INTRODUCTION
Many sectors and ordinary people are hopeful about the Union Budget 2022-23, which will be announced by the Union Minister of Finance Nirmala Sitharaman on February 1, 2022. The government's main focus in the previous budget was on health and rural infrastructure development. The administration is expected to make several significant announcements this year to develop the economy and empower the general public. However, the Omicron form of COVID-19 has sparked alarm in the wake of the economy's revival.
GST Reduction from 18% to 5%
Protecting one's health comes first in the hierarchy of necessities, and with the coming pandemic, health insurance is more important than ever. Health insurance is a necessary item that should be included in the 5% GST tax bracket to make quality healthcare more affordable. A considerable drop in the GST on all personal lines of products from 18% to 5% will encourage more people to purchase health insurance. It should be exempted for senior citizens.
Increasing the limit for Health Insurance under Section 80D
The increase in the tax deduction limit under Section 80D of the Internal Revenue Code may aid in the spread of health insurance even more. Individuals can deduct up to Rs 25,000 for themselves and their families under Section 80D. This threshold should be raised to Rs 1,50,000. Medical prices are rising, and the incidence of critical illnesses is increasing, making it an unaffordable burden for middle- and lower-income people. As a result, there is a pressing need for a bigger tax deduction maximum for health insurance policies.
Small ticket insurance products
Small ticket size insurance goods such as micro-insurance, sachet products, and other similar products can be exempted from GST due to the under-penetration of insurance in India and the desire to bring a wider range of people inside the safety net. This will give these products a boost by making them more accessible, allowing the general public to be exposed to low-cost insurance products and better appreciate their worth.
EdTech start-ups
The outbreak has aided the development of educational technology start-ups as well as investors. There has been significant growth in the usage of online courses, language apps, e-learning software, and video conferencing technology since the coronavirus pandemic. Although educational technology has been gaining popularity and seeing substantial growth in recent years, the crisis has brought the industry into the limelight. EdTech firms, which are forerunners in sharing skills and conceptual knowledge, require financial support from the government budget in the form of longer-term tax exemptions and financial support to succeed in the market. Furthermore, the government could announce programmes to improve Internet connectivity infrastructure across the country, ensuring last-mile connectivity, inexpensive 5G devices, and, most crucially, assisting e-learning players with a solid e-learning infrastructure.
Regulatory and tax changes for IFSCs
IFSC - GIFT City is gaining traction, with a variety of stakeholders exhibiting keen interest. However, uncertainty and short-sightedness of long-term advantages limit growth potential. The following regulatory framework and tax-related improvements are planned to make GIFT City a more appealing proposition:
Negotiating passport rights with overseas jurisdictions for India-domiciled IFSC Investment Funds to boost their marketability and investment appeal to a worldwide investor base.
Increasing the income-tax deduction benefit's longevity, complete exemption from Minimum Alternate Tax (MAT) liability, immediate commitment of a stable and predictable tax regime to investors, removing the applicability of domestic transfer pricing requirements and GAAR to transactions with IFSC units, incentivizing companies/individuals through fiscal incentives for enabling smooth movement of skilled personnel to IFSC – GIFT City, and so on.
Relaxation of the digital tax/withholding tax on financial services transactions/security transactions
Digital app lending, forecasting default trends, preventing security breaches in work-from-home, and common data sharing amongst financial institutions are all examples of areas where major investment/spending on digital up-gradation/innovation is required.
Existing equalisation levy (sometimes known as "digital tax") regulations expose transactions with any online component to the risk of an equalisation levy being imposed on foreign firms. This puts a stumbling hurdle in the way of global enterprises supporting and passing on their knowledge to Indian firms.
As a result, some relaxations/clarifications are likely to be made to make the provisions watertight and clear, ensuring that unwarranted financial services transactions involving a digital element are not caught within the equalisation levy's scope, especially given that OCED's Pillar One also proposes to keep regulated financial services out of scope.
Regulatory and tax framework for cryptocurrencies
Cryptocurrencies are gaining traction in most financial services companies' boardrooms at breakneck speed. Despite the lack of certainty on its legality and/or acceptability, cryptocurrency investments surged from around US$ 923 million in April 2020 to a stunning US$ 6.6 billion in May 2021.
Currently, there are several difficulties regarding whether the investment needs to be revealed and offered to tax in India by a taxpayer, pending any rules and the absence of any specific provisions in Indian tax laws dealing with the taxability of cryptocurrencies. It is necessary to specify the process for calculating fair market value, costs, taxable income, reporting requirements, and so on.
It is possible that a special regulatory and taxation regime for cryptocurrencies and central bank digital currencies would be implemented to cover numerous aspects.
MY OPINION
In my point of view, the reduction in GST and tax under Section 80D should be reduced so that people buy more health insurance, it will also be helpful to them only as they will have less burden in case of emergency. As in this pandemic period, technology has been used to provide education either through video conferencing or there are even sites that are providing education, so either the tax exemption should be given and with that good infrastructure should be provided. As we all know from last one year in India, cryptocurrency was in very much talk and it’s gaining popularity very much, so if possible a special regulatory and taxation regime for cryptocurrencies and central bank digital currencies would be implemented to cover numerous aspects.
REFERENCES
https://www2.deloitte.com/in/en/pages/tax/articles/budget-expectations-2022-financial-services.html