Budget 2022 Expectations | Date, Multiple Sectors with Varied Expectations

Small & Medium Enterprises (SMEs) are all optimistic about the Union Budget 2022, which is set to be announced on the 1st of February 2022 (Budget 2022 Date India). With just less than two weeks remaining for the budget, MSMEs are now expecting the following reliefs from the Finance Minister’s Union Budget address:

• First, providing incentives to the pandemic-hit MSME sector.
• Introduce measures to improve credit lending for MSMEs.
• The contribution of MSMEs in the international markets is commendable, and hence, the introduction of subsidies in this Union Budget will provide a big push for this sector.
• Quicker approvals and compliance clearances shall improve the 'ease of doing business for the MSMEs.
• Introduction of favorable norms that shall facilitate the business corridor into domestic and international markets for the MSMEs in India.
• MSMEs are also expecting import substitutes and the norms enabling it to promote ‘Make in India’ and self-reliance in domestic manufacturing.
• Businesses are eagerly waiting for a simplified taxation structure and exemption of GST on the expenses during the pandemic.

Experts in the healthcare industry expect reduced GST rates and import duties on medical devices and the spare parts of the medical equipment. As the Healthcare sector in India was the most impacted sector due to COVID-19, this sector is now seeking some relief to recover from the pandemic losses.

• Reducing the GST rate slab from 12% to 5% for the medical devices and the cold medical chain.
• Proper management of Customs Duty and GST slab on all the medical equipment spare parts.
• The medical device research and development centers are anticipating a tax holiday.
• Special budgeting provision for up-skilling of the existing healthcare workers.
• Expanding the bandwidth of the budget health insurance at all levels for all the healthcare workers.
• High custom duties currently on the medical products are defeating the government’s efforts to provide affordable healthcare to the Indian citizens. Hence, the healthcare industry experts expect a proper streamlining of the taxation structure for healthcare products and lower customs duties.
• Customs duty on medical devices to be brought down to 2.5%.
• A higher chunk of the healthcare budget should be allotted to the R&D activities as the lack of incentives in this sector has taken a huge toll on Indian citizens during the pandemic.

India's service sector has been a pivotal contributor to India's GDP by providing employment opportunities. The Indian service sector has accounted for about 54% of the Gross Value Added (GVA) in FY21. India’s IT services sector is expected to grow up to US$ 19.93 billion by FY-2025.

Hence the expectations of this sector cannot be ignored in the Union Budget of 2022-23:

• The Bombay Chamber of Commerce (BCCI) suggested that the 15% concessional tax rate available for the manufacturers should also be extended to the service sector.

The supreme body for the automobile retail industry in India, the Federation of Automobile Dealers Association (FADA), is expecting GST rates cut to revive the pandemic hit automobile industry in India.

Following is a wish-list of the GST on automobile sector of India from the Union Budget of 2022-23:

• Reduction in GST rates for two-wheelers up to 18%. FADA has also pointed out that two-wheelers are used as a reliable mode of transportation by the middle class and not as a luxury.
• Reduction in GST rates for used cars to 5%.
• Re-introduction of the ‘Depreciation Scheme' should be extended for the FY22-23.
• Introduce provisions that allow claiming depreciation of vehicles for individuals paying Income tax.
• Reduction in corporate tax rates to 25% for Limited Liability Partnerships (LLP), proprietary & partnership firms.

The real-estate sector has been stagnant with very little growth since the pandemic. Hence, the real estate industry needs a revival and is optimistic about the union budget. The popular expectation in the sector is about incentivizing the affordable housing sector and the rental housing market to provide support to help the industry stand on its feet firmly.

Following are some of the major expectations that the sector has to undergo a revival:

• Reduction in GST rates of the essential constriction materials.
• Improvements in the interest deduction limits on housing loans are expected to encourage people to buy more.
• There is a popular demand that the Rs. 2 lakh tax rebate on housing loan interest (under Section 24 – IT Act) should be increased at least up to Rs. 5 lakh.
• Government should revise the city-wise pricing parameters of affordable homes to improve the inclusion of a large masses.
• Extension of Rs. 1.5 lakh affordable benefits in housing in the FY22 as well. This shall encourage the buyers to invest more in real estate.
• Government should consider implementing expansionary policy measures to encourage consumer spending and investment in the real-estate sector. For example, first–time home buyers should be given the tax benefits or guidelines for the developers engaged in the affordable housing projects.

The government has recently rolled back the GST rate hike on the textiles thus providing a relief to the textile industry.

However, there are certain challenges that are still evident in front of the textile manufacturers. Following are some of the items from the wish-list of the textile industry to the Union Budget 2022-23:

• The Government should incentivize the investments in the textile sector.
• The prices of cotton are still high due to large exports. Hence, the government should consider levying export duty on the export cotton to keep the cotton prices stable in India.
• Simplify the Customs Administration of Rules of Origin under Trade Agreements (CAROTAR 2020) to enable easy clearance of import goods from the FTA countries.

Read related article:

Impact of GST on textile sector

Union Budget of 2022-23 is awaited, and all the major sectors in the nation are optimistic about it. After two years of pandemic and spiralling inflation, now is the time to provide relief to these sectors and revive the economy overall.

GSTHero will present all the Budget 2022 highlights post the budget date and time, to help businesses plan their financial year in terms of GST return filing.

Keep tuned in with GSTHero for the further Budget 2022 news.

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