
Budget 2022 seeks to focus on long-term growth, domestic manufacturing, digitisation, rural upliftment and planned urbanisation.
Allocation of funds towards capital expenditure and infrastructure sector sets out a futuristic and inclusive vision for the nation over the next 25 years.
Budget 2022 proposes several policy changes including the introduction of Digital Rupee, set-up of digital banking units, replacement of SEZ Act with new legislation and various measures for promoting IFSC as one of the favoured global financial service-oriented destinations.
The Budget highlights the underlying commitment of the government towards increasing tax certainty and reducing litigation.
Also Read: Budget 2022: Proposals for banking sector
Further from a financial services sector perspective, the following key changes have been proposed:-
Income arising on transfer of VDA (i.e. cryptocurrencies, NFTs, other digital assets, etc.) would be taxable at 30% without any deduction (except the cost of acquisition). Loss, if any, cannot be set off and carry forward. The payer would be liable to withhold taxes at 1%, subject to certain conditions. The introduction of a specific tax regime relating to the taxation of VDA shall provide much-awaited clarity to investors.
The scope of anti-avoidance provisions relating to bonus stripping has been sought to be expanded to include stocks, shares, units of REIT, InvIT and AIFs. Earlier, it was restricted only to mutual fund units. This proposal seeks to plug the tax planning opportunities resorted by the market participants by setting-off such losses against other capital gains.
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The Budget seeks to introduce several measures to promote the financial markets, support the development of IFSC, promote public-private capital investments and ensure overall fiscal management.
(Authored by Paresh Kubadiya of Associate Director, Grant Thornton Bharat and Amit Kedia, Chartered Accountant, Mumbai.)