Budget Crypto News: From Crypto Taxation to Rising 80C Limit, What the Market Wants from Budget

As Finance Minister Nirmala Sitharaman presents her fourth Union budget on February 1, all eyes will be on how the government balances populist measures while walking the tightrope of fiscal consolidation.

As Indian businesses expect key announcements that will reset their growth agenda, taxpayers expect additional disposable income in their hands to invest and consume more.

As India moves towards a $5 trillion economy by 2025, and just 2 days away from the 2022-2023 budget, here are the top five market expectations for direct and indirect taxes.

DIRECT TAXES:

1. The 80C deduction available up to Rs 1.5 lakh per annum will be revised upwards significantly; 2. To make the optional preferential tax regime, which came into effect from April 2021, more palatable, raise the income threshold by Rs 15 lakh to set the maximum tax rate at 30%; 3. As Web 3.0 unfolds, crypto assets encompassing a wide range of digital assets such as non-fungible tokens, wrapped asset tokens, etc., will gain popularity. a specialized cryptocurrency taxation scheme is expected to be introduced in the budget. 4. The long-term capital gains tax (LTCG) burden, introduced by the 2018 finance law, has somewhat shaken investor confidence. Major economies do not have an LTCG tax. Also in India, it is expected that the LTCG on the sale of Indian listed shares will be exempted as it would boost investment through the stock exchange. 5. Businesses expect the full amount, or an appropriate proportion of expenses incurred to assist society and employee welfare during COVID-19, to be allowed as a deductible expense. In addition, the government should reduce tax rates for companies engaged in R&D activities to 15 percent or less and allow a weighted deduction on internal R&D expenses.

INDIRECT TAXES:

1. Streamlining of the tariff structure for electric vehicles and ancillary components, renewable energy generating devices and related components is likely. 2. Sector-specific concessions for export-oriented semiconductor manufacturers are expected. 3. Budget allocations for the expansion of the PLI program for sectors such as leather and laminates; additional incentive programs will also incentivize companies to set up additional manufacturing in sectors that were not the focus of previous budgets and help reverse the impact of the pandemic. 4. The government is already reviewing 400 customs duty exemptions (as announced in the previous budget). The final list is expected to be proposed as part of the 2022 budget and the industry is awaiting it so that there is no negative impact on trade as a result of this exercise. 5. Extension of customs duty exemption on imported goods for testing and establishment of a customs dispute resolution forum, relaxation of customs obligations and integration of the current ICEGATE online portal, the DGFT and SEZ in a common digital platform.

EXPERTS TAKE:

Nangia Andersen India Chairman Rakesh Nangia said in particular that the high end of businesses as well as the upper middle class are doing well enough, despite the indelible impact left by the covid crisis.

“India is facing a real consumer problem as the poorer segments are still not out of their predicament. The main focus of the budget must be to enable the ecosystem to create jobs, income and demand. It is also necessary to address various challenges, including the most important consideration of data protection faced by relatively new sectors such as telemedicine, tele-advocate and education technology”, Nangia said.

Deloitte India partner Gokul Chaudhri said the budget is expected to bring relief to low and middle income people whose disposable income is affected due to inflation.

Furthermore, India has agreed to abolish the Equalization Levy (EL) and follow the multilateral solution in the form of Pillars 1 and 2 agreed among 137 member countries working under the inclusive framework of the OECD.

“It is expected that the budget will introduce the necessary legislative framework to facilitate their implementation and will also establish a roadmap for stakeholder consultation,” Chaudhri added.

Rajat Mohan, senior partner at AMRG & Associates, said the middle class expects higher disposal income to counter rising inflation, large corporations anticipate stability in the tax structure, MSMEs want additional liquidity to finance business growth and foreign investors expect a conducive business environment in the long term. long-term strategic investments of the 2022-2023 budget.

Nangia Andersen LLP, Indirect Tax Partner, Samir Kapadia, said if the government is sincere in promoting India as a manufacturing hub and pursuing the policy of Atma Nirbhar Bharat, then the government must take pragmatic measures .

“These measures, among others, may require, on the one hand, to rationalize the rate of primary inputs/intermediates and, on the other hand, to increase the rate of finished products to provide tariff protection in order to promote manufacturing national in India,” Kapadia added.

Sandeep Bhalla, Partner at Dhruva Advisors LLP, said the media and entertainment industry requires huge investments in digitization, technology setup and distribution network.