“There’s no surprise, that’s the surprise.”


Cut your coat according to your cloth, because if you don’t, you will lose them both! Budgeting is an essential part of our lives. We are budgeting all the time, knowingly, unknowingly, as it helps us in keeping our expenses in tandem with our income. Every year the finance minister of the country along with the team prepare a budget for the nation which decides on how much taxes are to be collected or other non-tax sources of revenue. Accordingly, various schemes, subsidies, projects and policies are also prepared to be implemented over the next financial year. Most people assume that these are government activities that have no bearing on their lives. However, the truth is, budget announcements are one of the most significant aspects of your budget and financial management.

Consider this, when you buy products or avail services, buy fuel or pay for cooking gas, you are paying indirect taxes or availing subsidies, embedded in the product price which goes/comes, straight to/from the Government; when you receive salary or such income, the tax deducted also goes to the Government. All these tax rates are decided by the Government. Meanwhile, the public amenities you use such as roads, railways, bridges, police etc. are all affected by the Government policies which are decided and announced during the annual budgeting activity. If you are a businessperson, these policies may favourably or adversely impact your business as well, apart from your finances. Allowing foreign players, subsidising rates, granting more licenses or providing more liquidity to the economy, all bear a huge impact on the businesses – directly and indirectly.

A good study of the annual budget announcements can help you in many ways –

  1. Capture new upcoming opportunities created by the Government
  2. Avail subsidies, grants, or concessions offered by the Government
  3. Manage your finances by planning taxes and expenditure
  4. Understanding impact on the economy, the industry and your business, or your employer’s business
  5. Making long term investment decisions based on sectors being focussed on, economic factors and tax implications of investment

In this publication, we are presenting comprehensive coverage of the Budget 2022 presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on February 1, 2022. This budget is for the financial year 2022-2023. Amounts that were ever mentioned in this publication are in Indian Rupees unless otherwise stated. We hope you have a great time analysing the budget. You may reach out to us with your queries at


“The budget will try to sway the upcoming polls in the north”, “Nirmala Sitharaman will address inflation and employment issues”, “The budget will provide much-needed tax relief post-pandemic”, “Taxes will be increased to recover vaccination costs”, there were so many predictions around the kind of budget that will be presented, before ‘the day’. Unhindered by them all, Finance Minister Nirmala Sitharaman delivered a thoroughly professional budget. There were no fancy announcements this year, as the FM chose to stick to the prior year resolutions while keeping the tax regime stable. One may argue that this is ‘Budget Number Three’ of the current Government – with too many announcements in the first two years, and to leave room for more in the pre-election budgets, the middle ones had no choice but to be passive and unfancy. 

Even after considering those arguments, the annual budget has been professionalised significantly with the merger of railway budget with fiscal budget (and gradual removal of the same), early budget session instead of last day of February providing more time to prepare and of course with fewer politics and more policy-making, things have fallen pretty much in line. Meanwhile, one should not forget that Finance Ministry has made enough announcements through press conferences (literally a test match of press conferences) and notifications that there isn’t enough left on the plate to announce by the time finance budget day arrived. This has been the case with the present regime of the Government – there’s always something happening all around the year! As finance professionals, we find it remarkable.

Having said that the budget was professional, it is worth noting that everything in the budget was already known and expected, and barring a few, there were no new schemes or projects announced, nor any major reforms both tax and non-tax, making it a low-profile budget, as well. Of course, in respect of tax amendments, as usual, ‘the devil was in the finance bill’, as budget speeches speak only about the fancy part while it is left to the Chartered Accountants to explain and inform the same to the taxpayers. Don’t worry, we have got you covered!

“Amritkaal” is the Great Indian Dream

As India is celebrating its 75 years of independence dubbed as ‘Azadi ka Amrit Mahotsav’ which you may have already observed on all Government websites, advertisements, emails and social media posts, and anything else possible, along with Prime Minister Narendra Modi’s photo. It’s all marketing. Taking inspiration from the same, Finance Minister Nirmala Sitharaman prepared to keep the vision of ‘100 years of independence’ dubbed as ‘Amritkaal’. The term ‘Amritkaal’ refers to the critical time when the gates of greater pleasure open all and an auspicious time to start new work. This year’s budget lays the foundation stone for the ‘Amritkaal’ and gives a blueprint to steer the economy to ‘Amritkaal’ in the next 25 years. Sounds, so wow, right? So did we, until we analysed the entire budget and found nothing significant that hinted towards an ‘Amritkaal’. This was a major factor why we ended with a low 6 pointer rating for the budget.

We won’t be surprised if Nirmala Sitharaman chooses to present budget once or twice in five years, in next term, as most of the announcements made in the prior budget were such long term plans (3 years – 10 years) that the current period budget had to merely confirm that the Government is sticking with the same with minor tweaks and new mission names to garner headlines. Anyways, leaving behind the ‘Armitkaal’ narrative, this year’s budget focussed on 4 pillars – productivity, climate action, financing investments and PM Gati Shakti plan. Let’s understand the various aspects of this year’s budget.

Capital expenditure

The outlay for capital expenditure in the Union Budget has been stepped up sharply by 35.4% from 5.54 lakh crore in the current year to 7.50 lakh crore in FY 2023. This is 2.2 times the expenditure of FY 2020 and will be 2.9% of the GDP. As much capable it is of making headlines, it is important to note that the Government had made little effort towards capital expenditure in its first regime which had resulted in economic recession and then the pandemic shook the country further. However, now it is fascinating to see that the Government finally understands and accepts its responsibility to increase spending and develop public infrastructure. Unlike prior years, and in continuation to the previous year, this year’s budget reiterates Government’s focus on public infrastructure spending under a new banner ‘PM GatiShakti’ – that’s good news as infrastructure means more long-term spending, more employment and a higher supply of money in the economy. However, the announcements that followed the mighty mission title, do not justify it.

As per budget announcements, the Government has plans to improve the transportation in the country under its ‘PM GatiShakti’ plan comprising Road, Railways, Metros, Ropeways, Warehouses, etc. and digital initiatives for seamless connectivity of the same. You are going to hear the word ‘digital initiatives’ quite a time in the publication as Government considers it a strategic move. However, given the era we live in, these digital initiatives comprising of building websites, combining websites, constructing databases and online training or libraries, aren’t a big thing that deserves a mention in the annual budget. Besides, taxpayers who have experienced the digital initiatives of GST Portal, Eway Bill Portal, MCA 2.0 and the latest “high-tech” Income Tax Portal, would be well-aware of the ground reality. It has been announced that 400 Vande Bharat trains will be ‘manufactured over the next 3 years and that shouldn’t be confused with 400 new trains on the railway tracks! ‘Kavach’ security measures for the safety of railways would be extended to 2,000 kilometres of railway track. Few announcements such as the faster implementation of metro systems, multimodal data connectivity and ‘One station, one product’ are vague announcements for ‘vocabulary analysis of budget’ and not required mention in the budget.


Farm bill protests were the political highlight of the past year and there were high expectations that Government would try to lure these voters. The allocation for minimum support price is right there, as usual, to garner the trust of the farmers and stay in line with promises made by the Government. The introduction of ‘Kisan Drones’ is a good push towards innovation in the agriculture sector, something that can uplift the efficiency of farming in the country. Other announcements for millets, oilseeds, packages for fruits and vegetables, digital and hi-tech services are vague announcements as they neither specify the amount allocated nor elaborate the scheme (if any planned). We would know more about these schemes as and when concerned ministries chalk out the detailed plan and scheme. Ken-Betwa project will take more time before the benefits reap and consensus on the river linking project may be a more critical task than the actual project.

Digital Rupee and Cryptoassets

As was already expected, India has followed the Chinese way of dealing with Cryptoassets (Cryptocurrencies). Similar to how China launched Digital Yuan, India is going to launch its own Central Bank Digital Cryptocurrency (CBDC) which will be known as ‘Digital Rupee’. It is expected that the same will be launched in FY 2023 itself. We had already elaborated on how this in our June 2021 Newsletter. It will be issued by the Reserve Bank of India (RBI) to Commercial banks and other payment networks adhering to RBI guidelines. Thereon, the digital rupee can be obtained by citizens and saved in crypto wallets (digital lockers). However, the budget announcement only explains the approach while leaving behind many other questions on privacy, technology and the accessibility of the same. Since the Government has already listed a new law on Cryptoassets which is expected to ban private cryptocurrencies, if one read between the lines, the following is the status of the crypto assets –

  1. There is only one legal tender in India – Indian Rupees (INR) and ‘Digital Rupee’ will be the virtual version of the same. It is next to impossible that government would ever accept any other currency as legal tender unless the country’s economy is in a dire state. Legal tender means the coins or currencies which can be used to settle the debt or financial obligation.
  2. Anything other than ‘Digital Rupee’ will be allowed to operate as ‘Virtual Digital Assets’. For issuing, exchanging or providing services to virtual digital assets owners, there will be registration formalities and only those qualifying the same would be considered as legal, all others would become illegal. These registration and other regulations together will ensure compliance, transparency and reporting of those dealing in the same. Thus, cryptocurrencies (as we call them) would be similar to equity shares, gold, bonds, etc. – an investment tool and not a medium of exchange like currency notes.
  3. Digital Rupee is merely a digital version of INR and therefore, it would be a stable currency and its value would be equal to the value of INR, as it may appear in foreign exchange markets. Conversion of paper currency to digital currency will not involve any cost on the part of the citizens since the same is expected to be equivalent.
  4. All foreign exchange regulations will be equally applicable to conversion of ‘Digital Rupee’ to any other foreign currency, as it would apply otherwise to the paper currency.
  5. As per Budget 2022, cryptocurrencies would be taxable at a 30% tax rate. Only the cost of acquisition would be allowed as a deduction against the same. Thus, one cannot claim other administrative expenses, finance costs, depreciation, etc against the same. This income will be taxed as ‘Capital Gains’ and cannot be taxed as ‘Business income’. 
  6. As per Budget 2022, losses arising from cryptocurrencies would carry no value i.e. no setoff against any other income and also no carry forward of losses to any other year. So, if you incur a loss, there are no tax implications. If you incur profit, you will have to pay 30% tax.
  7. As per Budget 2022, TDS is required to be deducted at 1% on the ‘Sale value’ by the Cryptocurrency exchanges that buy the cryptocurrency. Thus, the compliance burden is on the cryptocurrency exchanges who are fewer and thus, can be regulated, traced and forced to report appropriate details, so that the ultimate traders are traced and taxed by the income tax department with ease.
  8. Virtual Digital Assets (VDA) would also include Non-Fungible Tokens (NFTs) and other similar digital assets which may be issued in future.

The new announcements have made life difficult for the cryptocurrency traders as they are now in partnership with the income tax department where the IT department is a partner in profits only – if you make a profit of 30% tax if you don’t, your loss. Cryptocurrency trading is already risky and now will become less compensatory as well, thus, reducing the trading in same, which is the intent of the Government. Meanwhile, people looking for cryptocurrencies as a long term investment option may try their luck, following the basic principle of investment in high-risk assets – invest an only amount that you can afford to lose and not your entire wealth. Since the taxes are 30% only, if a cryptocurrency gives a better return than other assets, you can easily compensate the difference of 10-15% as compared to other assets such as land, equity shares, bonds, etc.

5G spectrum auction and strategic disinvestment

Finance Minister Nirmala Sitharaman has also announced that the 5G Telecom Spectrum Auction would take place in 2022, for rollout in 2022-23. While this should be good news, the real situation is dire as there are few telecom players left in India, with Vodafone Idea ‘trying’ to revive and BSNL in losses. So finding bidders and also finding cash-rich buyers would be difficult for the Government, as the telecom sector is making move towards Duopoly and the Government hasn’t done anything major apart from the Telecom Relief Package, revive the same. The Government is expected to make the most of the spectrum auction as it would result in huge revenue for the Government.

In this context, it is important to mention that the expected target of strategic disinvestment has been drastically lowered for FY 2023 to INR 65,000 crore only. Besides, according to the budget documents, the target for FY 2022 has also been revised to INR 78,000 crore from the estimated INR 1,75,000 crore, announced in the previous budget. This is an INR 97,000 crore downward revision – such a gross error in estimating? The centre had planned major divestments and strategic sales of Air India, BPCL, public sector banks and the insurance company. However, only a few have been completed while there is a question mark over others. While FM Nirmala Sitharaman had gladly announced generating 1,75,000 crore divestment revenue, which was opposed by many, the budget 2022 has tried to silently cover the traces. As per the budget documents, ‘Disinvestment in Public Sector Banks and Financial Institutions’ has been revised for FY 2022 from INR 1,00,000 crore to Nil. Should even trust the announcements in the budget anymore?

Updated tax returns

Finance Minister started the exciting Part B of her budget with the announcement of ‘Updated Returns’. While listening to the budget announcement, it added a vow factor to the speech, as the ‘Updated Returns’ made headlines everywhere in the news. However, on reading the fine print of the budget, we realised that it was barely useful to the taxpayers, and only a means of avoiding tax litigations for the tax officers, better call it a tool for tax officers to force taxpayers to pay taxes. This isn’t a trust-based scheme, as the finance minister called it. What her budget speech missed to mention was that the updated return can only be filed to increase your income, and such incremental income has to be paid along with original taxes as applicable, additional taxes at 25% and 50% if a return was filed earlier, or not filed earlier respectively. Isn’t it an important point to be mentioned while announcing the scheme? Well, the Finance Minister didn’t think so.

Since the income tax department is increasingly relying on information received from other departments, it will now send notices to taxpayers to file ‘Updated return’ and include the income in such return. This return cannot be filed without paying the taxes first. If you don’t file the same, you will end up in scrutiny and litigations. This is a good provision for the tax officers, however, harsh for the taxpayers who may have genuinely missed to disclose certain income and 50% – 80% tax on such income doesn’t seem fair and is far away from ‘trust based’ return filing.

Rationalisation of tax laws

Unlike other budgets, this year’s budget didn’t introduce new concepts or provisions in the tax laws, instead only removed, cleaned up or rectified the errors. The faceless assessment scheme, the goods and services tax old return filing system, the assessment and reassessment provisions, various sections where judicial pronouncements varied or have been heavily litigated or judicial decisions didn’t match with the intent of law have been amended, rectified or substituted. Similarly, tax duties under customs have also been rationalised to suit the ‘Aatmanirbhar Bharat’ agenda of the Government.

The bottom line

The truth is there were no major announcements. However, this is India, and the budget needs to have some punchlines so that the news media can convert them into headlines. Please do note here, this is the shortest budget speech by Nirmala Sitharaman which lastest merely for 92 minutes (1 hour, 32 minutes) including more than usual water breaks. Nirmala Sitharaman is already holding the record for longest budget speech and spoke for 162 minutes (2 hours, 42 minutes) in 2020. She broke her record for the longest budget speech of 2019 where she spoke for 137 minutes (2 hours, 17 minutes). This year’s performance didn’t seem as enthusiastic as the other years which also explains there wasn’t much to mention. We expected a lot more from the Budget 2022. However, we are happy that the finance minister kept the regulations close and tight, without any rejig in the tax regime. When there’s nothing much to do, it’s better to let it be the way it is! Though the budget didn’t present anything exciting, we rated it, based on the professionalism and the restraint depicted in proposing unnecessary reforms. Although the budget would have been rated higher had the government shown more intent and newer schemes. The Government also failed to satisfactorily address the looming problems of the economy, unemployment, higher education, preventive health measures post-pandemic, and the creation of growth opportunities. It’s done and dusted, so let’s analyse the budget and stay put for new mid-year announcements, as the Government is known to do so.