/incentivising the UPI channel for small-value payments via feature phones
  • Introducing Central Bank Digital Currency for wholesale and retail payment transactions 

Oil and Gas sector expectations

By Deepak Mahurkar, Partner and Leader, Oil and Gas, PwC India

  1. The petroleum industry is seeking a remedy for the break in getting GST credits post project construction on sale of products. The Government of India has renewed the pitch to international investors for participating in the Indian exploration and production (E&P) sector. Investors are seeking GST inclusion of gas for clarity on projected earnings for investment decisions. Newer uses of gas in trigeneration, chemical projects and manufacturing which do not reduce the states’ earning when levied with classical GST are also being sought to be brought under GST while excluding conventional uses that allow states to earn VAT revenue.
  2. In the decarbonised world, hydrogen molecules will be the only energy carriers from source to consumption along with electrons. Presently, the hydrogen infrastructure is in a nascent state. Therefore, it is imperative that clarity is provided in the Union Budget on taxation, incentives, regulations, pathways to achieving the end goal, and other such issues.
  3. Gas pricing remains one of the most important subjects that investors in the E&P sector are seeking clarity on in Union Budget 2022–2023. Both public sector undertakings (PSUs) and private investors are seeking upward revision of the administered price of domestically produced gas.
  4. To attract investments for manufacturing petrochemicals, the petrochemicals industry is seeking the removal of customs duty on naphtha or any other feedstocks. This is being done along with rationalisation of import duty on polymers, to make the spread as per international standards.
  5. For the development of gas markets, gas marketers and consumers are seeking to take the sector to the next level of maturity with the ability to swap gas volumes, trade surplus gas, make shortfalls through instant purchases, bank gas volumes with LNG terminals, introduce incentives to gas consumers, get input tax credits on gas sale transactions irrespective of end uses, and other such provisions.
  6. To reduce the cost of LPG for consumers, the industry is seeking significant privatisation of the supply chain. The industry is hopeful that activities such as owning and operating coastal facilities, bottling plants and pipelines as well as the medium-term plan of marketing of cylinders would be taken up by the private sector.


Environmental, social, and governance: Key expectations from the Union Budget - PwC India

Environmental, Social, and Governance (ESG): Key expectations from the Union Budget

  1. India has made the following commitments at the Conference of the Parties (COP26):
    • To raise the country’s non-fossil fuel-based energy capacity to 500 GW by 2030

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Key expectations in industrial development - PwC India

Key expectations in industrial development

This budget could usher in economic development in the country’s hilly states, that hold immense potential across sectors, by providing a specific thrust on resource-based industries, food processing and tourism. It could enable economic development in such states by supporting them with a mix of investments to develop quality connectivity and industrial infrastructure.

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FM armed with strong fiscal ammunition to spur growth - PwC India

FM armed with strong fiscal ammunition to spur growth

An analysis of the monthly revenue trends of the Central Government for FY22 up to the month of November and a comparison with the average revenue up to November from FY16 to FY20 (skipping FY21 due to severe COVID-related impact) reveals that the revenue receipts of the Union Government are likely to exceed budget estimates by INR 6.4 trillion.

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Tax track | Budget 2022 expectations

  • With respect to the recent agreement on the OECD’s Two-Pillar Solution, more clarity can be expected on unilateral measures taken by India i.e. Equalization Levy (EL)/Significant Economic Presence (SEP) in the intermittent period. We may also see some enabling provisions for implementation.
  • Provisions could be introduced with regard to taxability of cryptocurrency transactions.
  • The Government's focus on ease of doing business will continue along with increased attention on compliance with law and regulations, both in form and substance. We could expect the following:
    • Rationalisation of tax deducted at source(TDS)/tax collected at source (TCS) provisions with regard to the threshold limit, duplicity of provisions, etc., for reducing compliance burden on sale of goods.
    • Introduction of a permanent alternative dispute resolution scheme to settle ongoing litigation.
    • Certain thresholds of transfer pricing regulations may be revisited (e.g. minimum threshold of INR 1 crore for maintaining detailed transfer pricing documentation and threshold for maintaining the master file). Further, the requirement of having an independent accountant sign the 3CEB should be replaced with self-certification of the 3CEB. These measures will go a long way to improve ease of doing business.
    • The time limit for disposal of appeals could be reduced to 12 months from the existing 24 months.
  • Deductibility of COVID-related expenditure for employees/corporate social responsibility (CSR)/work from home (WFH) expenditure in COVID scenarios.
  • Extension of sunset date for SEZ units and clarity to be provided for WFH arrangement.
  • The Government's focus on Make in India is likely to continue. More products across sectors are likely to be classified as having enough local content and suppliers, making it difficult for companies who do not have adequate local content in India to sell to the Government. The Government is also likely to continue to offer incentives to companies under the Make in India scheme.
  • Concessional tax rate/tax holiday for electric vehicles, green technology/clean energy and semi-conductors could be expected.
  • Start-ups incorporated up to 31 March 2025 (as against 31 March 2022) should be made eligible for the existing 100% tax rebate and fresh life of eight years must be given to business losses incurred by start-ups.
  • The reduced rate of 15% should also be made available to existing domestic manufacturing companies (set up before October 2019) based on objective thresholds of investments to provide them with a level playing field with new manufacturing companies.
  • Reduction in tax rate on limited liability partnerships (LLPs)/ partnerships to bring them at par with corporates.
  • One lump sum tax which accounts for payment of all types of taxes, including direct and indirect, should be levied on small businesses.
  • Safe harbour provisions should be rationalised by increasing the turnover thresholds for eligibility and decreasing the margins based on experiences from concluded advanced pricing agreements (APAs).
  • This will serve two purposes – (i) the takers for safe harbours will increase, and (ii) the backlog of cases under APAs will be reduced. This will signal the Government's seriousness in dispute prevention.

In the past, Government raised the tax bill for the middle and the higher income group taxpayers by raising the surcharge and introducing the measures such as taxing the employer’s contribution and interest thereon to the retiral schemes exceeding a threshold and also taxing the interest on employee’s own contribution to Provident Fund exceeding 2.5 lacs. Considering the Covid situation and the need to promote consumption and investment to push economy, the government needs to put more money in the hands of taxpayers, in particular the middle class. The common man has several expectations from this year’s Budget. These include:

  • raising the standard deduction
  • allowing Covid-related relief such as exemption for allowances/expenditure to adopt to the work from home model, deduction for medical expenditure due to covid
  • raise the 80C limit and also the deduction for interest on housing loan (including raising the limit of affordable housing from 45 lakh to 1 crore for first time home buyers to avail additional deduction of Rs. 1.5 lakh u/s 80EEA)

Expectations are detailed below under following three categories:

Covid-related reliefs

Working from home - extend tax benefits

  • Provision of assets by the employer for office set up at home to perform office duties should be specifically made tax free in the hands of employees. Where employers provide any allowance, the same should be exempt from tax up to a certain threshold.
  • Alternatively, a one-time set up cost for creation of such workspace at home say Rs. 1,00,000 or allowance say Rs. 10,000 per month to maintain such space covering cost for space, electricity, a/c etc. may be allowed.
  • A deduction for one laptop and computer along with printer and other accessories may be allowed to the extent of Rs. 1,00,000 once in a period of 2 years.
  • Additionally, a deduction of Rs. 10,000 per month be allowed for having a domestic help to ease the pressure on working class during pandemic.
  • To take care of the expenses for protection from Covid impact, expenses on safety products etc., a deduction against submission of purchase invoices for COVID test, masks, sanitizers etc. to the extent of Rs. 5,000 per month may be introduced. 
  • Alternatively, tax free medical reimbursement by employers which used to be there for salaried class upto Rs 15,000, may be re introduced with a higher limit of Rs 60,000 p.a.

Taxability of Covid advance from Provident Fund (PF) accumulated balance

The Government introduced a facility of claiming a non-refundable advance of lower of 75% of the balance or three months of salary. However, clarity on its taxability is not there and hence, the Government may come out with a clarification in this regard and make an appropriate amendment in the Income Tax Act providing an exemption in respect of the non-refundable PF advance availed by the employee due to ongoing pandemic.

Raising the limits/providing relief to put more money in the hands of tax payers

Standard deduction u/s 16(ia)

Standard deduction should be increased INR 50,000 to INR 100,000   to give a meaningful benefit to the salaried taxpayer.

Section 80C - Deduction in respect of specified investment/ expenditure

The current deduction allowed under section 80C is limited to Rs.150,000 for Specified investments/ expenses incurred by individuals. This limit may be enhanced to Rs. 250,000 per annum.

Deduction in respect of interest on housing loan

The law provides for deduction in respect of interest, if any, on borrowed capital for acquisition or construction of a self-occupied property to the extent of Rs. 200,000. Keeping in view the ongoing pandemic and challenges faced by the buyers, below changes are suggested:

  • Presently where the construction is not completed within 5 years of availing the loan, deduction of Rs. 200,000 gets capped to Rs. 30,000. The said cap of 5 years should either be done away with or increased to 10 years.
  • Interest for pre-construction period is allowed over a period of 5 years in equal instalments beginning from the year in which construction is completed. Such instalment is allowed as deduction within the cap of Rs. 200,000 along with other normal housing interest for the said year. Such deduction for housing interest may be enhanced to Rs. 300,000.
  • First time home buyers are eligible for an additional deduction of housing loan interest upto Rs. 150,000 u/s 80EEA provided the stamp duty value of property doesn’t exceed Rs. 45 lacs. The said threshold limit may be raised to Rs. 1 cr.

Section 17(2)(vi) - Value of shares issued to the employees under ESOP

Currently, ESOPs are taxed at 2 stages, first as perquisites - when an employee exercises the options (shares are allotted), and later as Capital gains – when an employee sells the shares. In order to take care of this, a regime of one-time taxation at the time of sale of shares be restored for ESOPs as it used to be there few years back.

New tax regime

To make the new tax regime u/s 115BAC attractive, the standard deduction along with few others such as HRA, LTA, 80C and deduction for housing interest and saving bank interest should also be permitted. Even the number of slabs may be reduced, and the maximum slab should be raised to Rs 25 lacs (from Rs 15 lacs) in order to encourage the taxpayers to move to simpler regime. The non-salaried class should also have the flexibility of choosing the new regime on year-on-year basis depending on their situation.

Deduction u/s 80TTA

The interest on all types of deposits, including term deposits may be included under the ambit of deduction u/s 80TTA. Also, the present limit of Rs. 10,000 may be revised to Rs. 50,000.

Limit for applicability of advance tax

The advance tax is required to be calculated and paid by an individual where the tax liability on income where no TDS is deducted exceeds Rs. 10,000. The limit for applicability of advance tax provisions for an individual may be increased to Rs. 30,000 from Rs. 10,000.

Deduction in respect of interest paid on loan taken for the purchase of electric vehicle-80 EEB

A deduction of INR 150,000 is allowed as interest on loan for the purchase of electric vehicle. The limit may be increased considering the requirement and encouraging individuals to buy more of such electric vehicles.

Deduction on loan taken for education-Section 80E

The law provides for full deduction on interest paid on education loan during the span of 8 years starting from the year of payment of interest. However, no tax benefit is allowed for the principal repayment. The government should consider providing tax benefits on repayment of loan like they offer in housing loan.

Exemption on payment of leave encashment- Section 10(10AA)

The government should consider increasing the exemption limit from INR 3,00,000 to INR 5,00,000 as it has not been increased since the introduction of this law.

Section 17(2)(viii) read with Rule 3(7)(iii) - Meal Perquisite

Currently, any meal provided by the employer during working hours in office premises is exempt to the extent of Rs. 50 per meal per day. It is suggested the meal limit should be raised to Rs 100 per meal.

Income from house property self-occupied for part of the year and let out for the remaining part of the year

Currently, if a house is partly occupied and partly let out during the year, the taxpayer ends up paying tax for the full year i.e. on the actual rent received plus notional rent for the period for which employee occupied his house during the year. The government should make some provisions where individual should be taxed only on the actual rent received during the year rather than also for the period during which house was self-occupied.

Section – 17(2)(viii) read with Rule 3(7)(i) – Exemption for notional interest on petty loans

At present notional interest is taxable on interest-free or concessional loan provided by the employer except on petty loans not exceeding Rs. 20,000 in aggregate. It is suggested that this limit be enhanced to Rs. 100,000.

Section 80GG - Rent paid by assessee not having HRA income

The deduction is allowed under section 80GG of the Act to the extent of Rs. 5,000 per month in respect of rent paid by the assesse  who is not in receipt of House Rent Allowance. It is suggested that the limit should be increased to Rs. 20,000 per month.

Income of minors – to increase exemption limits under section 10(32)

The income of minors clubbed in the hands of parents is exempt to the extent of Rs.1,500 for each minor. These have not been revisited since year 1993. It is suggested that this should be raised to at least Rs.10,000/- for each minor child.

Changes required to address the practical difficulties and to ease the compliances

Clarification on requirement of a Tax Residency Certificate (“TRC”) before filling individual income tax return.

A non-resident taxpayer, to whom a DTAA applies, shall not be entitled to claim any relief under the treaty unless a TRC of his being a resident in the overseas country is obtained from the overseas tax authorities. This poses a challenge where the TRC is not available before filing India tax return or in respect to a country where there is no system of issue of TRC.

To take care of this, foreign tax return, or a certificate issued by the employer of the individual or confirmation from the individual, stating his residency may be considered as an alternative to TRC at the time of filing the return. Taxpayer should be permitted to file the TRC as soon as it is obtained before end of the financial year in which return is filed. In case of countries which do not issue the TRC, the overseas return or other proof evidencing the residency in overseas country may be accepted as an alternative.

Clarification on options for verification of Form 67 filed electronically by the foreign citizens.

For verification of Form 67, Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) is mandatory. In order to generate EVC by using the prescribed modes (Net banking facility, Indian bank account number, Aadhaar number and Demat account), the tax payer needs to input the OTP received simultaneously on the registered email ID and his/ her Indian mobile number. In case of foreign nationals who have already left India, genuine difficulties in obtaining EVC through prescribed modes  and hence, either manual submission of such Form 67 should be introduced or verification should be accepted on the OTP received on email.

Seeking extension of the due date to file a revised income tax return u/s 139(5)

The time limit for revising the return u/s 139(5) of the Act has been reduced by one year. This led to practical challenges in claiming treaty relief due to timing difference on account of different tax years followed by the overseas tax jurisdictions. Such taxpayers claiming such treaty relief face a genuine hardship and therefore, bring back the erstwhile time limit for filing revised return i.e. before expiry of one year from the end of relevant assessment year is suggested.

Rectification mechanism for online tax payment challan

Currently, challan correction mechanism for physical challans is in place and can be corrected through the concerned bank branch within a time window of 7 days from the date of receipt of correction request from the taxpayer. However, for e-payments, challan can be rectified only by jurisdictional assessing officer. A process to rectify the e-challan through an online mechanism may be introduced whereby the individual concerned may file an online application through his/ her e-filing account.

Rule 114 - Documents needed for applying for PAN by a foreign national located outside India at the time of making the application

Currently, the foreign national is required to submit a national ID duly attested/ apostiled from the Indian Embassy in his home country as an address proof while filing application in Form 49AA for obtaining PAN. It is inconvenient where Indian Embassy/High commission is not in the same city where expat is living overseas and hence, in order to avoid such hardships, a certificate from the Indian company to whom such individual is coming to work in India certifying the identity of the individual and his foreign address may be accepted as an address proof,

E-payment of taxes

Currently, the payment of taxes can be done online through specified banks only. The e-payment facility should be extended to all banks to improve ease of doing business in India.

  • Phased withdrawal of exemptions to be carried out based on a review of 400 exemptions as announced in the last budget, wherein the Government has also consulted the industry at large
  • Clarification on the applicability of Social Welfare Surcharge @10% of duties, taxes and cesses, where the customs duty is completely exempted
  • Relaxation in Manufacturing and Other Operations in Warehouse Regulations (MOOWR) and extension of benefits, including depreciation on capital goods removed from the warehouse and drawbacks against duty paid inputs consumed in the final product exported out of India
  • Amendment to overcome the Supreme Court ruling in the case of Cannon India under the jurisdiction of Directorate of Revenue Intelligence (DRI) officers
  • E-advance ruling scheme similar to income tax law
  • Duty benefits relating to agriculture and food processing, semiconductors, hydrogen storage and fuel cell development, electric vehicle charging infrastructure, digital payments, and aircraft parts for maintenance, repair, overhaul (MRO)
  • Amendments to the Special Economic Zone (SEZ) laws aimed at simplification, permitting SEZs to provide services in domestic tariff area (DTA) against INR billing and relaxation of work from home requirements without affecting the tax benefits
  • Possible roadmap on some key policy decisions based on the GST council meetings and the discussions of the Group of Ministers on rationalisation of inverted duty structure and GST rate and review of exemptions
  • Extension of the compensation cess system for a further period of five years with an increased share of the Central Government to compensate for revenue shortfall, especially in the post-COVID economy
  • GST law amendments relating to the constitution of the GST Tribunal
  • Clarificatory circular on inter-office supply of services and input service distribution mechanism, which was earlier referred to the law committee
  • Although clarification on the status of cryptocurrency was expected from the Government, this may not be taken up as part of the Budget and would be subsequently elucidated. This may be the case, particularly considering the impending launch of the Reserve Bank of India’s (RBI) digital currency, i.e. the Central Bank Digital Currency (CBDC).

Budget insights: Union Budget 2021-22

Highlights of Union Budget 2021-22 announcements in Infrastructure and Logistics

  • Capital recycling for investing in new infrastructure by monetising operating public infrastructure assets to be done though a ‘National Monetization Pipeline’ of potential brownfield infrastructure assets and monitoring progress – across roads, pipelines, warehouses, airports, transmission, railways and stadiums.
  • Railways – SonnagarGomoh section (263.7 km) of Eastern Dedicated Freight Corridor in PPP mode in 2021–22 followed by Gomoh-Dankuni section of 274.3 km.
  • INR 18,000 crore to support augmentation of public bus transport services to enable PPP for financing, acquiring, operating and maintaining over 20,000 buses.
  • Subsidy support of INR 1,624 crores over five years to Indian flagged ships to compete in global tenders floated by ministries and Central Public Sector Enterprises.
  • All non-strategic Central Public Sector Enterprises to be privatised. Only a few Central Public Sector Enterprises to remain. 


  • The significant increase in spend allocation (35% over FY20) should see more projects being prepared and rolled out. More importantly, it should incentivise execution by setting aside ~10% (INR 44,000 crore) for additional funding to projects/programmes/departments showing good progress, thereby enabling competition for speedy execution.
  • The intention to speed up monetisation of brownfield infrastructure assets by creating a National Monetisation Pipeline will send the right signals to private investors.
  • Setting up of the ARC and AMC to address bad assets while recapitalising lending intuitions and creating a new development finance institution can help trigger lending for infra sectors.

Highlights of Union Budget 2021-22 announcements in Healthcare

  • The New PM Atmanirbhar Swasth Bharat Yojana is to be launched with an outlay of INR 64,180 crore over six years. This is to build capacities in primary, secondary and tertiary care. This is in addition to the amount budgeted for the National Health Mission
  • An additional INR 35,000 crore has been allocated for COVID-19 vaccines. The Government is committed to spend more on this front if needed. India has two vaccines against Covid-19 and two more are on the way.
  • The Government proposes to introduce the National Nursing and Midwifery Bill as well as the National Commission for Allied and Healthcare Professionals Bill.
  • The Supplementary Nutrition Programme and the Poshan Abhiyan are to be merged into Mission Poshan 2.0 to strengthen the nutritional content, delivery, outreach, and outcome of nutrition programmes.
  • Innovation and R&D is another important pillar of the budget. A total of INR 50,000 crore has been allocated over five years to strengthen the research ecosystem


  • India is rolling out the world’s second largest vaccination programme and has made budgetary provisions for the same, with commitment to spending more if required.
  • This Budget is a step in the right direction to meet the goal of 2.5% of GDP spend on healthcare by the Government.
  • PLI push will make India integral part of the global supply chain and create job opportunities. It will also attract global players in the Indian pharma and medical devices manufacturing.

Highlights of Union Budget 2021-22 announcements in the Oil & Gas

  • Asset monetisation of pipeline infrastructure – GAIL, IOCL, HPCL.
  • The Ujjwala scheme, which has benefited 8 crore households, will be extended to cover 1 crore more beneficiaries.
  • 100 more districts are to be added to the City Gas Distribution network.
  • An independent gas Transport System Operator will be set up for facilitation and coordination of booking of common carrier capacity in all natural gas pipelines on a non-discriminatory open access basis.
  • It is proposed to launch a Hydrogen Energy Mission in FY 2021–22 for generating hydrogen from green power sources


  • Gas transportation capacity will get unlocked with an independent Transmission System Operator (TSO), and more so with digitalisation of booking. More licensing in City Gas Distribution (CGD) will make way for gas to be the bridge to a greener economy.
  • Green hydrogen is the energy carrier of the future. The new Energy Mission sets out a critical agenda to bring about the transformation. Capital infusion in Solar Energy Corporation and IREDA will also help in generating renewable power for the hydrogen agenda.
  • Health concerns among rural women have been addressed by the Ujwala LPG scheme. The coverage of remaining households is an impactful social initiative.

Union Budget 2021-22 - announcements in Financial Services

  • Development Finance Institution (DFI) to be set up with INR 20,000 crore to raise INR 5 lakh crore funding for infrastructure projects.
  • A unified securities market code to be created to include the SEBI Act, Govt Securities Act and Depositors Act.
  • Investment grade bond fund purchase framework to be established to invest in corporate bonds during stressed times.
  • FDI in insurance to be increased to 74% with protection through a majority of board and management of Indian origin, 50% of board members being independent and retention of a percentage of profits. This will need a separate Parliament nod to amend the Insurance Act, 2015, which fixed it at 49% with no foreign control.
  • Recapitalisation of PSBs to the extent of INR 20,000 crores


  • Development Finance Institution brings back infrastructure lending companies of the past with the hope that it would have broader and easier access to private capital. This could boost the infrastructure space and employment in the country.
  • Credit access impact was not as extensive as expected in the Budget. With prior actions taken during the lockdown, only a few additional norms for easing the Stand-Up India scheme and MSME funding were announced.
  • An increase of FDI in insurance should bring in more capital from existing players and attract several new insurers who were unwilling to come in without control. However, regulatory considerations like IFRS17 accounting principles, deferred acquisition costs and Solvency II measures have to be addressed at the policy level to bring India at par with the world and encourage FDI.
  • Strategic disinvestment of the PSU company can mean more large FDI into the country as well as an increase in the country’s underwriting capacity.

Union Budget 2021-22 - announcements in Power & Mining

  • INR 3,05,984 crore has been provided over five years for power sector reform and restructuring – assistance for infra creation, smart metering, feeder segregation, upgradation of systems, etc., tied to financial improvement.
  • A Comprehensive National Hydrogen Energy Mission is to be launched in 2021–22 for generating hydrogen from green power sources.
  • A framework enabling electricity consumers to choose between service providers in electricity distribution has been announced.
  • To support the promotion of renewable energy, INR 1000 crore has been allocated to the Solar Energy Corporation of India (SECI) and INR 1500 crore to Indian Renewable Energy Development Agency Limited (IREDA).
  • There is a push for indigenisation – custom duties on solar inverters have been increased from 5% to 20% and on solar lanterns, from 5% to 15%.


  • The framework for electricity consumers to choose service providers will encourage public and private utility monopolies to enhance operational efficiency and attract start-ups/new age companies/talent.
  • The large investment outlay for distribution upgradation and automation has the potential to enhance network performance and customer satisfaction, manage renewable integration, and improve sector financials.
  • Plans around hydrogen and promoting renewable and battery technologies will promote energy security, help in meeting our climate change commitments and indigenise manufacturing.
  • As per the Government’s vision for Aatmanirbhar India, the PLI scheme is expected to incentivise global and domestic manufacturers to engage in high-volume, high-value production hereby increasing self-reliance and also, increasing exports.

Highlights of Union Budget 2021-22 announcements in Automotive sector

  • The voluntary vehicle scrappage policy along with mandatory vehicle fitness tests will aid personal and commercial vehicle demand.
  • Augmentation of public bus transport by about 20,000 buses is a positive for bus manufacturers.
  • The customs duty rate has been increased on certain auto parts (such as ignition wiring sets, safety glass, parts of signalling equipment). This is in line with the Government’s Aatmanirbhar Bharat initiative to promote localisation in auto spare parts manufacturing.
  • Enhanced outlay for infrastructure – railways, metro rail, rural – development projects will benefit the commercial vehicle, construction equipment and tractor segment.


  • While the industry was hoping for GST reduction or accelerated depreciation on vehicles, no additional increase in taxation is a relief to the industry.
  • The continued focus on building rural and agricultural infrastructure and prioritising agriculture credit growth will have a long-term positive impact on the rural demand for passenger, small and light commercial vehicles.

Personal Taxes

While there are no changes proposed in personal Income Tax rates and slabs, the Government has made certain key proposals to provide relief to small taxpayers, especially to middle class and salaried earners in the form of:

  • Rebate on tax for total income of up to INR 5,00,000 for individuals
  • Increase in standard deduction from INR 40,000 to INR 50,000 for salaried employees
  • Relief for owners of more than one house; second self-occupied house not to be subject to tax on deeming/notional basis; aggregate deduction of interest on home loan for self-occupied properties retained at INR 2,00,000
  • Prescribed monetary threshold for deduction of tax on interest from bank or Post Office deposits increased from INR 10,000 to INR 40,000
  • Proportionate exemption on long-term capital gains arising from proceeds of sale of residential house extended to purchase of two residential houses from one house, subject to:
    • Amount of capital gain not exceeding INR 2 crore [no monetary threshold continues for investment in one residential house]
    • One-time opportunity to claim such exemption

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Corporate Taxes

Domestic companies with a turnover not exceeding INR 250 crore during FY 2016-17 continue to enjoy a reduced tax rate of 25% (increased by applicable surcharge and cess). The base year for this reduced tax rate is proposed to be extended to domestic companies with turnover not exceeding INR 250 crore for FY 2017-18.

The provisions relating to TDS on rental payments provide for a monetary threshold of INR 1.8 lakh. This threshold has been enhanced to INR 2.4 lakh.

Certain key amendments have been proposed in the Interim Budget to provide relief and give an impetus to the Real Estate sector, including the affordable housing market:

  • The provisions were introduced vide Finance Act 2017 to tax notional income on rentals from property held as stock-in-trade for a period beyond one year from the end of the financial year in which the certificate of completion of property was obtained. This period of holding is proposed to be increased to two years.
  • Under the present provisions, deduction on profits is available to developers who are engaged in developing and building affordable housing projects. One of the conditions, i.e. the time taken to seek approval for a project from the competent authority, is proposed to be extended to 31 March 2020.
  • The Government envisages a push towards technology-intensive tax assessments and return processing within the next two years. This is directed towards eliminating personal interface and bringing transparency.

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Indirect Taxes

The Government has estimated the CGST collection for FY 2019-20 at INR 6.10 lakh crore. This assumes a growth of around 20% over the revised estimate FY 2018-19 at INR 5.04 lakh crore.

Given that overall growth in GST collection in the current year over last year is only 8% (INR 97,100 crore vs INR 89,700 crore on a month-on-month basis), it will be interesting to see how this ambitious target is achieved by the Government.

It will need substantial expansion in the tax base and stringent control over revenue leakages.

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Stamp Duty

The proposed amendments in stamp duty provisions are largely aimed at rationalising the various stamp duty provisions as well as streamlining the stamp duty collection mechanism. It is intended to designate stock exchanges and depositories to collect stamp duty on sale or transfer of securities. Such collection will be transferred to the respective state government within the prescribed time. The amendments also propose changes to the rates of duties. It also appears that exemption of stamp duty on transfer of dematerialised shares is proposed to be done away with.

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Union Budget 2021-22: Personal tax updates

  • Tax exemption for specified expenditure incurred (during the period October 12, 2020 to March 31, 2021) in lieu of Leave Travel Concession – now enacted
  • Accrued interest on employee’s contributions on or after April 1, 2021 to EPF exceeding INR 250,000 taxable
  • No exemption under Section 10(10D) for ULIP – Policy issued after 1 Feb 2021 and annual premium exceeds INR 250,000
  • Relief in filing of tax return for Resident senior citizens (75 years or above) having income from pension and interest from same specified bank - tax on such income is deducted by bank
  • Tax relief on income accrued from overseas retirement benefit account – Rules to be prescribed 
  • Advance tax on dividend on receipt basis

Union Budget 2021-22: Indirect tax analysis


  • Union Budget 2021-22 showed a clear policy focus on ensuring ease of compliance for small taxpayers and technology-based initiatives for larger players to streamline compliance. Capacity augmentation for undertaking electronic compliances, e-invoicing by taxpayers (for which the 3rd installment for taxpayers in the INR 50m-1b bracket is expected from April 1, 2021) and AI based initiatives to identify frauds and evasion is on the forefront
  • GST audit process has been simplified to be based on self-certification  

Customs duty

  • This Budget has taken a broad-based review of exemptions to be undertaken over the next 6 months via a consultative process. In line with the rationalisation process undertaken last year to remove outdated exemptions, a new customs duty regime on such exempted items, etc., will come into force with effect from October 1, 2021.
  • The focus of the Government will be to continue to remove anomalies and challenges in the indirect tax regime – especially the inverted duty structure - which impedes the Make in India policy. For this purpose, rationalisation of the customs duty rates on key raw materials and inputs/ components will continue
  • Bill of Entry (BOE) on imports would henceforth need to be filed at least a day before the arrival of the vessel, which would require a level of process change   
  • Defined timelines and process for investigations in Anti-Dumping Duty (ADD) and Countervailing Duty (SCV) to be prescribed to ease and expedite the assessment process 

Union Budget 2021-22: Corporate tax updates

  1. In a positive move, Union Budget 2021-22 proposes to reduce the time limit for reopening past assessments to 3 years from existing 6 years (except in case of serious evasion). This reflects Government's confidence in businesses and tax-payers and would reduce the undue stress and anxiety for the latter.
  2. Furthering the commitment to move towards a more transparent tax system, which is also tech friendly, Union Budget now proposes a Faceless Income Tax Appellate Tribunal Centre, where all communication on tax cases shall be digital, including virtual hearings, if needed.
  3. Buoyed by the positive response to Vivad se Vishwas scheme, Union Budget proposes a similar Dispute Resolution Committee for small tax-payers with less than INR 50 Lakhs of annual income and disputes of upto INR 10 Lakhs.
  4. To reduce the burden of tax compliance, threshold for requirement of tax audit increased to INR 10 crores from INR 5 crores for companies that do its substantial business digitally. 
  5. Union Budget proposes to correct the anomaly in provisions related to computation of advance tax on dividends received by taxpayers. Advance tax liability to arise on dividends only after declaration of dividends.
  6. As a step to ease the process of preparation and filing of tax returns, forms shall come pre-filled with more data like gains and dividends on listed securities, interest from Post Offices, etc.
  7. Time Limit for getting affordable housing projects approved, for claiming the tax exemption, extended till March 31, 2022.

Budget at a glance

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Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book.

Our experts share their insights on the Union Budget 2021-22 announcements for their respective sectors.

Sanjeev Krishan

Sanjeev Krishan

Chairman, PwC in India

The FM has done a prudent job of prioritising spending to address immediate needs and mid to long term goals across critical areas. Privatisation, substantial increase in FDI in the insurance sector as well as other announcements around asset monetisation, INVITs/REITs are progressive measures that will definitely have a far-reaching positive impact on creating a conducive ecosystem for business and help address some legacy issues. The FM had an unenviable job of striking a balance on the fiscal deficit front without altering tax rates to fuel economic growth and must be complimented for having achieved it. The thrust on digital, affordable housing, inclusive growth, ease of doing business, innovation and R&D are steps towards making India future ready. However, operational detailing and seamless execution will be critical.
Arnab Basu

Arnab Basu

Partner & Leader – Advisory, PwC India

India’s first digital budget is symbolic of the government’s resolve towards a truly Digital India. Announcements around the digital census, creating an enabling eco-system to further a ‘Digital First Mindset’ in education, adding impetus to fintech, etc. are positive moves that can add momentum to the pace of digital adoption in a post pandemic world.

Union Budget 2022-23 Analysis (PDFs)


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