On February 1, finance minister Nirmala Sitharaman will give her fourth Union Budget 2022, and all eyes will be on how the government balances populist policies while treading the fine line of fiscal reduction.
While Indian corporations anticipate important announcements that will allow them to reset their growth goal, ordinary taxpayers anticipate greater discretionary money in order to invest and spend more.
As India strives for a $5 trillion economy by 2025, and with the Budget 2022 just two days away, here are the top five market forecasts on direct and indirect taxes.
- To make the optional concessionary tax regime, which went into force in April 2021, more palatable. It raise the barrier for laying the maximum 30% tax rate to 15 lakh rupees.
- As Web 3.0 unfolds, crypto assets, which include a wide range of digital assets will acquire significant popularity. A specialized framework for bitcoin taxes is anticipated to be implemented in the Budget 2022.
- The burden of the long-term capital gains tax (LTCG) imposed by the Finance Act of 2018 has harmed investor confidence. There is no LTCG tax in major economies.
- Corporations anticipate that the full amount, or a reasonable proportion, of expenditure paid for societal. And employee welfare during Covid-19 will be deductible. In addition, the government is likely to decrease tax rates for enterprises involved in R&D operations to 15% or less, and to provide a weighted deduction for in-house R&D investment.
- Rationalization of Customs duty structure for EV and ancillary components, renewable energy generation devices and related components is likely.
- Budget allocations for the expansion of the PLI scheme for sectors such as leather and laminates. The additional incentive schemes will also entice companies to set up additional manufacturing in sectors. They were not a priority in previous budgets, thereby helping to mitigate the impact of the pandemic.
- The administration is already evaluating 400 exemptions from customs duties (as announced in the previous budget).