The following are the salient highlights of the maiden budget of the Modi government presented by the Union Finance Minister, Shri Arun Jaitley. The Finance Minister mentioned that slow decision making has effected growth and a beginning of a journey of 7-8% growth projected in the coming years. He also emphasised the growth in the manufacturing sector.
1. Advance ruling facility extended to resident tax payers also within defined threshold limit hitherto available only to NRIs and PSUs
2. Government will not change policies retrospectively which will induce liability on the tax payer. ie. no new retrospective tax laws will be introduced. However, no clarity on the pending litigations on earlier introduced retrospective laws.
3. All retro tax cases to be scrutinised by a high level committee of the CBDT.
4. FDI in defence sector increased to 49%
5. Cap on FDI in insurance sector increased from 26% to 49%.
6. FY16 fiscal deficit targeted at 3.6% of the GDP.
7. FY17 fiscal deficit targeted at 3% of the GDP.
8. INR 7,060 crores allocated for housing sector.
9. E-visas to be introduced in nine airports in a phased manner within a year.
10. Government to sell shares in banks to retail investors.
11. Kisan Vikas Patras (KVPs) – a small saving scheme to be reintroduced again.
12. Currency notes in braille to be introduced for the visually impaired.
13. INR 1,000 crores allocation for Prime Minister Krishi Sichayi Yojana
14. Under the sanitation programme, Swachh Bharat Abhiyan, all houses to be provided sanitation by 2014
15. A national multiscale programme called Skill India to be initiated to generate employment.
16. Seven new industrial smart cities to be allocated.
17. INR 7,060 crores allocation to start 100 smart cities.
18. INR 500 crores allocated for rural electrification scheme. Committed to 24/7 power supply for all villages.
19. INR 5,000 crores allocation for SC/ST schemes
20. INR 200 crores allocated for Sardar Patel statue of unity.
21. INR 100 crores allocated for empowerment of girl child, under the Beti padao – Beti badhao scheme.
22. Unified account scheme for portability of provident fund schemes.
23. No cut in NREGA allocation.
24. Twelve more medical colleges to be added.
25. INR 500 crores allocation for 4 more AIIMS like institutes to be set up.
26. INR 500 crores allocated for 5 more IITs and IIMs to be set up.
27. INR 3,600 crores allocated for drinking water schemes.
28. INR 100 crores allocated for metro feasibility study for Lucknow and Ahmadabad.
29. INR 4,000 crores allocated for national housing banks for providing affordable housing to the urban poor including easier FDI in the sector.
30. INR 15 crores for safety of women on roads under the Nirbhaya scheme.
31. INR 100 crores allocated for a new girl child fund to be formed.
32. INR 100 crores allocated for development of madrasas under the minority scheme.
33. The senior citizen pension plan extended till august 2015.
34. Slum development to be included in CSR activities.
35. INR 100 crores for national adaptation fund for climate change
36. Farmers will get additional 3% rebate for timely repayment of the loans apart from the 7% RoI in the form of interest subvention on these loans which is now extended to FY 2014-15.
37. INR 100 crores allocated for agri infrastructure fund.
38. INR 14,389 crores allocated for rural roads.
39. INR 100 crores allocated for rural entrepreneurship programme.
40. INR 500 crores allocated for farm warehousing plan.
41. State governments to be encouraged to set up farmers market.
42. INR 8 lakh crores allocated for farm credit in FY 16.
43. Steps to be initiated to revive SEZs.
44. Mumbai infrastructure corridor to be completed on schedule.
45. INR 200 crores for six more textile clusters.
46. INR 50 crores allocated for the Pashmina development programme.
47. INR 10,000 crores allocation for start-up funds.
48. INR 11,635 crores allocation for development of ports in FY 15.
49. Ultra modern power projects to be initiated in the states of Tamil Nadu, Rajasthan and Ladakh.
50. A new Indian accounting standards for the financial sector to be made voluntarily applicable from FY 15-16 and mandatorily from FY 16-17.
51. INR 3,000 crores allocated for roads in the north east.
52. The gas grid pipeline to be doubled to 30,000 km through the PPP mode.
53. To clarify on tax treatment for foreign funds in India.
54. To introduce a single DMAT account for all financial transactions.
55. The ceiling for investment in pf increased from INR 1 lakh to INR 1.50 lakhs.
56. ADR, GDR schemes to be liberalised.
57. Six debt recovery tribunals to be set up.
58. Pending insurance bill to be taken up.
59. War memorial and war museum to be set up at princess part and INR 100 crores allocated for the same.
60. INR 2.29 lakh crores allocation for the defence sector.
61. Banks can now give long term loans for infrastructure projects.
62. INR 50 crores allocation for national police memorial.
63. INR 2,037 crores allocated for the Ganga mission.
64. INR 500 crores allocated for five tourist circles.
65. INR 3,000 crores allocated for state police modernisation.
66. INR 990 crores allocation for development of border villages.
67. INR 100 crores allocated for river interlinking projects.
68. Agriculture university to be set up in Telangana and Haryana, Rs. 100 crores have been allocated for this purpose
69. Will initiate scheme to provide a soil health card, Rs. 100 crore set aside. Rs. 56 crore for soil testing labs across country
70. INR 5,000 crore to address the need for scientific warehousing
71. Provision have been made by various ministries and departments to help in the development of Andhra Pradesh and Telangana
72. All the Govt departments and ministries will be integrated through E-platform by December 31 this year
73. Rs 100 crore for cleaner thermal power technology
74. Rs 200 crore set aside for upgradation of indoor, outdoor stadiums in Jammu and Kashmir to international standards,
75. A sports university to be set up in Manipur.
76. National sports academy to be setup in different cities.
77. The budget estimates for FY 2014-15 is as follows:
Non plan expenditure: INR 12,19,892 crores
Plan expenditure: INR 5,75,000 crores
Total budget expenditure: INR 17,94,892 crores
Gross tax receipts: INR 2,12,505 crores
State share of above: INR 3,87,266 crores
Central share of tax receipts: INR 9,77,258 crores
Non tax receipts: INR 2,12,505 crores
Capital receipts: INR 73,952 crores
Total receipts: INR 12,63,715 crores
Deficit: INR 5,31,177 crores
Fiscal deficit: 5.67% of GDP
Revenue deficit: 2.90% of GDP
Direct Tax Proposals (Income Tax):
1. No change in tax rates
2. Basic exemption limit increased from INR 2 lakhs to INR 2.50 lakhs
3. Basic exemption limit for senior citizens increased from INR 2.50 lakhs to INR 3 lakhs.
4. No change in surcharge
5. Education cess will continue at 3%.
6. The investment limit u/s 80c increased from INR 1 lakh to INR 1.50 lakhs
7. The deduction for interest on housing loan increased from INR 1.50 lakhs to INR 2 lakhs.
8. The introduction of the above benefits will result in a maximum tax savings of INR 15,450/- for an individual tax payer.
9. Capital gains tax rate increased to 20% for investment in mutual funds.
10. Holding period for computing capital gains tax on sale of mf units increased from 12 months to 36 months.
11. Ten year tax holiday in power sector to continue.
12. If payments are made without deduction of tax at source, 30% of such payments would be disallowed instead of the hitherto 100%.
13. Sixty more Aayakar Sampark Kendras (ASKs) to be set up across the country in FY 2015.
14. Government to review the direct tax code.
15. Income from portfolio investments to be capital gains.
16. Ten year tax holiday extended to units which begin generation, distribution and transmission of power by 31.03.2017.
17. Concessional rate of 15% on foreign dividends without any sunset date to continue.
18. Investment allowance of 15% for manufacturing company which invests more than INR 25 crores in new plant and machinery, benefit to be available for three years upto 31.03.2017.
19. Investment linked deduction extended to two more sectors.
20. Asset fund managers encouraged to set up shop in India, income to be treated as capital gains
21. Income Tax Dept is expected to function not only as an enforcement dept but also as a facilitator
22. The direct tax proposals to result in a net revenue loss of INR 22,200 crores.
Customs Duty Proposals:
1. Customs duty cuts on petrochemicals
2. 3% cess on imported electronic equipments
3. 100% customs duty on telecom products.
4. No customs duty on led panels below 19 inches.
5. Export duty on bauxite increased from 10% to 20%
6. Import duty increased on colas and non alcoholic beverages.
7. The export duty on methyl alcohol reduced to 5%.
Excise Duty Proposals:
1. The excise duty on packaging materials reduced from 10% to 6%
2. The excise duty on food processing machinery reduced from 10% to 6%
3. Excise duty on footwear halved from 12% to 6%.
4. The excise duty on tobacco products and cigarettes increased from 11% to 72%.
5. Aerated drinks and pan masala to cost more.
Service Tax Proposals:
1. No change in basic service tax rates.
2. Negative list items to be reduced.
3. Service tax levied on radio taxies, brought in par with rent-a-car operators.
4. The loading/ unloading/ transportation of cotton exempted.
5. Services of ESIC from 1.4.2012 exempted.
6. The services of micro insurance schemes where sum assured does not exceed INR 50,000 exempted.
7. The indirect tax proposals expected to bring in additional revenue of INR 7,525 crores.
CA Sanjay Thampy
FCA, Grad. CWA, CS, DBM
For Kerala Biz News
About the Author: Sanjay is a Chartered Accountant based in Mumbai and can be reached at email@example.com