Highlights of the Union Budget Speech of Hon’ble Finance Minister-Sh. Arun Jaitley (29th Feb, 2016)
— Health Insurance Scheme being announced to benefit at least 1/3rd of Indian Population
— Significant changes expected in the FDI policy
— Following are the 9 pillars of this Budget:
- Agriculture and farmer’s welfare.
- Rural employment and infrastructure
— Digital Literacy mission scheme to cover over 6 crore households
— Revamp of National Land records programme and to be implemented as a Central scheme under Digital India Campaign
- Social sector
— Measures to make available supply of cooking gas to all households
— New Health Protection Scheme upto Rs. 1 Lacs per family
— PM Jan Aushadhi Yojna for affordable medicines. 3000 drug stores to be opened for medicines.
— Entrepreneurship to be encouraged amongst SC/ST
— Aim for 100 % village electrification by 1st May, 2018
— National Pension Scheme: Upto 40 % withdrawal from the Corpus will be tax free at the time of retirement
- Educational, skills and job creation
— Digital depository for degrees, certificates
— 1500 multi skill training institutes to be set up
— National Board for Skill Development to be set up
— Entrepreneurship trainings to be provided through open online courses
— Job creation by extending companies tax relief for hiring unemployed with salaries below Rs25, 000 should give some boost to job creation
— Model Shops and Establishments bill to be circulated which may be adopted by States on a voluntary basis…..Mom and Pop shops should be allowed to remain open for all 7 days just like Malls.
— Govt. will pay EPF contribution of 8.33% for all new employees for 1st three years
- Infrastructure
— Road transport in passenger segment to be opened up to private sector
— Public utility resolution disputes bill to be introduced to resolve disputes in construction contracts
— 100 % FDI through FIPB route in the marketing of food produced, procured and manufactured in India
- Financial Structure reforms
— Comprehensive code of resolution of financial firms to deal bankruptcy of banks/insurance companies
Including the Insolvency and Bankruptcy law
— Financial data management centre to be set-up for integrated data mining and analysis
— New derivative products to be developed by SEBI in the Commodities market
— SEBI to have more benches of Securities Appellate Tribunal to deal with illicit deposit schemes
— Recapitalisation of Public Sector Banks
— Process for Debt Recovery Tribunal to be strengthened for faster disposal of cases
- Governance and Ease of doing business
— Aadhar number to be used for targeting beneficiaries. Bill to be introduced for the same. Social security platform to be introduced.
— Bill to amend Companies Act, 2013 to be introduced in the Budget session of Parliament
- Fiscal discipline
— The difference between Planned and Non Planned Expenditure to be removed from FY 17-18; Instead every scheme to have outcomes and review mechanism
- Tax reforms to reduce compliance procedures
— Relief to small tax payer
— No change in tax slab
— Ceiling of tax rebate u/s 87A (for assesses whose taxable income is less than Rs. 5 Lacs) – Rs. 2,000 to Rs. 5,000
— Increase the limit of rent paid u/s 80GG (who is not entitled to HRA) from Rs. 24,000 pa to Rs. 60,000 pa
— For non-professionals i.e. traders etc.: Increase the turnover limit to Rs. 2 crores from Rs. 1 crores under Section 44AD i.e. no audit required and tax is payable on presumptive income of 8 %
— For professionals: Presumptive income tax scheme under Section 44Ad to all professionals for turnover up to Rs. 50 Lacs with presumptive income of 50 % of gross revenue (optional for the assessee)
— Benefit of deduction of research to be limited to 150 % in FY 16-17 and 100 % in FY 17-18
— Sunset clause for SEZs: Benefits under Section 10AA to new SEZ entities to be available for entities who commencement of production before 31st Mar, 2020
— New manufacturing Companies incorporated on or after 1st Apr, 2016 to be taxed at 25 % for 3 years out the first 5 years provided they do not take any investment allowance.
— Turnover not exceeding Rs. 5 crores for FY ending 15-16- Tax @29 % plus surcharge plus cess from FY 16-17
— NBFCs to get deduction of 5 % for bad and doubtful debts
— GAAR to be implemented from 1st Apr, 2017
— Services provided by EPFO exempted from service tax
— Krishi Kalyan Cess of 0.5% on all taxable services from 1st June 2016
— Pension society
— Affordable housing
— Additional interest benefit of Rs. 50,000 pa for loans up to 35 Lacs where house value does not exceed 50 Lacs
— Service tax exempted for housing construction of houses less than 60 square metre
— Reducing litigation
— Tax @ 10 % on dividend > 10 Lacs p.a. on the recipients of Dividend. This is over and above the Dividend Distribution Tax deposited by Companies.
— Surcharge increased from 12 % to 15 % on income exceeding Rs. 1 crores pa
— Securities Transaction Tax (STT) increased from 0.017% to 0.05 % on options
— Holding period for determining Long Term capital gain on transfer of shares of unlisted companies reduced from 3 years to 2 years
— Excise duty @ 1 % (without input tax credit) or 12.5 % with input tax credit on branded jewellery (excluding silver jewellery and excluding diamond studded jewellery)
— Voluntary disclosure scheme for old undisclosed income – Tax @ 45 % including surcharge from 1st June, 2016 to 31st Dec, 2016
— Income Tax Disputes: Process to be made simpler
— Penalty: Under reporting on income: 50 %; Misreporting: 200 % (Current penalty as discretion of the Assessing Officer 100-300 %)
— 11 new benches being created of CESTAT; Limit of single member bench to be increased from Rs. 15 Lacs to Rs. 50 Lacs
— Simplification
— Higher rate will not apply to non-residents without PAN upon submission of alternate documents
— Technology
— e-Assessments for all assesses in 7 mega cities soon
— No face to face contact with the IT department soon
— Govt. will pay interest @ 9 % (instead of 6 %) in delay beyond 90 days for refunds
Other announcements
— Forex reserves are at highest levels at USD 350 billion
— CPI inflation down to 5.4 %
— GDP growth has accelerated to 7.6 %
— No mention of GST.