5 takeaways from budget 2022 for investors

04 February 2022
5 takeaways from budget 2022 for investors

What are the most important points an investor should know from the budget 2022? Here are some of the major decisions taken by the government for the upcoming 1-year period.

1.  Cryptocurrencies brought under the regulatory boundaries of Government

The profit from the transfer or sale of digital assets would be taxed at a fixed rate of 30% while setting off losses of previous years are restricted. This brings them on line with the tax treatment of lottery wins. The finance minister emphasised in her budget speech that transactions in 'virtual digital assets' (read cryptocurrencies, NFTs, and similar) had increased dramatically, necessitating the creation of a separate tax structure for them. Aside from charging a 30 percent tax on gains deriving from their transfer, the FM stated that no deductions for expenses other than the acquisition cost will be allowed for computing the gains. Furthermore, any loss incurred as a result of the transfer of virtual digital assets cannot be offset against any other source of income.
Furthermore, to ensure that such transactions do not slip through the cracks, a 1% TDS has been imposed at the time of transfer above a particular monetary level, which is Rs 50,000 for certain specified persons and Rs 10,000 for others within a financial year.

2.  RBI to launch digital rupee

The finance minister also stated that the Reserve Bank of India (RBI) will launch its digital currency, the Central Bank Digital Currency (CBDC), in FY 22-23. The currency is planned to be linked to the Indian rupee's fiat form. It will result in a more efficient and cost-effective currency management system based on Blockchain technology. The currency, according to the finance ministry, can deliver major benefits such as decreased reliance on cash, fewer transaction costs, and lower settlement risk.

3.  Surcharge on all LTCG capped at 15 per cent

Currently, the surcharge rate fluctuates between 10% and 37%, depending on the taxpayer's total income. The surcharge on long-term capital gains (LTCG) on listed shares and equity funds, on the other hand, was restricted at 15%. As a result, the surcharge for LTCG deriving from other assets has steadily grown in accordance with the taxpayer's income bracket.
However, beginning in the next financial year, the surcharge on non-equity assets' LTCG will be restricted at 15%.

4.  Economic Health/Tax/Fiscal Deficits

  • The revised fiscal deficit for FY22 has been 6.9% to support growth.
  • GDP growth for the Financial Year 2022 is expected to be 9.2%, the highest among any other large economy.
  • A new updated return will be introduced by the Department of Revenue. This tax return can assist taxpayers who discover they have made errors or omissions when estimating their income-tax payment. They will have the option of paying an extra tax to fix such inaccuracies. Within two years of the conclusion of the relevant assessment year, this revised return can be filed. This will simplify the tax system, encourage taxpayer voluntary compliance, and reduce litigation.

5.  Technology is the Future

In 2022, all 1.5 lakh post offices will be brought inside the core banking system to improve interoperability and financial inclusion. People would be able to access their accounts online through net banking, mobile banking, and ATMs, as well as transfer funds between their post office and bank accounts. All investors in small savings programmes will profit from this decision. This will widen the government’s trial of digital banking even in rural India. Government will continue to support the digital payments ecosystem this year as well.