Page 3 - Union Budget, 2022

Union Budget, 2022

FOREWORD

Budget times are periods of heightened expectations; however, such suppositions are, at times, unlikely to turn into reality. Last time
around it was the COVID-19 cess, which did not see the light of the day. This time around, it was the turn of the expectations on

standard deduction limits. Taxation of cryptocurrencies attracted all the attention. Though clarity on taxing of crypto assets was
expected, the taxation at 30% wasn’t. Though a muted budget in terms of number of new schemes launched or number of new
amendments, it outlined the intent of stable policy with clear focus on continuing the reforms, instead of launching new schemes.
With State elections in 2 highly critical states around the corner, Budget was a perfect stage for an election campaign but the
Government of the day deserves to be credited for the discipline in controlling the urge to announce frenzy sops in such a scenario.

On the direct tax amendment front, the Government has continued to maintain a consistent policy which augurs well in providing
confidence to investors, especially foreign investors. Though, the number of sections that have been amended through the Finance
Bill is 82, most of them are either clarificatory or consequential in nature. Though omission of Sec 144(B)(9) would have raised lot
of eyeballs, the Government’s intent seems to avoid the assessment procedure being adjudged null and void due to procedural lapses

and the general consensus is that the principle of natural justice would still prevail. The efforts on the litigation management and the
nudge to voluntary compliance are steps in the right direction but would require certain refinements to realise the full benefit.

The amendment on taxation of digital assets signals the Government’s intent of treating investments in virtual currencies at par with
gambling and winning from lotteries and other highly speculative income. Though, NFTs have been covered as part of the digital
assets, it has not been defined and the Board has been given the power to list exceptions which shall not fall within the ambit of this
new section. There are bound to be multiple iterations in this taxation mechanism since the sector itself is in nascent stage. Though
at present the digital assets, based on block chain technology, is not well regulated, the Government has signalled willingness to adopt
the technology in coming out with its own digital currency, which is to be appreciated wholeheartedly. The Government continued
its efforts to attract India based business to GIFT City by providing fresh exemptions to non-residents, receiving passive income

such as royalty, lease rent, etc. from the units in GIFT City.

Holistically, it has been a consistent budget in line with the earlier approach, along with the clear policy predictability. We are happy
to inform that our Managing Partner Sundara Rajan TK has written an editorial on the macro-economic aspects of the Budget, Najeeb
Baig, CEO, Aatma Capital has provided his view on the budget impact on the real estate and banking sector and continuing with last
year’s feature, we have included a section on GST compiled by CA.Vignesh Narayanan, Partner, VGJ & Co., which provides the
important updates in GST over the last year. We would also express our sincere gratitude to CA Gracelin Lita, who along with the
research team, has compiled this publication in record time.

As always, we would love to hear your feedback, please free to write to me at divakar@dvsca.com.

Divakar Vijayasarathy

Founder and Group Chairman
DVS Advisory Group

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