Finance Minister Arun Jaitley on Saturday proposed no changes in personal income-tax rates for 2015-16 but extended benefits to middle-class by increasing the limit of deduction on health insurance premium from Rs 15,000 to Rs 20,000, while presenting the Budget 20105-16.
For senior citizens, it will go up from Rs 20,000 to Rs 30,000 and for those above 80 years, not covered by health insurance, deduction of Rs 30,000 towards expenditure on medical treatment will be allowed. Combining these incentives with others including an enhanced deduction of Rs 1.5 lakh on account of contribution to pension fund as against Rs 1 lakh now, the relief of tax deductions under various sections, including 80C and 80CCD, go up to Rs 4.42 lakh.
The transport allowance exemption has been doubled to Rs 1,600. In the first full-year Budget of the NDA government that shunned populism, he announced a 5 percent reduction in corporate tax over next four years, abolished wealth tax and replaced it with an additional 2 percent surcharge on super-rich individuals, while increasing service tax that will result in higher cost of variety of services.
Highlights of Union Budget 2015-16
DIRECT TAX
* Aim direct tax regime that is globally competitive
* Aim at stable tax policy
* To avoid retrospective tax provisions
* Tax policy to curb black money, encourage Make in India
* Tax exemption to individuals to continue
* 30% rate of corporate tax makes cos uncompetitive
* Corporate tax rate reduction to include some sop removal
* To reduce corporate tax rate to 25% over next 4 yrs
* Direct tax proposal to lead to loss of 83 bln rupees
* Most Direct Taxes Code proposals already in income tax act
* No merit in proceeding with current Direct Taxes Code
* To include yoga in charitable purposes in income tax act
* Individual tax payer to get benefit up to 444,200 rupee/yr
* Girl child saving plan already eligible for tax deduction
* Interest payment on Sukanya Smriti Plan exempted from tax
* Transport allowance exemption up at 1,600 rupees/mo
* Tax exemption of 50,000 rupee under 80C for pension plan
* 100% tax exemption in CSR activities for Swachh Bharat Kosh
* 100% tax exemption in CSR activities for Clean Ganga Fund
* Tax deduction cap for health insurance up at 25,000 rupee
* To apply some tax administration reform panel steps FY16
* CBDT to clarify on dividend from Indian cos’ foreign arms
* To gain 90 bln rupees from 2% more surcharge on super rich
* 2% surcharge on income over 10 mln rupees
* To replace wealth tax with 2% more surcharge on super rich
* 300% penalty on concealing income
* Black money holders to be imprisoned up to 10 years
* Comprehensive bill this session on curbing black money
* To bring ‘benami’ transaction bill this session
INDIRECT TAX
* To roll out GST on Apr 1, 2016
* Indirect tax proposal to lead to 233.83 bln rupee net gain
* Svc tax exemption to storage facilities of fruit, vegetable
* Service tax exemption on senior citizen insurance plan
* To levy 2% Swacch Bharat cess on all svcs if needed
* Effluent treatment plants to be exempt from svc tax
* Clean energy cess on coal 200 rupee/tn from 100 rupee
* To raise service tax to 14% including education cess
* Excise duty on footwear below 1,000 rupees cut to 6%
* Custom duty on raw materials, intermediaries to be reduced
* Some change in cigarette, other tobacco pdts excise duty
* General rate of educational cess being rounded off to 12.5%
* Petrol, diesel excise duty incidence unchanged
* To cut basic customs duty on all 22 items
* Rich and wealthy must pay more tax
* To cut income tax on royalty fee on tech svc to 10%
* To modify permanent establishment norms for fund managers
* Quoting PAN must for over 100,000 rupee purchase
* Bill to curb domestic black money to be introduced
* Amending definition of crime in anti-money laundering law
* Customs on specified inputs used for endoscope cut to 2.5%
* Special extra duty on naptha for excisable goods cut to 2%
* Effective customs on select goods vehicles raised to 20%
* Effective customs on 10-plus people vehicle raised to 20%
* Basic customs duty on antimony waste cut to 2.5% vs 5.0%
* Basic customs duty on liquefied butane cut to 2.5% vs 5.0%
* Basic customs duty on ulexite ore cut to nil from 2.5%
* Basic customs duty on organic LED TV panel cut to nil
* Tariff rate of customs duty on bituminous coal cut to 10%
* Basic customs duty on CVs hiked to 40% from 10%
* Customs duty on organic LED TV panel scrapped
* Tariff rate of customs on iron, steel, pdts hiked to 15%
* Extended excise sop on e-vehicles till March 2016
* Special additional duty on iron, steel scrap cut to 2%
* Excise duty on ambulance chassis cut to 12.5% vs 24%
* Excise duty on cigarettes of other lengths hiked by 15%
* Customs duty on isoprene, liquefied butane cut to 2.5%
* Excise duty on sub-65 mm cigarettes hiked by 25%
* Excise duty on cut tobacco hiked to 70 rupee/kg vs 60 rupee
* Customs duty on sulphuric acid for fertiliser cut to 5%
* Basic customs duty on metallurgical coke at 5% vs 2.5%
* Basic customs duty on sulphuric acid at 5% vs 7.5%
* Excise duty on ethylene polymer bags hiked to 15%
* Basic customs duty on upgraded Ilmenite cut to 2.5%
* Excise duty on over 1000-rupee leather footwear cut to 6%
* Basic customs duty on metallurgical coal raised to 5%
* Excise on wafer for smart card integrated circuit cut to 6%
* Effective hike in road cess on petrol, diesel 6 rupees/ltr
* Excise duty on LED driver input cut to 6% from 12%
* Net revenue gain 150.68 bln rupees from tax changes
GROWTH, INFLATION
* Our objective is to keep inflation below 6%
* India to take off on faster growth trajectory
* Aiming for double digit growth seems feasible
* CPI inflation seen at 5% FY15 end
* FY18 effective revenue deficit seen 0% of GDP
* FY18 gross tax revenue seen 10.7% of GDP
* FY18 revenue deficit seen at 2.0%
* FY17 effective revenue deficit seen 1.5% of GDP
* FY17 gross tax revenue seen 10.5% of GDP
* FY17 revenue deficit seen at 2.4%
FISCAL HEALTH
* Have concluded monetary policy framework talks with RBI
* Concluded monetary policy framework pact with RBI
* To set up public debt management agency
* FY18 fiscal deficit rolling target 3.0%
* FY17 fiscal deficit rolling target 3.5%
* FY16 fiscal deficit rolling target 3.9%
* Path of fiscal consolidation is on track
* Aim fiscal deficit of 3.0% in next 3 yrs
* To meet fiscal gap aim of 3% of GDP medium term
EXTERNAL SECTOR
* FY15 CAD seen lower than 1.3%
* Foreign inflow since Apr 2014 above $50 bln
* FX reserves of $340 bln a record
* To allow foreign invest in alternative invest funds
* To amend FEMA Section 6 for capital flow clarity, control
* FEMA Act to be amended to tackle undeclared assets abroad
* 7-yr imprisonment for non-filing of return on foreign asset
* Probe into undeclared foreign acct highest priority
FINANCIAL SECTOR, MARKETS
* Aim to fund the unfunded, bank the unbanked
* States to work with NITI Aayog for unified national mkt
* To launch Indian Financial Code “sooner than later”
* SEBI, FMC to be merged
* Autonomous bank board bureau to determine PSU bank heads
* To amend RBI Act this yr for monetary policy committee
* Rupee has become stronger by 6.4% vs basket of currencies
* To move amendment to FRBM in finance bill
* Need to deepen Indian bond market
* Bank farm credit seen 8.5 trln rupee FY16
* Unclaimed EPF deposits 60 bln rupees
* Unclaimed PPF deposits 30 bln rupees
* NBFCs with 5 bln rupees to be institutions under SARFAESI
* To promote cashless transactions to curb black money
* To incentivise credit/debit card transactions
* To disincentivise cash transactions
INFRASTRUCTURE, INDUSTRY
* Aim to make India mfg hub of the world
* To introduce regulatory reform law for infra
* To form panel to make draft law on ease of doing business
* Plan public contract resolution bill
* To set up exclusive commercial divisions in high courts
* Aim sanctioning building 100,000 km of roads
* Allot 250 bln rupees for rural infra via NABARD
* Additional fiscal space to go to infra invest
* Need to up invest in infra via PPP model
* Increasing invest in infra is a challenge
* Mfg has declined from 18% to 17% of GDP
* 100,000 km road under implementation already
* PSU ports to be corporatised under Companies Act
* Need to relook PPP model for infra development
* To allow tax free infra bonds for irrigation projects
* To permit tax-free infra bonds for rail, road projects
* To set up national infra fund
* National infra fund allocation to be 200 bln rupees
* To bring comprehensive bankruptcy code FY16
* 5 new UMPPs to unlock 1 trln rupee investment
* To set up 5 UMPPs in plug, play mode
* 2nd unit of Kudankulam project to be commissioned FY16
* Plan 175,000 MW renewable energy by 2022
* Plan project development co via SPVs for mfg hub in SE Asia
* Contribution to EPF should be optional below certain salary
* Employees may opt for EPF or new pension plan
* To create sector neutral grievance redressal body
* 50 bln rupee extra to natl infra fund FY16 if tax buoyant
* Pursuing Make in India towards making defence equipment
* Manufacturing exports stagnant at 10% of GDP
* 750 mln rupee allocation for electric vehicles
FARM SECTOR
* To create national farm market
* Need to improve farm productivity
* Aim to increase irrigated areas
* Farm incomes under stress
* To allot 346.99 bln rupee for rural job plan
* FY16 farm credit seen 8.5 trln rupees
* To allot 53 bln rupees for micro irrigation plan
* To support organic farming scheme
* Allot 30 bln rupees for PM irrigation plan, if tax buoyant
SOCIAL SECTOR, EDUCATION
* Need to upgrade 80,000 senior secondary schools
* To make use of 154,000 postal offices for Jan Dhan
* Plan universal social security system under Jan Dhan
* At least 1 member of each family to have job by 2022
* To build 20 mln houses in urban, 40 mln in rural India
* Electrification of remaining 20,000 villages by 2020
* Medical facility in each village essential
* All our schemes have to centre around the poor
* Committed to supporting jobs via MNREGA
* To up MNREGA allocation by 50 bln rupee if tax buoyant FY16
* To launch National Skills Mission across 31 sectors
* National Skill Mission to develop youth employability
* To set up IIMs in J&K and Andhra
* To set up IIT in Karnataka
* To set up AIIMs in J&K, Punjab, Tamil Nadu, Himachal, Assam
* To set up IT-based student financial aid authority
* ISM Dhanabad will be upgraded to full IIT
FY16 ESTIMATES
* See FY16 GDP growth at 8.0-8.5%
* FY16 capital expenditure 1.25 trln rupee
* FY16 net resource transfer to states seen 5.25 trln rupee
* 62% of total receipts to go to states FY16
* FY16 invest in infra seen up by 700 bln rupees
* FY16 PSUs’ capex seen 3.18 trln rupees
* FY16 minority affairs allocation 37.38 bln rupees
* FY16 gross budgetary support to railways 100.5 bln rupees
* FY16 outlay on roads 140.3 bln rupees
* Allocated 792.58 bln rupees for women’s schemes for FY16
* FY16 allocation for ST plans 199.8 bln rupees
* Aim FY16 revenue deficit 2.8% of GDP
* Aim FY16 fiscal deficit 3.9% of GDP
* FY16 devolution to states estimated at 5.24 trln rupees
* FY16 non-tax revenues 2.21 trln rupees
* Revenue deficit pegged 2.8% of GDP FY16
* Gross tax receipt 14.49 trln rupee FY16
* FY16 total expenditure 17.77 trln rupees
* Plan spend 4.65 trln rupee FY16
* FY16 non-plan expenditure 13.122 trln rupees
* Defence allocation 2.47 trln rupees FY16
* FY16 women, child allocation 103.51 bln rupees
* FY16 health sector allocation 331.5 bln rupees
* 224 bln rupees for housing, urban development FY16
* To allot 689.68 bln rupee to education sector FY16
* FY16 total capital receipts 802.53 bln rupees
* FY16 income from dividends and profits 1 trln rupees
* FY16 gilt redemption seen 1.44 trln rupees
* Govt’s total revenue receipts seen 11.42 trln rupees FY16
* FY16 total non-tax revenue 2.22 trln rupees
* Govt’s total non-tax revenue seen 2.21 trln rupees FY16
* Govt’s other non-tax revenue seen 944 bln rupees FY16
* FY16 centre’s net tax revenue 9.2 trln rupees
* Govt’s interest receipts seen 236 bln rupees FY16
* Govt’s dividend, profit seen 1 trln rupees FY16
* FY16 service tax receipts seen 2.1 trln rupees
* Centre’s net tax revenue seen 9.2 trln rupees FY16
* FY16 central excise duty receipts seen 2.3 trln rupees
* FY16 states’ shr of taxes seen 5.24 trln rupees
* FY16 customs receipts seen 2.08 trln rupees
* FY16 income tax receipts seen 3.27 trln rupees
* FY16 service tax mop-up seen 2.1 trln rupees
* FY16 net 364-day T-bill borrow seen 81 bln rupees
* FY16 corporation tax receipts seen 4.7 trln rupees
* FY16 net 182-day T-bill borrow seen 40 bln rupees
* FY16 excise mop-up seen 2.30 trln rupees
* FY16 gross tax receipts seen 14.49 trln rupees
* FY16 customs mop-up seen 2.08 trln rupees
* FY16 net 91-day T-bill borrow seen 179 bln rupees
* FY16 income tax mop-up seen 3.27 trln rupees
* FY16 corporate tax mop-up seen 4.7 trln rupees
* FY16 states share of taxes seen 5.24 trln rupees
* FY16 GDP tax ratio 10.3%
* FY16 pension payments seen 885 bln rupees
* FY16 interest payment seen 4.56 trln rupees
* FY16 spectrum, telecom receipts seen 429 bln rupees
* FY16 PSU dividend 362 bln rupees
* FY16 RBI surplus, PSU bank dividend 645 bln rupees
* FY16 effective revenue deficit seen 2.0% of GDP
* FY16 gross tax revenue seen 10.3% of GDP
* FY16 effective revenue deficit 2.84 trln rupees
* FY16 effective revenue deficit 2.0% of GDP
* FY16 revenue deficit 3.94 trln rupees
* FY16 revenue deficit seen at 2.8%
* FY16 securities against small savings 224 bln rupees
* FY16 total subsidy seen 2.44 trln rupees
* FY16 fuel subsidy seen 300 bln rupees
* FY16 food subsidy seen 1.24 trln rupees
* FY16 fertiliser subsidy seen 730 bln rupees
* FY16 MSS provision 200 bln rupees
* FY16 cash drawdown seen 120 bln rupees
* FY16 nominal GDP seen 11.5%
* FY16 divest mop up target 410 bln rupees
* FY16 fiscal deficit seen at 5.56 trln rupees
* FY16 net short-term borrowing pegged 301 bln rupees
* Govt to switch/buyback 500 bln rupee gilt in FY16
* FY16 divest mop-up aim 410 bln rupee
* FY16 gross market borrowing pegged 6 trln rupees
* FY16 net market borrowing pegged 4.56 trln rupees
FY15 REVISED
* FY15 real GDP growth seen at 7.4%
* FY15 fiscal deficit seen at 4.1% of GDP
* FY15 net resource transfer to states seen 3.38 trln rupee
* FY15 disinvestment receipts revised to 264 bln rupees
* FY15 gilt redemption seen 1.39 trln rupees
* FY15 gilts buyback seen 63 bln rupees
* FY15 gilts switch seen 320 bln rupees
* FY15 fiscal deficit seen at 5.13 trln rupees
MISCELLANEOUS
* Inherited sentiment of doom, gloom
* Aim to lay down policy direction
* Govt relentlessly pursuing all-inclusive governance
* Still have old thorns in our garden
* World is predicting India’s chance to fly
* Presenting Budget in far more positive environment
* Laying roadmap to up growth, boost invest
* Credibility of Indian econ re-established
* Have embraced states as equal partners in econ growth
* Have turned around econ, restored stability
* Need quantum, not incremental, econ growth
* Double-digit econ growth seen feasible
* Aim housing for all by 2022
* Aim to build 60 mln toilets
* India set to be world’s fastest growing large economy
* Over 125 mln families brought under Jan Dhan plan
* Promoted non-adversarial tax regime
* India 2nd best performing mkt among developing economies
* Mindful of challenges but still optimistic
* Restored macro economic stability
* Direct benefit transfers to be hiked to 103 mln from 10 mln
* 63.35 bln rupees so far transferred for LPG subsidy
* To significantly up divest target
* Subsidies need to be well targeted
* To divest stake in both sick and profit-making PSUs
* Committed to rationalisation of subsidies
* Jan Dhan, Aadhaar, mobile will aid in targeting benefits
* To be mindful of fiscal discipline
* Aim is senior secondary school within 5 km for every child
* To ensure northeast region at par with rest of India
* All our schemes must focus on removing absolute poverty
* Rural, urban divide not acceptable
* Need to ensure telecom connectivity to all villages
* Must encourage growth in start-ups
* Need to boost entrepreneurship
* To launch self employment scheme with 10 bln rupee corpus
* Atal pension plan launched
* 1.5-bln-rupee allocation for Atal innovation scheme
* New scheme to give physical aid to poor senior citizens
* Set aside 150 bln rupee for short-term RRB fund
* To increase access to formal credit system
* 200 bln rupees for micro units development refinance agency
* To create micro units development refinance agency Mudra
* Plan to introduce public resolution of disputes bill
* Propose law for public procurement
* Up visa on arrivals to citizens of 150 countries vs 43 now
* To work on restoring churches, convents in Goa
* Higher allocation to restore heritage sites
* To allot another 10 bln rupee to Nirbhaya Fund
* Introduce composite caps for foreign investments
* To do away with distinction between FPI, FDI
* Jewellers can obtain loans against metal accounts
* To launch sovereign gold bond with fixed interest rate
* New gold monetisation plan to offer interest on metal accts
* To start work on Indian gold coin
* To give 15 bln rupees for integrated child plan
* Stated policy to avoid surprises in corporate tax policy
* Allot 15 bln rupees for rural youth skill development plan
* Allot 12 bln rupees for Delhi-Mumbai Industrial Corridor
* Propose special assistance to Bihar, Bengal
* To speed up optical fibre cable network of 750,000 villages
* To reimburse states for digital India optic fibre costs
* Making good progress on Digital India programme
* Will not subject capital gains by FIIs to MAT
* Propose subsuming education cess under central excise duty
* GAAR will only apply prospectively after Apr 2017
* Rental income from REITs to have tax pass-through facility
* To allow pass through taxation in alternative invest funds
* To give 500 mln rupee for Renuka dam construction in Delhi
* To set up NRI fund for Ganga river conservation
* 20.37 bln rupee allocation for Clean Ganga plan
Bureau Report
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