Budget 2022: The economists expect the Central government to re-introduce wealth and inheritance tax to address the rising inequality during Covid pandemic.
Budget 2022: As the Central government is preparing to present Budget 2022 on February 1, 2022, the economists, experts in financial matters and the middle-class people of the country expect Union Finance Minister Nirmala Sitharaman to take a capex route and spend on capital assets and infrastructure projects, rather than just increasing allocation to rural-centric schemes. On the other hand, the experts also want the re-introduction of wealth and inheritance tax to address rising inequality during Covid pandemic.
Here are 10 things the economists, companies, tax experts and the general public expect from FM Sitharaman’s Budget 2022 on February 1, 2022.
- Looking at the dwindling economy at this pandemic time, the experts are rooting for a gradual fiscal consolidation path, capital expenditure to pursue growth and steps to rein in inflation. They feel that the year-on-year projection of fiscal deficit should not be significantly large and they want the Central government to take capex route, and preferably spend on capital assets and infrastructure projects.
- On the other hand, the economists expect the Central government to re-introduce wealth and inheritance tax to address the rising inequality during Covid pandemic. A joint study by Ashoka University and think tank CBGA suggested re-introduction of these taxes, while providing incentives for charitable donations.
- As most of the employees are doing work from home due to coronavirus, the salaried class people expect a deduction for home office expenses in calculating their taxes in Budget 2022. The employees clearly need a backing in terms of cost perspective. As multiple members in a family are working from home and as they need to accommodate online classes for children, the salaried class employees are looking at moving to homes with larger personal spaces. And for this, there is an additional investment required for employees to manage working from home.
- At this time, the insurance companies want health covers slotted in the 5% GST slab to make it more affordable to access quality healthcare. They believe that a reduction in the GST on all personal lines of products—from the existing 18% to 5% will encourage more people to buy health insurance in these times.
- Moreover, the automobile sector also wants electric vehicles to be put in priority lending to encourage more citizens to buy EVs at low interest rates. The automobile sector also wants allocation of more funds for R&D in a public-private partnership mode for development of batteries.
- In the meantime, the hospitality sector wants restoration of GST input tax credit as it struggles with thin margins, huge losses, and loss of livelihood. It also expects the Centre to formulate a mechanism to protect restaurants from further lockdowns such as insurance or a furlough scheme.
- Representatives from banks and MSMEs expect from the Centre a support for in line with the Emergency Credit Line Guarantee Scheme – a measure introduced earlier during the pandemic. The MSMEs also want the Centre to amend the Insolvency and Bankruptcy Code for recovery of MSME dues.
- The airlines which are being affected by the pandemic want tax breaks and suspension of minimum alternate tax for at least two years. They say that they are taxed as high as 21% but there is no provision for input tax credit as there is with other sectors. They also want suspension of minimum alternate tax (MAT) for aviation and airport sector for at least two years, or reduction in MAT from about 18% to 5%.
- The blockchain startups expect the Centre t bring clarity over issues such as taxation, legislation, exemptions and regulations. They want FM Sitharaman to acknowledge the potential of the industry and frame some clarity of operations to aid their operations and growth in the future.
- As the renewables sector in the country is looking for investment-based tax incentives for companies in EV manufacturing/charging business, they expect the Centre to incentivise R&D, technology adoption and investments in the storage segment.
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