New Delhi, February 29 (IANS): Focusing on rural economy and infrastructure with minor rebate for small taxpayers but amnesty for defaulters, Finance Minister Arun Jaitley on Monday unveiled a Rs.19.78 lakh crore ($300 billion) budget for 2016-17, earmarking more money for health, literacy and roads.
The direct impact on taxpayers from the proposals announced during the 100-minute budget speech will be a Rs.3,000 rebate, benefiting 20 million assessees. Those living in rented homes will get a higher exemption of Rs.60,000 now, against Rs.24,000 earlier. But the tax slabs remain unchanged.
At the same time, withdrawal of provident fund and pension upon retirement are partially taxable. Jaitley also announced an amnesty for those with disputed tax claims, with a waiver of penalty on amounts up to Rs.10 lakh. He said 300,000 such cases were pending before appellate authorities, for an amount totalling Rs.5.5 lakh crore.
Similarly he also unveiled a limited tax compliance window from June 1 to September 30 for people to declare their undisclosed incomes, with a tax liability of 45 percent of value, including the surcharge and penalties -- together with immunity from scrutiny, enquiry and prosecution.
His other steps include a pilot project to extend the direct cash benefit transfers, currently in areas like cooking gas to the fertiliser sector, as also Rs.25,000 crore for the recapitalisation of state-run banks that are under financial stress on account of mounting bad loans.
While there were misgivings over money set aside for additional capital for banks, Jaitley told a press conference later that more money will follow as and when warranted. “The budget is not the last word on this,” he said, adding he was also open to consolidation of commercial banks.
On cutting subsidies, he promised a bill soon to use Aadhaar for direct transfer of cash.
Jaitley also said the government will meet its fiscal targets but said that from next year he proposed to do away with the classification of plan and non-plan expenditure -- a move bound to stir up a controversy.
“I have weighed the policy options and decided that prudence lies in adhering to fiscal targets. Consequently, the fiscal deficit in revised estimated 2015-16 and budget estimates 2016-17 have been retained at 3.9 percent and 3.5 percent of GDP, respectively,” he said.
Jaitley also enhanced the total expenditure for this fiscal to Rs.19.78 lakh crore from Rs.17.85 lakh crore in the revised estimates for this fiscal -- a hike of 10.7 percent -- while the plan expenditure component was revised upward by 15.3 percent.
Jaitley, a lawyer by profession, decided to bring his fellow practitioners under the service tax net of 14 percent. He also imposed an across-the-board cess of 0.5 percent on services towards farmer welfare, which will add 50 paise for every Rs.100 one spends on food to mobile bills.
Jaitley said the bulk of his tax plan was in nine categories: Relief to small assessees, boosting growth and employment, incentivising “Make in India”, encouraging pension, promoting affordable housing, pushing rural economy, reducing litigation, taxation simplification and accountability.
Among the various sectors, the allocation for the ministry of agriculture and farmers’ welfare was enhanced by 93 percent to Rs.44,485 crore, for rural development by 10.7 percent at Rs.87,765 crore and for health and family welfare by 13 percent to Rs.39,533 crore.
A major boost was also given to infrastructure including energy with a 11.3 percent hike in the outlay to Rs.246,246 crore, as also for human resource development with allocation up by 7 percent at Rs.72,394 crore.
In a bid to boost entrepreneurship, a lower corporate tax rate has been proposed for small firms with a turnover of below Rs.5 crore, to 29 plus surcharge and cess, and 100 percent deduction of profits for three out of five years for start-ups set up between April 2016 and March 2019.
Similarly to boost “Make in India”, changes were proposed in customs and excise levies on certain inputs to reduce costs and improve competitiveness in sectors such as IT hardware, capital goods, defence, textiles, minerals fuels, chemicals and petrochemicals, and aircraft and ship repair.
Jaitley opened his speech saying while the global economy was in stress, India was still going strong. “The risks of further global slowdown and turbulence are mounting. This complicates the task of economic management for India,” he said.
“We see these challenges as opportunities.”
Budget Higlights
• To reduce multiplicity of taxes and cascading, 13 taxes with collections of less than Rs.50 crore a year abolished
• Income tax department will expand e-sahyog to assist small taxpayers
• Scope of e-assessment to be expanded to seven mega cities to simplify compliance for taxpayers
• Taxation proposals to increase government revenue by Rs.19,610 crore
• Penalty to be 50 percent of tax in income under-reporting cases, 200 percent in misreporting of facts
• Tax arrears can be paid in lieu of interest liabilities in retrospective taxation cases
• Direct Benefit Transfer in fertilisers on pilot basis in few districts
• Limited tax compliance window from June 1 - September 30 for declaring undisclosed income at 45 percent including surcharge and penalties
• Clean energy cess increased from Rs.200/tonne to Rs.400/tonne on coal, lignite and peat
• Moving towards a low tax regime with non-litigious approach
• Committed to provide a stable and predictable taxation regime
• Relief of Rs.3,000 per year to taxpayers with income below Rs.5 Lakh per year to benefit one crore taxpayers
• Surcharge on income tax for incomes exceeding Rs.1 crore per annum raised from 12 percent to 15 percent
• Service tax exempted for general insurance schemes under Niramayi Swasthya Bima Yojana
• Suitable changes to be made in customs and excise duty rates to improve competitiveness and boost Make In India
• Plan, Non-Plan distinction to be removed from 2017-18
• For income below Rs.5 lakh per annum, tax ceiling has been raised from Rs.2,000 to Rs.5,000
• Relief to those in rented houses: Deduction raised from Rs.24,000 to Rs.60,000 under Section 88G
• Corporate income tax: Incentives for new manufacturing companies and relatively small enterprise companies
• Fiscal deficit for 2016-17 targeted at 3.5 percent
• Committed to implementing General Anti-Avoidance Rules (GAAR) from April 1, 2017
• New policy for managing assets of public enterprises
• Comprehensive approach to be adopted for government investment in central public sector enterprises
• Three initiatives for better delivery of public services
• Increased allocation of Rs.1,80,000 crore under PM MUDRA Yojana
• Market Stabilization Fund for Pulses gets Rs.900 crore
• Financial Data Management Centre for integrated data collection and analysis
• RBI Act being amended to provide statutory basis for monetary policy framework
• 100 percent FDI to be allowed through FIPB route in food products produced and marketed in India
• Department of Disinvestment to be renamed Department of Investment and Public Asset Management
• Comprehensive plan being drawn up to be implemented in the next 15-20 years for exploiting nuclear energy
• Government to provide health insurance of up to Rs.1 lakh per family; 300 generic drug stores to be opened under PM Jan Aushadhi Yojana
• Roads and highways allocated Rs.55,000 crore, 50,000 km of state highways to be taken up for upgradaing to national highways
• Stand Up India scheme allocated Rs.500 crore for SCs, STs women entrepreneurs
• Government to incentivise gas production from deep sea and other unutilised deep sources
• Public Utility Resolution of Disputes Bill for resolution of infra sector disputes
• Pradhan Mantri Kaushal Vikas Yojan gets Rs.1,700 crore
• Digital depository for school leaving certificates
• Higher education financing agency to be set up with fund of Rs.1,000 crore
• National Skill Development Mission has imparted training to 76 lakh youth; 1,500 multi-skill training institutes to be set up
• Model Shops and Establishments Bill to be circulated for voluntary adoption by states
• Current account deficit down to $14.4 billion
• Rs.2.87 lakh crore for rural and urban local bodies
• Animal welfare programme, animal health card, e-marketing platform for connecting breeders
• 100 percent village electrification to be achieved by May 1, 2018
• Appreciation for 75 lakh middle class and lower middle class families for willingly giving up LPG Subsidy
• Rs.19,000 crore allotted for PMGSY
• Rs.8.5 lakh crore of agricultural credit targetted in 2015-16; and Rs.9 lakh crore in 2016-17
• Rs.35,984 crore allocated for agriculture in 2016-17
• Five lakh acres to be brought under organic farming over three-year period
• MGNREGA to get Rs.38,500 crore
• Recapitalisation of banks during next fiscal
• Prudent fiscal policy needed, domestic demand should be raised, reforms need to be carried out
• Farm, rural sector, infra and social sector to get more funds
• Need to prioritise expenditure given recommendations of 7th Pay Commission and OROP implementation
• Nine pillars for reforming India, among them agriculture, social sector, education, infra, fiscal discipline, and tax reforms
• Presenting budget when global economy in a serious crisis
• Amidst global headwinds, the Indian economy has held its own
• Converted challenges we inherited into opportunities
• CPI inflation down to 5.4 percent from 9 percent-plus, bringing big relief to the public
• Forex reserves at highest-ever level
