From tax slab to healthcare sector: What are the expectations from India’s union budget 2022

*Paromita Das

The Budget session of Parliament was set to kick off on Monday, January 31, 2022, with President Ram Nath Kovind address to both the houses

The session is divided into two parts, the first of which will end on February 11, 2022. Part two of the session would begin on March 14, 2022, and end on April 8, 2022, following a month-long recess.

Finance Minister Nirmala Sitharaman is slated to present her fourth Union Budget on February 1, 2022, amid fears about the impact of the Omicron strain of the coronavirus (Covid-19) on India’s GDP development.

Personal taxation is one of the most eagerly anticipated announcements in the annual union budget. Every budget includes a reassessment of income tax rates and slabs. The income tax brackets, on the other hand, have remained unchanged since 2014. Will Sitharaman’s budget on Tuesday tweak the slabs and provide relief to taxpayers?

This year’s budget is also likely to include significant efforts toward simplifying and rationalising the income tax system.

Around 70 exemptions and deductions of various kinds were eliminated in the Budget 2020-21. Remaining exemptions and deductions will be evaluated and rationalised in the future years with a view to further simplifying the tax system and decreasing the tax rate, the finance minister said. The finance minister did not make any significant changes to the income tax rates or slabs in the 2021-22 Budget.

According to the country’s main private-sector healthcare providers, the government should budget for continued tax incentives, upgrades to medical facilities in smaller areas, and work force skilling.

The Covid-19 pandemic has been a difficult moment for everyone, whether individuals, governments, or entire communities around the world. The two previous waves of the epidemic, as well as the current wave, have pushed our frontline personnel and healthcare infrastructure to the test

In the Union Budget 2021, the government correctly prioritised health and well-being as the first of six pillars, and this focus must continue in 2022. To begin, the budget for healthcare infrastructure should be increased diagnosis centres, ventilators, ICUs, critical care facilities, and oxygen plants should all be installed in tier 2-3 cities, Ashutosh Raghuvanshi, MD and CEO of Fortis Healthcare, stated.

Apart from increasing the share of healthcare as a percentage of GDP to at least 2.5 percent in the upcoming budget, Ashok Patel, CEO and Founder of Max Ventilator, India’s leading ventilator manufacturer, said that the government must also build on previous policy incentives such as PLI schemes and dedicated med-tech parks by increasing allocations.

Interaction with industry and global players can assist India’s pharmaceutical sector in transitioning from a generic maker to a world-leading innovator and manufacturer. Apart from it, another important focal area is technology/digital transformation. In fact, it would serve as a foundation for India’s much-anticipated universal healthcare system.

The GST on pharmaceuticals is currently levied in four different ways: 0%, 5%, 12%, and 18%. While some life-saving pharmaceuticals are tax-free, others are taxed at 5%, and the majority are subject to the 12% GST rate. Other demands from the pharmaceutical industry include the extension of a tax break for product development and R&D.

The sector also wants a tax deduction of 150 percept for in-house R&D.

The healthcare industry is expecting from the government to set aside funding for the creation of resources to improve the public’s health monitoring system and to encourage research and development to find products to address health-related challenges.