Budget 2022


The banking sector has shown signs of recovery. Bank credits have increased from 6 percent in 2020-21 to 7.3 percent in 2021-22, though bank deposits have reduced from 11.3 percent in 2020-21 to 9.6 percent in 2021-22.

In the post-COVID-19 phase, the focus of the banking industry is on innovation, in rendering banking services with the help of technology and digital transformation. Thus, the Budget could introduce policy initiatives to give impetus to innovations in the banking sector, by offering incentives such as reimbursement of certain costs or tax subsidy in the form of weighted deductions/100 percent depreciation, etc.

India has set goals to reduce carbon emission in its fight against Climate Change, and Environmental, Social, and Governance (ESG) measures will be undertaken by financial institutions. Thus, laying out uniform measurement standards, capital requirements for the risk arising from Climate Change, and incentivizing entities adhering to ESG programs will be required. Expenses incurred towards ESG projects, including the capital, maybe allowed as a deduction, and be not considered as corporate social responsibility (CSR) expenses for tax purposes.

certainties on tax (income tax and indirect tax) and regulations on cryptocurrencies may be spelled out. The impact and operation of a Central Bank Digital Currency on the economy is unclear for individuals and corporates, and budgetary allocation for more literacy programmes to build awareness on its benefits can be considered.

The government may consider constituting a dedicated fund to strengthen the digital infrastructure of cooperative banks which will offer a big boost to a more inclusive financial system. Budgetary concessions, such as a GST waiver for digital transactions along with incentivisation, especially in semi-urban and rural India, will further augment cashless payments.


The pandemic has significantly increased the potential for health and life insurance penetration. While life insurance penetration has increased from 2.8 per cent in FY20 to 3.2 percent in FY21, and non-life insurance has increased to 1 percent in FY21 from 0.94 percent in FY20, it still remains under-penetrated. The percentage increase of linked life insurance premium is 168.3 percent while non-linked life insurance premium is 0.4 percent in FY 2021-22, which may show that life insurance is being viewed as a saving and investment product rather than a protection product.

It requires a combined effort by industry, regulators, and the government to increase awareness about insurance benefits. Insurtech companies may be encouraged for technological innovations.

The insurers have restrictions for investment in capital markets and overseas securities due to which, it may lose the competition with mutual funds when it comes to investment returns. Thus, in the upcoming Budget, policy initiatives may be laid down to relax investment norms and thereby, enable insurance companies to generate better returns for policyholders.

Certain tax incentives may be introduced to increase insurance penetration, such as (i) to provide separate deduction of Rs 30,000 for first-time life insurance buyers, (ii) exemption from GST may be granted for senior citizens buying non-life insurance products, and (iii) lowering of GST rate from the current 18 percent on term policies.

The Budget can encourage service providers ways to deepen insurance penetration in uninsured rural areas, and among the urban poor. Alternatively, insurance companies may be granted special tax deductions for premiums earned from businesses in rural areas.

Asset Management

The asset under management (AUM) of the mutual fund (MF) industry has grown from Rs 6.82 trillion as of November 30, 2011, to Rs 37.73 trillion as of December 31, 2021 — that’s more than a six-fold increase in a decade. The total number of folios as of December 31, 2021, stood at 120.2 million. However, there is still huge growth potential for this sector, which may be achieved by some policy initiatives, such as (i) providing incentives for setting up local presence in tier two cities and beyond, (ii) providing additional tax benefits for investment in certain specified schemes, and (iii) provide incentives to asset management companies for use of technology and digital transformation.

The financial services sector is the pillar of the economy. Such policy measures will go a long way to boost and strengthen this sector while also paving the way for financial inclusion and digitalisation of the financial services as envisioned by the government.

Better Health infrastructure

In the earlier budget Minister Nirmala Sitharaman announced an increase in the allocation for health by 137 percent to Rs. 2.23 lakh crore (Rs. 2,23,846 crore) from the previous year’s budget estimate of over Rs. 94,000 crores (Rs. 94,452 crores) and by 118 percent from the previous year’s revised budget of over Rs. 1.02 lakh crore (Rs. 1,02,873 crore). Now common man expects better hospitals nationwide so that the common man doesn’t need to run to the private hospital for basic health care. 

Boost to employment

In the previous few days we are regularly observing agitation on employment issues, now we expect the government to provide a helping hand to stress sectors such as Automobiles and real states, so more jobs can be created in the market. 

Benefits in Income tax slab rate

Salaried class has huge expectation from this budget to scale up their net income that is income after tax and how this will get done this can be done to giving a direct relief on income up to 5 lac, that is no tax up to 5 lac and further rate reduction on further income along with surcharge reduction. 

Increase the limit of section 80C and other similar deductions

It is expected for many years that the limit of these sections should be increased from 1.5 lac to 3.0 lac it will be a great help in increase of saving in the hand of many Indians. Report this ad 5. Increase in the limit of Section 80D:- Due to the increase in health expenditure many people are now taking health insurance and there is a significant increase in people’s awareness and now many people are taking medical insurance. To increase it further, the government needs to double the limit from 25,000 to 50,000.

Cryptocurrency taxation:

The government has shown a positive intent towards taxation on crypto. It is expected that the government will at least bring clarity on cryptocurrency taxation. There are various ambiguities and concerns about the classification of crypto, applicable tax rates, TDS/TCS and GST implications on cryptocurrency transactions, etc. 

Work from home allowance deduction:

In Budget 2022, we may expect tax-free work from home allowances for salaried employees. Allowing tax exemptions for such expenses will raise employees’ in-hand salaries, increasing the demand for goods and services in the country.

e-Invoicing applicability limit may be reduced under GST:

e-Invoicing threshold turnover limit could be reduced to apply above Rs.25 crore instead of the current limit of Rs.50 crore. Such a move will not only help the newly onboarded small or medium sized businesses but also allow large enterprises who enter into business with them.  They can seamlessly claim accurate and genuine Input Tax Credit (ITC) as all B2B invoices will be uploaded to GSTN via the IRP on time. 

Introduction of a reverse charge mechanism for pushing GST compliance:

Large taxpayers with turnover exceeding Rs.100 crore or Rs.500 crore may be allowed to pay GST directly to the government instead of their small vendors, with turnover less than Rs.5 crore. It improves the overall GST compliance, boosts revenue collection, and ultimately expands the taxpayer base. For small businesses, the tax compliance burden reduces with the frequency of tax payment, if any, moving to quarterly or half-yearly. On the other hand, large enterprises need not deal with non-compliant vendors, reducing their administrative burden and allowing smoother ITC claims.

Revision of annual GST returns:

The government must consider introducing a revised annual return system or form. Taxpayers must be able to correct any mistakes while filing the GSTR-9 return, including the Business-to-Business (B2B) transactions. Such a decision could save all the taxpayers from unnecessary issues such as missed ITC claims due to vendor delays, uploading any unreported sales invoices, avoiding interest levies and clerical errors.