Salient points of the. Union Financial. Budget Contents. Foreword. 2 Fiscal and economic review. 3 Key policy announcements

Transcription

1 Salient points of the Union Financial Budget Contents 1 Foreword 2 Fiscal and economic review 3 Key policy announcements Direct tax proposals Indirect tax proposals Contact us

2 Foreword With India all set to tread a high growth path with Make in India, Budget 2017 rightly focuses on initiatives around transforming, energizing and cleaning India. The budget has spearheaded three major reforms: First, presentation of budget advanced to 1 st February to enable the Ministries to operationalize all activities from the commencement of financial year, Second, merger of the Railways budget with General budget to bring railways to the centre stage of Government s fiscal policy, and Third, removal of plan and non-plan classification of expenditure to facilitate a holistic view of allocations for sectors and ministries. Government spending on key areas of infrastructure, housing and social schemes would continue to boost the economy with fiscal prudence remaining the corner stone for management of all its finances. Foreign investment inflows are likely to improve with the Foreign Investment Promotion Board ( FIPB ) to be abolished, a legacy of the license raj. The budget reaffirms the Government s commitment to tax reforms with certainty on implementation of Goods and Service Tax ( GST ) and no major announcement on excise and service tax. Gopal Mitruka Director

3 Fiscal and economic review GDP and key fiscal indicators Gross Domestic Product ( GDP ) growth rate is expectedto rebound to 6.75% - 7.5% in from a dip to 6.5% in current financial year. Gross fiscal deficit is expected to reduce to 3.2% of the GDP in the next financial year from an estimated 3.5% for Revenue deficit is expected to reduce to 1.9% of GDP in next fiscal year from an estimated 2.1% for % 8.00% 6.00% 4.00% 2.00% 0.00% GDP 7.60% % 6.50% (E) Other Key Economic Indicator Current Account Deficit declined from 1% of GDP in to 0.3% of GDP in the first half of Foreign Exchange Reserves is at USD 361 Billion covering twelve months of import Foreign Direct Investment ( FDI ) increased by 36% in first half of CPI Inflation declined from 6% in July 2016 to 3.4% in December % Fiscal Deficit and Revenue Deficit as % of GDP 3.90% 4.00% 3.50% 2.80% 2.00% 2.10% 1.90% 1.00% 3.00% 0.00% 3.20% (E) Gross Fiscal Deficit Revenue Defict

4 Key policy announcements Financial Sector Digital Economy Foreign Investment Promotion Board ( FIPB ) to be Government to launch two new schemes to promote BHIM abolished with further liberalization of FDI policy under consideration app, including cashback scheme for merchants Andhra Pay, a merchant version of Andhra enabled payment Expert committee to study and promote creation of operational and legal framework to integrate spot and system to be launched for people who don t have mobile phones derivative markets for commodities trading Payment regulatory board at RBI to be set up in accordance Insolvency and bankruptcy code and resolution mechanism with recommendations of committee on digital payments. for financial firms to be introduced for stability and resilience of financial systems. Financial inclusion fund to be strengthened to implement digital payment initiatives Computer emergency response team to be set up for financial sector Listing of Public Sector Enterprises ( PSEs ) to foster greater Public Services public accountability with revised mechanism for timebound listing of central PSEs and Railway PSEs like IRCTC, Centralized Defense pension distribution system to be Head post-office to be used for passport services IRFC and IRCON established Integrated public sector oil major to be created All Government recruitment through a two-tier exam Pradhan Mantri Mudra Yojana s lending target at Rs system lakh crore. Government would introduce laws to confiscate assets of Draft bill to curtail menace of illicit deposit scheme to be economic defaulters placed in public domain soon

5 Key policy announcements Infrastructure Rural Population Total capex and development expenditure of Railways pegged at Rs trillion Railways: Passenger safety Safety fund corpus set up, unmanned level crossings to be eliminated by year 2020 Railway lines of 3,500 km to be commissioned Launch dedicated tourism/pilgrimage trains 500 stations to be made differently-abled friendly Cleanliness in railways: To introduce Coach MITRE facility by 2019, bio-toilets for all coaches Railways to offer competitive ticket-booking facility; service charge withdrawn for tickets booked on IRCTC New metro rail policy to be announced Roads sector: Allocation for national highways at Rs. 64,000 crore Airports Authority of India Act to be amended to enable monetization of land resources Telecom sector: Allocation to Bharat Net programme at Rs. 10,000 crore To make India global hub for electronics manufacturing Export infra: New restructured central scheme to be launched Mission Antyodaya to bring 1 crore households of poverty MGNREGA: Rs. 48,000 crore has been allocated; participation of women now at 55%; using space technology in a big way Prime Minister Gram Sadak Yojana: Rs. 19,000 crore allocated; along with states, Rs. 27,000 crore will be spent in FY 18 Pradhan Mantri Awas Yojana: Rs. 23,000 crore allocated 100% village electrification by May 2018 Rural livelihood mission: Rs. 4,500 crore allocated Mason training to be provided for 5 lakh people Panchayat Raj: Human resource reform programme to be launched Rs. 1,87,223 crore allocated for rural programmes

6 Key policy announcements Farmers Farmer credit fixed at record level of Rs. 10 lakh crore, adequate flow to underserved areas will be ensured Government to set up mini-labs in Krishi Vigyan Kendras Long-term irrigation fund in Nabard corpus at Rs. 40,000 crore Dairy processing infra fund with corpus of Rs. 8,000 crore Dedicated micro-irrigation fund with Rs. 5,000 crore corpus Poor and Unprivileged Women: Mahila Shakti Kendras with Rs. 5,00 crore corpus Stepped up allocation to Rs lakh crore for various schemesfor women and children Affordable housing to be given infrastructure status Two new AIIMS in Jharkhand and Gujarat New rules to be introduced for medical devices Legislative reforms to simplify and amalgamate existing labour laws Senior citizens: Aadhaar-based smart cards with health details to be provided Youth Education: System of measuring annual learning outcomes, emphasis on science Innovation fund for secondary education Reforms in UGC: Colleges to be identified based on ranking and givenmore autonomy Propose to leverage information technology with launch of SWAYAM platform for virtual learning Nationaltesting agency to be established for all entrance exams, freeing up CBSE, AICTE and other bodies 100 Indian international skill centres to be established with courses in foreign languages Rs. 4,000 crore allocated to launch skill acquisition and knowledge awareness Special scheme for creating employment in leather/footwear sector Tourism: Five special zones to be set up

7 Direct tax proposals MAT credit to be carried forward to 15 years from 10 years Income tax rate for companies with annual turnover upto INR 50 crore to be reduced to 25% Foreign Portfolio Investor ( FPI ) Category I & II exempted from indirect transfer provision Indirect transfer provision shall not apply in case of redemption Presumptive income subject to tax for businesseswith of shares or interests outside India as a result of or arising out turnover upto Rs. 2 crore would be reduced from the present 8% rate to 6%, in respect of turnover which is by non-cash means of redemption or sale of investment in India which is chargeable to tax in India Scope of domestic transfer pricing restricted to only if one of Advance tax to be paid in one installment instead to four for the entities involved in related party transaction enjoys presumptive taxation of professionals with receipt upto Rs. 50 lakh specified profit-linked deduction Simple one-page form to be filed as Income Tax Return for the Threshold for auditof books for presumptive income scheme to be increased to Rs. 2 crore from present 1 crore category of individuals having taxable income upto Rs. 5 lakh other than business income Threshold for maintenance of books for individuals and HUF Time period for revising a tax return is being reduced to 12 increased from turnover of Rs. 10 lakh to Rs. 25 lakh or income months from completion of financial year, at par with the time from Rs. 1.2 lakh to Rs. 2.5 lakh period for filing of return No cash transaction above Rs. 3 lakh to be permitted subject Timefor completion of scrutiny assessmentsto be reduced to certain exceptions from 21 months to 18 months for AY and further to 12 3 year period for long-term capital gains tax on immovable months for AY and thereafter property reduced to 2 years, base year indexation shifted from to

8 Direct tax proposals Concessional withholding tax of 5% on interest earned on external commercial borrowings by foreign entities to be extended to June Benefit also extended to Rupee Denominated (Masala) Bonds. Condition of continuous holding of 51% of voting rights for carry forward of losses for start-ups relaxed, subject to the condition that the holding of the original promoter/promoters continues. Profit (linked deduction) exemption availableto the start-ups for 3 years out of 5 years is changed to 3 years out of 7 years Allowable provision for Non-Performing Asset of Banks increased from 7.5% to 8.5%. Interest taxable on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also to be treated at par with scheduled banks Personal Tax Existing rate of taxation for individual assesses between income of Rs. 2.5 lakh to 5 lakh reduced to 5% from the present rate of 10% Surcharge of 10% for those whose annual income is Rs. 50 lakh to 1 crore. Commission payable to individual insurance agents exempt from the requirement of TDS subject to their filing a self-declaration that their income is below taxable limit Surcharge of 10% on income of Rs. 50 Lakhs to 1 crore. 5% tax reduction for income up to Rs. 5 Lakhs

9 Indirect tax proposals The Goods and Service Tax ( GST ) Council has finalized its recommendations on almost all the issues Preparation of IT system for GST on schedule Extensive reach-out efforts to trade and industry for GST would start from 1st April, 2017 to make them aware of the new taxation system. Basic customs duty on LNG to be reduced from 5% to 2.5% Miniaturized POS card reader for m-pos, micro ATM standards version 1.5.1, Finger Print Readers / Scanners and Iris Scanners and on their parts and components for manufacture of such devices to be exempt from BCD, Excise / CVD and SAD GST Rollout as per schedule Digitization manufacturing tax exemptions LNG custom duty reduction

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