Analyzing India's Budget 2022

This webinar decodes the Indian Budget 2022 as presented by the honorable Finance Minister Nirmala Sitharaman.

With this budget, the government has focused on nurturing infrastructure and the digital economy.

• Emphasis on the importance of private equity by placing support schemes for private investments
• More promotion of domestic manufacturing with PLI scheme to reduce China's dominance
• Focus on continued support to startups
• Budget allocated for roads, bridges, water, and housing specifically
• Focus on railways, river linkages, MSMEs, and hospitality
• Reduction in non-performing assets indicates improvement in the health of the banking sector.

With the budget, a very high provision is made for public spending growth, which will be a catalyst for economic growth. But growing inflation rate is a worrying sign that needs to be tackled.

What is the impact of a faceless tax regime?

Maulik Doshi, Deputy Managing Director, Transfer Pricing and International Tax at Nexdigm, shared the impact of faceless tax regime followed by India:

• Income tax website isn't up to the mark to support faceless mechanism
• Keeping taxpayers on toes with reminders and notices digitally
• With the budget, video conferencing for personal hearing is made mandatory
• Allowing taxpayers to adjust to the new system by giving them 2 years

Impact of budget on GST

• The latest provisions have increased the compliances leading to more complexity in GST filing.
• Stricter provisions on filing - for example, if you have not filed any previous month's return, you can't file returns for the next month.
• The provisions push everyone to get GST credits; hence non-compliant or irregular businesses will be forced to lose customers who file returns on time.
• Credit restrictions have been implemented to reduce misuse.
• Redundant provisions have been removed.

How the budget supports Make in India?

• There is a reduction in customs duties on raw materials while an increase in items needed to be manufactured within India.
• Since India is a growing market, this move deters importing. At the same time, PLI (Production Linked Incentives) are put in place to tilt companies to manufacture in India to capture the Indian market.

Will digital assets have GST?

Since there is no tariff entry for digital assets, custom acts only cover tangible goods. There is no clarification if digital assets are goods or services and how to treat digital assets to clarify any GST implications.

Also, one needs to undertake registrations for compliances which is not the case for investments. If GST is to be implemented, everyone will have to register, leading to complications.

In the end, the government should provide a roadmap to allow space for the industry to adapt to the changes.