Four days ago, on February 1, Finance Minister, Nirmala Sitharaman, presented the Union Budget, 2022. While there was no revision in tax slabs or tax benefits, it was a balanced budget overall. With a focus on capital expenditure, economic growth is sure to get a boost. Today we’ll discuss some of the key takeaways that affect individuals like you and me.

A future that’s digital

RBI to launch digital rupee

The finance minister announced that the Reserve Bank of India would introduce its digital currency, called the Central Bank Digital Currency (CBDC), in financial year 2022-23. Using Blockchain technology, the finance ministry states that this currency can provide a great deal of benefits in the form of reduced dependency on cash, lower transaction costs and reduced settlement risk.

Cryptocurrencies to be taxed @ 30%

Cryptocurrency transactions have been on the rise in the past couple of years. So, this update was inevitable. With effect from April 1, 2022, gains made on the sale of cryptocurrency will be taxed the same way as winnings from lotteries are taxed – at a flat rate of 30%. Further, any loss incurred on such transactions cannot be set off against any other income.

Another important update for crypto enthusiasts is regarding TDS. Tax at the rate of 1% will be deducted when buying virtual currencies beyond Rs.10,000 during a financial year. Similarly, for individuals who are required to get their accounts audited under the Income Tax Act, the Rs.10,000 limit goes up to Rs.50,000. This will take effect starting July 1, 2022.

A future that’s green

Green Bonds

As part of their borrowing program for FY 2022-23, the government is set to issue Sovereign Green Bonds. The proceeds raised through these bonds will be utilized for public sector projects that are environmentally sustainable. Financing clean energy will help reduce the country’s carbon emissions, a net-zero target that is set to be achieved by 2070.

While banks and corporates have already been issuing green bonds since 2015, this will be the first year that the government will be issuing such bonds. The usual tenure for green bonds is between 5-10 years. However, the government has not announced the tenure, rate, and other such details yet.

Battery Swapping

In financial year 2020-21, electric vehicle sales accounted for only 1.3% of total vehicle sales in the country. This figure could and should be much higher. However, range anxiety and not enough charging stations are the main reasons for the slow adoption rate. Currently, charging an electric vehicle with a fixed battery takes 6-8 hours on a home charger or a regular charging unit, and 50-60 minutes with a fast charger.

Now, imagine being able to drop into an EV station and exchanging your discharged battery for a fully charged one, all within a few minutes. This is exactly what battery swapping intends to do. Sure, this policy needs a lot more detailing, right from setting standards to monitoring progress, but it could well be the key to increasing EV adoption. We’ll know more about how this policy will pan out in the next few months.

A future that’s progressive

Post office accounts to be accessible online

Finally! Those that have invested in post office saving schemes in the past would know the pain of having to stand in line to even update your passbook. In 2022, all 1.5 lakh post offices will come under the core banking system (a back-end system that processes banking transactions online). This will allow people to access their accounts online via net banking, mobile banking, ATMs, as well as transfer funds online between their post office accounts and bank accounts. Small saving schemes investors will greatly benefit from this move.

24*7 free mental health counselling

An ICMR (Indian Council of Medical Research) study conducted in 2019 stated that one in seven persons in India suffers from mental disorders. Sitharaman said, “The pandemic has accelerated mental health problems in people of all ages. To better the access to quality mental health counselling and care services, a National Tele Mental Health Programme will be launched.”

With NIMHANS (National Institute of Mental Health and Neurosciences) as the nodal centre, there will be 23 centres of excellence set up to fulfil this vision.

A future that’s taxing? Not really

There was some talk around the government enhancing the limit of Section 80C of the Income Tax Act. It’s the section that deals with certain deductions from your total taxable income. The last time this limit was raised was way back in FY 2014-15, from Rs 1 lakh to Rs 1.5 lakhs. Seven years on, and the limit remains the same. There has neither been any change in the tax slabs, nor has there been any increase in the standard deduction offered to salaried employees. This can certainly be disappointing. However, the new tax regime was introduced merely two years ago. So an increase in deductions seemed unlikely. The best thing to do is to make the most of the benefits that already exist. And Section 80C isn’t the only option to lower your taxes.

All in all

This year’s budget has surely presented a roadmap for the future. The four key pillars of development that India is focussed on are inclusive development, productivity enhancement, energy transition and climate action. And it shows.

There are of course many more budget updates. These were the ones that we felt were the most relevant to us as individuals. If you’d like to watch the full budget speech, here it is –

Author Bio - Komal Shivdasani
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