Highlights of the Union Budget 2016 – 2017


These are the major highlights of the Union Budget presented by Finance Minister, Shri Arun Jaitley in Parliament today, for the financial year 2016 – 2017.

General provisions:
1. Foreign Exchange reserve at 350 Bn USD is the highest in 3 years.
2. Plan Expenditure increased instead of the normal practice of reducing it.
3. CPI inflation has come down to 5.4%.
4. Indian GDP has accelerated to 7.6% now.
5. FY 16 Current account deficit at 1.4% of the GDP.
6. Global economy in serious crisis, feels the FM.
7. Expenditure in farm and rural, social and infrastructure sector to be enhanced
8. Bank re-capitalisation to be allowed in these sectors.
9. BPL families will be provided cooking gas facility supported by Union subsidy.
10. Aadhar platform to be given a mandatory status.
11. Rural insurance scheme for farmers planned.
12. Income of farmers to be doubled in 5 years by FY 2022.
13. Rs. 35,984 crores budget allocation for the farmers.
14. Dedication long term irrigation fund to be started by NABARD with an initial corpus of Rs. 20,000 crores.
15. Paragrat Krishi Vikas Yojana to be implemented.
16. 89 irrigation projects to be fast tracked.
17. Fertilizer companies will now market compost also.
18. Allocation of Rs. 17,000 crores for irrigation sector.
19. Govt. to undertake 3 major social schemes.
20. Provision of Rs. 15,000 crores to reduce loan repayment burden of farmers by way of interest subvention scheme.
21. 2.8 Mn. Hectares to be brought under the PM irrigation plan.
22. 5 lakh acres to be brought under organic farming in 3 years.
23. Rs. 2.87 lakh crores to be given as grant to gram panchayats and municipalities.
24. This grant will translate into Rs. 80 lakhs per gram panchayat and Rs. 2.1 crores per urban body.
25. Rs. 5,500 crores allocation for PM fasal bima yojana.
26. Rs. 38,500 crores budget allocation for MNREGA, the highest spending ever.
27. Rs. 19,000 crores allocation for Awachh Bharat Abhiyan.
28. Rs. 8,500 crores allocation for rural electrification program.
29. 100% rural electrification of the entire country to be achieved by 01/05/2018.
30. 2 schemes to be launched to improve digital literacy.
31. Rs. 2,000 crores allocation for providing LPG connection to women in all rural household.
32. This scheme to cover 1,50,000 BPL households.
33. Rs. 87,765 crores allocation for overall rural development in FY 17.
34. National Dialysis services programme to be launched by providing dialysis machines in all local health centres.
35. Certain parts of dialysis equipments to be exempt from customs duty/SAD/CVD.
36. A new health protection scheme to be launched.
37. 3,000 drug stores to be opened under the PM Aushadhi Yojana.
38. Rs. 5,000 crores allocation for Standup India Scheme.
39. Higher Education Financing Scheme to be launched with initial capital of Rs. 1,000 crores.
40. Under the Employees Pension Scheme, employers’ contribution of 8.33% will be paid by the Govt. for the first 3 years for all employees with salary up to Rs. 15,000 pm.
41. Rs. 1,000 crores budget allocation for the above scheme which will result in encouraging employers to hire fresh employees.
42. The deduction u/s 80JJAA will now be available with minimum employment period reduced from 300 days to 240 days.
43. The deduction will be available only to those employees with monthly emoluments less than Rs. 25,000 pm and those employees for whom the EPS contribution is paid by the Govt. will not be covered.
44. Rs. 17,000 crores allocation for skill development program.
45. 10,000 km of National Highways to be approved in FY 17.
46. Rs. 55,000 crores allocated for Roads and Highways.
47. NHAI to raise Rs.15000 crores via bonds in FY 17.
48. Govt. to open up road transport sector.
49. Proposal under consideration for ultra deep sea gas exploration.
50. Allocation of Rs. 800 crores for new port development.
51. 10 non functional air strips to be taken up for re-deveopment.
52. New credit rating system for infra to be developed.
53. 100% FDI to be allowed in food products developed in India.
54. FDI policy for bourses and asset recast companies to be modified allowing for 100% FDI.
55. To do away with plan/non plan classification from FY 18.
56. Rs. 31,300 crores to be mobilized by Govt. infra bodies.
57. Bankruptcy code to be introduced in the parliament.
58. Rs. 25,000 crores allocation for bank re-capitalisation in FY 16-17.
59. Govt. to consider cutting stake in IDBI Bank to below 50%.
60. Govt. to draw road map for consolidation of PSU Banks.
61. DBT (Direct Benefits Transfer) to be introduced on pilot basis for fertilizer sector.
62. Targetted deliveries of subsidies through Aadhar framework to be introduced.
63. Banking Board Bureau to be operationalised by FY 17.
64. 3,000 fair price shops to be automated by FY 17.
65. Govt. to stick to fiscal deficit target of 3.9% in FY 16.
66. Rs. 14.3 lakh crores non-plan expenditure in FY 17.

Tax proposals:
1. No change in personal tax slab rates.
2. Rebate u/s 87A to be increased from Rs. 2,000 to Rs. 5,000 for income below Rs. 5 lakhs, which is a major relief to small tax payers.
3. 1 lakh tax payers to benefit by the Rs. 3,000 higher rebate u/s 87A.
4. The deduction u/s 80GG for rent paid available to employees receiving no house rent allowance and not having any house of their own to be increased from Rs. 24,000 to Rs. 60,000 pa.
5. The turnover limit for presumptive tax u/s 44AD for small and medium non corporate entities increased from Rs. 1 crore to Rs. 2 crores who can claim presumptive income of 8%.
6. The presumptive tax scheme extended to professionals with gross receipts not exceeding Rs. 50 lakhs provided they declare a presumptive income of 50% of their gross receipts.
7. Accelerated depreciation rate now restricted to 40% w.e.f.01/04/2017.
8. Benefit of deduction for research would be limited to 150% w.e.f. 01/04/2017 and to be further reduced to 100% w.e.f. 01/04/2020.
9. Benefit u/s 10AA to new SEZ will be available only to units which commence operations before 31/03/2020.
10. Weighted deduction u/s 35CCD for skill development will continue only till 01/04/2020.
11. New manufacturing companies incorporated on or after 01/03/2016 will be now taxed at reduced rate of 25% plus SC plus Cess provided they do not claim any further deduction or accelerated depreciation.
12. Companies with turnover below Rs. 5 crores in FY 15 will be taxed at 29% plus SC plus Cess.
13. Income Tax relief for 3 out of the initial 5 years for start ups incorporated between April 2016 to March 2019.
14. MAT will be applicable for such start ups.
15. No capital gains for such start ups.
16. NBFCs will be eligible for deduction up to 5% of their income for provision for bad and doubtful debts.
17. Securities Transaction Tax for options increased from 0.017% to 0.050%.
18. Deduction in corporate tax rates to be calibrated.
19. Complete pass through status provided for notified securitization trusts.
20. Withdrawal up to 40% of the corpus from NPS (national pension scheme) at the time of retirement to be tax free.
21. Limited period compliance window opened for domestic tax payers who can declare undisclosed income.
22. Such tax payers can declare their undisclosed income by paying 30% tax plus 7.5% SC and 7.5% penalty.
23. Such tax payers would not be subject to any scrutiny and they would have immunity from prosecution. They would have the option to pay tax within 2 months of the declaration.
24. TDS provisions for small tax payers to be rationalized.
25. Additional deduction of Rs. 50, 000 for interest on housing loans up to Rs. 35 lakhs, provided the cost of the house does not exceed Rs. 50 lakhs.
26. Penalty now leviable under the discretion of the Assessing Officer from 100% to 300% of the tax liability to be totally revamped giving less discretionary powers to the AO.
27. Penalty will be restricted to 50% of the tax liability for cases of under reporting of income.
28. Penalty will be 200% of the tax liability in respect of cases of mis reporting of income.
29. Govt. will stand committed to stable tax regime with no more retrospective amendments.
30. No interest to be charged for existing retrospective tax cases.
31. TDS provisions for small tax payers to be rationalized.
32. Proposal to introduce new dispute redressal scheme.
33. 10% tax on gross amount of dividend receipt by recipients receiving dividend in excess of Rs. 10 lakhs in a year.
34. Surcharge on persons other than companies, firms and co-op. societies having income above Rs. 1 crore to be increased from 12% to 15%.
35. TDS of 1% to be applicable on purchase of luxury cars costing above Rs. 10 lakhs.
36. TDS of 1% to be applicable on cash purchase of all goods and services above Rs. 2 lakhs.
37. Monetary limit for deciding cases by a single bench of the ITAT enhances from Rs. 15 lakhs to Rs. 50 lakhs.
38. Disallowance u/s 14A read with Rule 8D to be now limited to 1% of the average monthly value of the investments yielding exempt income.
39. Such disallowance shall not exceed the amount of actual expenditure claimed.
40. Infra Cess of 2% on diesel cars.
41. Excise duty on tobacco produces increased by 10-15%.
42. Clean energy cess increased from Rs. 200/tone to Rs. 400/tone.
43. Excise duty exemption for Ready Concrete Mix.
44. 0.5% Krishi Kalyan Cess to be introduced from 01/06/2016 for all taxable services.
45. Services provided by EPFO (employees provident fund organizations) to be exempt from service tax.
46. 4% high capacity tax introduced for SUVs.
47. No service tax for houses built under 60 square meters.
48. Cenvat credit rules to be amended.
49. 13 different cesses by different ministries to be abolished.
50. Govt. will pay interest of 9% instead of 6% for any delay in implementing appellate order.
51. Rs.1060 crores revenue loss through the direct tax proposals.
52. Rs. 20,670 crores revenue gain through the indirect tax proposals.
53. The effective revenue gain from the Union Budget 2016 proposals will be Rs. 19, 600 crores.

Compiled by

CA. Sanjay Thampy

For Kerala Biz News

An avid blogger, Sanjay is based in Mumbai and can be reached at sthampyca@gmail.com.


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