Key Features
of Budget 2016-2017
INTRODUCTION
§ Growth of Economy
accelerated to 7.6% in 2015-16.
§ India hailed as a ‘bright
spot’ amidst a slowing global economy by IMF.
§ Robust
growth achieved despite very unfavourable global conditions and two consecutive
years shortfall in monsoon by 13%
§
Foreign exchange reserves touched highest ever level
of about 350 billion US dollars.
§
Despite increased devolution to States by 55% as a
result of the 14th Finance Commission award, plan expenditure increased at RE stage in 2015-16 – in contrast to earlier years.
CHALLENGES IN 2016-17
§ Risks of further global
slowdown and turbulence.
§
Additional fiscal burden due to 7th Central Pay Commission recommendations and OROP.
ROADMAP & PRIORITIES
§
'Transform India' to have a significant impact on
economy and lives of people.
§ Government to focus on –
·
ensuring macro-economic stability and prudent fiscal management.
·
boosting on domestic demand
·
continuing with the pace of economic reforms and
policy initiatives to change the lives of our people for the better.
§
Focus on enhancing expenditure in priority areas of -
farm and rural sector, social sector, infrastructure sector employment
generation and recapitalisation of the banks.
§ Focus on Vulnerable sections through:
·
Pradhan Mantri Fasal Bima Yojana
·
New health insurance
scheme to protect against hospitalisation expenditure ·
facility of cooking gas connection for BPL families
§ Continue
with the ongoing reform programme and ensure passage of the Goods and Service
Tax bill and Insolvency and Bankruptcy law
§ Undertake important reforms by:
·
giving a statutory backing to AADHAR platform to
ensure benefits reach the deserving.
·
freeing the transport sector from constraints and restrictions
·
incentivising gas discovery and exploration by providing
calibrated marketing freedom
·
enactment of a comprehensive law to deal with
resolution of financial firms
·
provide legal framework for dispute resolution and re-negotiations in PPP
projects and public utility contracts
·
undertake important banking sector reforms and public
listing of general insurance companies undertake significant changes in FDI
policy.
AGRICULTURE AND FARMERS’ WELFARE
§ Allocation for Agriculture
and Farmers’ welfare is ` 35,984 crore
§
‘Pradhan Mantri Krishi Sinchai Yojana’ to be
implemented in mission mode. 28.5 lakh
hectares will be brought under irrigation.
§
Implementation of 89 irrigation projects under AIBP,
which are languishing for a long time, will be fast tracked
§
A dedicated Long Term Irrigation Fund will be created
in NABARD with an initial corpus of about ` 20,000 crore
§
Programme for sustainable management of ground water
resources with an estimated cost of ` 6,000 crore will
be implemented through multilateral funding
§
5 lakh farm ponds and dug wells in rain fed areas and
10 lakh compost pits for production of organic manure will be taken up under MGNREGA
§
Soil Health Card scheme will cover all 14 crore farm
holdings by March 2017.
§
2,000 model retail outlets of Fertilizer companies
will be provided with soil and seed testing facilities during the next three years
§
Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’
and 'Organic Value Chain Development in North East Region'.
§
Unified Agricultural Marketing ePlatform to provide a
common e- market platform for
wholesale markets
§
Allocation under Pradhan
Mantri Gram Sadak Yojana increased to ` 19,000 crore. Will connect
remaining 65,000 eligible habitations by 2019.
§
To reduce the burden of loan repayment on farmers, a
provision of `
15,000 crore has been made in the BE 2016-17 towards interest subvention
§ Allocation under Prime
Minister Fasal Bima Yojana ` 5,500 crore.§
` 850 crore
for four dairying projects - ‘Pashudhan
Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic
Centre for indigenous breeds
RURAL SECTOR
§ Allocation for rural sector
- ` 87,765 crore.
§
` 2.87 lakh crore will be given as Grant in Aid to Gram
Panchayats and Municipalities as per the recommendations of the 14th Finance Commission
§
Every block under drought and rural distress will be
taken up as an intensive Block under the Deen
Dayal Antyodaya Mission
§ A sum of ` 38,500 crore allocated for MGNREGS.
§ 300 Rurban
Clusters will be
developed under the
Shyama Prasad Mukherjee Rurban Mission
§ 100%
village electrification by 1st May,
2018.
§ District Level Committees under
Chairmanship of senior most Lok Sabha MP from the district for monitoring and
implementation of designated Central Sector and Centrally Sponsored Schemes.
§ Priority
allocation from Centrally Sponsored Schemes
to be made to reward villages that have become free from
open defecation.
§ A
new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional household within the next 3 years.
§ National
Land Record Modernisation Programme has been
revamped.
§ New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of ` 655 crore.
SOCIAL SECTOR INCLUDING HEALTH CARE
§ Allocation for
social sector including
education and health
care –`1,51,581 crore.
§ 2,000
crore allocated for initial cost of providing LPG connections to BPL families.
§ New health protection scheme will
provide health cover up to ` One lakh
per family. For senior citizens an additional top-up package up to ` 30,000 will be provided.
§ 3,000
Stores under Prime
Minister’s Jan Aushadhi Yojana
will be opened during 2016-17.
§ ‘National
Dialysis Services Programme’ to be
started under National Health Mission through PPP mode
§ “Stand
Up India Scheme” to facilitate at least two projects per bank branch.
This will benefit at least 2.5 lakh
entrepreneurs.
§ National
Scheduled Caste and Scheduled Tribe Hub to be set up in partnership with
industry associations
§ Allocation of ` 100 crore each
for celebrating the Birth Centenary of
Pandit Deen Dayal Upadhyay and the 350th Birth Anniversary of Guru Gobind Singh.
EDUCATION, SKILLS AND JOB CREATION
§ 62 new Navodaya Vidyalayas will be opened
§ Sarva Shiksha Abhiyan to increasing focus on quality of education
§ Regulatory architecture to be provided
to ten public and ten private institutions to emerge as world-class
Teaching and Research Institutions
§ Higher Education Financing
Agency to be set-up with initial capital base of
` 1000
Crores
§ Digital Depository
for School Leaving
Certificates, College
Degrees, Academic Awards and Mark sheets to be set-up.
SKILL DEVELOPMENT
§ Allocation
for skill development – ` 1804.
crore.
§ 1500
Multi Skill Training Institutes to be set-up.
§ National Board
for Skill Development
Certification to be setup in
partnership with the industry and academia
§ Entrepreneurship Education and
Training through Massive Open Online Courses
JOB CREATION
§ GoI will pay contribution of
8.33% for of all new employees enrolling in EPFO for the first
three years of their employment. Budget provision of 1000 crore for this
scheme.
§ Deduction under Section 80JJAA
of the Income Tax Act will be available to all assesses who are subject to statutory
audit under the Act
§ 100 Model Career Centres to
operational by the end of 2016-17 under National
Career Service.
§ Model
Shops and Establishments Bill to be circulated to States.
INFRASTRUCTURE AND INVESTMENT
§ Total investment in the road
sector, including PMGSY allocation, would be ` 97,000 crore during 2016-17.
§ India’s highest ever kilometres
of new highways were awarded in 2015. To
approve nearly 10,000 kms of National Highways in 2016-17.
§ Allocation of ` 55,000
crore in the
Budget for Roads.
Additional 15,000 crore to be raised by
NHAI through bonds.
§ Total
outlay for infrastructure - ` 2,21,246 crore.
§ Amendments to be made in Motor Vehicles Act to open up the road transport sector in the passenger segment
§ Action plan
for revival of
unserved and underserved
airports to be drawn
up in partnership with State Governments.
§ To
provide calibrated marketing freedom in order to incentivise gas production
from deep-water, ultra deep-water and high pressure-high temperature areas
§ Comprehensive plan,
spanning next 15 to 20
years, to augment the investment in nuclear power generation to be
drawn up.
§ Steps
to re-vitalise PPPs:
· Public Utility (Resolution of
Disputes) Bill will be introduced during 2016-17
· Guidelines for renegotiation of PPP
Concession Agreements will be issued
· New credit rating
system for infrastructure projects
to
be introduced
§ Reforms in
FDI policy in the areas
of Insurance and Pension, Asset Reconstruction Companies, Stock Exchanges.
§ 100% FDI
to be allowed
through FIPB route
in marketing of food products
produced and manufactured in India.
§ A new
policy for management
of Government investment in Public
Sector Enterprises, including disinvestment and strategicsale, approved.
FINANCIAL SECTOR REFORMS
§ A comprehensive Code
on Resolution of
Financial Firms to
be introduced.
§ Statutory basis for a Monetary
Policy framework and a Monetary Policy Committee
through the Finance Bill 2016.
§ A Financial Data Management
Centre to be set up.
§ RBI
to facilitate retail participation in Government securities.
§ New derivative products will be developed by SEBI in the Commodity Derivatives market.
§ Amendments in the SARFAESI Act
2002 to enable the sponsor of an ARC to hold up to 100% stake in the ARC and
permit non institutional investors to invest in Securitization Receipts.
§ Comprehensive Central
Legislation to be
bought to deal
with the menace
of illicit deposit taking schemes.
§ Increasing
members and benches of the Securities Appellate Tribunal.
§ Allocation of ` 25,000 crore
towards recapitalisation of Public Sector Banks.
§ Target
of amount sanctioned
under Pradhan Mantri Mudra Yojana increased to ` 1,80,000 crore.
§ General Insurance Companies
owned by the Government to be listed in the
stock exchanges.
GOVERNANCE AND EASE OF DOING BUSINESS
§ A Task
Force has been constituted for rationalisation of human resources in various Ministries.
§ Comprehensive review and
rationalisation of Autonomous Bodies.
§ Bill for
Targeted Delivery of Financial and Other Subsidies, Benefits and Services by
using the Aadhar framework to be introduced.
§ Introduce DBT on pilot basis
for fertilizer.
§ Automation
facilities will be provided in 3 lakh fair price shops by March 2017.
§ Amendments
in Companies Act to improve enabling environment for start-ups.
§ Price
Stabilisation Fund with a corpus of ` 900 crore to help maintain stable
prices of Pulses.
§ “Ek Bharat Shreshtha Bharat” programme
will be launched to link States and Districts in an annual programme that
connects people through exchanges in areas of language, trade, culture, travel
and tourism.
FISCAL DISCIPLINE
§ Fiscal deficit in RE 2015-16
and BE 2016-17 retained at 3.9% and 3.5%.
§ Revenue Deficit target from
2.8% to 2.5% in RE 2015-16
§ Total expenditure projected
at ` 19.78 lakh crore
§ Plan
expenditure pegged at ` 5.50 lakh crore under Plan, increase of 15.3%
§ Non-Plan expenditure kept at
` 14.28 lakh crores
§ Special
emphasis to sectors such as agriculture, irrigation, social sector including
health, women and child development, welfare of Scheduled Castes and Scheduled
Tribes, minorities, infrastructure.
§ Mobilisation
of additional finances to the extent of ` 31,300 crore by NHAI, PFC, REC,
IREDA, NABARD and Inland Water Authority by raising Bonds.
§ Plan / Non-Plan
classification to be done away with from 2017-18.
§ Every new
scheme sanctioned will have a sunset date and outcome review.
§ Rationalised
and restructured more than 1500 Central Plan Schemes into about 300 Central
Sector and 30 Centrally Sponsored Schemes.
§ Committee to review the
implementation of the FRBM Act.
RELIEF TO SMALL TAX PAYERS
§ Raise the ceiling of tax rebate
under section 87A from `2000 to `5000 to
lessen tax burden on individuals with income upto `5 laks.
§ Increase the limit
of deduction of rent paid
under section 80GG from`24000 per annum to `60000, to provide
relief to those who live in rented houses.
BOOST EMPLOYMENT AND GROWTH
§ Increase
the turnover limit under Presumptive taxation scheme under section 44AD of the
Income Tax Act to ` 2 crores to bring big
relief to a large number of assessees in the MSME category.
§ Extend the presumptive taxation
scheme with profit deemed to be 50%, to
professionals with gross receipts up to `50 lakh.
§ Phasing out deduction under
Income Tax:
· Accelerated
depreciation wherever provided in IT
Act will be
limited to maximum 40% from 1.4.2017
· Benefit
of deductions for Research would be limited to 150% from 1.4.2017 and 100% from
1.4.2020
· Benefit
of section 10AA to new SEZ units will be available to those units which
commence activity before 31.3.2020.
· The
weighted deduction under section 35CCD for skill development will continue up
to 1.4.2020
§ Corporate
Tax rate proposals:
· New manufacturing companies
incorporated on or after 1.3.2016 to be
given an option to be taxed at 25% + surcharge and cess provided they do not
claim profit linked or investment linked deductions and do not avail of investment
allowance and accelerated depreciation.
·
Lower the corporate tax rate for the next financial
year for relatively small enterprises i.e companies with turnover not exceeding
` 5 crore (in
the financial year ending March 2015), to 29% plus surcharge and cess.
§
100% deduction of profits for 3 out of 5 years for
startups setup during April, 2016 to March, 2019. MAT will apply in such cases.
§ 10% rate of
tax on income from worldwide exploitation of patents developed and registered
in India by a resident.
§ Complete pass
through of income-tax to securitization trusts including trusts of ARCs. Securitisation trusts required to deduct tax
at source.
§
Period for getting benefit of long term capital gain
regime in case of unlisted companies is proposed to be reduced from three to two years.
§
Non-banking financial companies shall be eligible for
deduction to the extent of 5% of its income in respect of provision for bad and
doubtful debts.
§ Determination
of residency of foreign company on the basis of Place of Effective Management
(POEM) is proposed to be deferred by one year.
§
Commitment to implement General Anti Avoidance Rules
(GAAR) from 1.4.2017.
§ Exemption
of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya
Yojana and services provided by Assessing Bodies empanelled by Ministry of
Skill Development & Entrepreneurship.
§
Exemption of Service tax on general insurance services
provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust
for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and
Multiple Disability.
§
Basic custom and excise duty on refrigerated
containers reduced to 5% and 6%.
MAKE IN INDIA
§ Changes in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry in sectors like Information technology hardware, capital goods, defence production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling [MRO] of aircrafts and ship repair.
MOVING TOWARDS A PENSIONED SOCIETY
§ Withdrawal
up to 40% of the corpus at the time of retirement to be tax exempt in the case
of National Pension Scheme (NPS). Annuity fund which goes to legal heir will
not be taxable.
§
In case of superannuation funds and recognized
provident funds, including EPF, the same norm of 40% of corpus to be tax free
will apply in respect of corpus created out of contributions made on or from
1.4.2016.
§
Limit for contribution of employer in recognized
Provident and Superannuation Fund of ` 1.5 lakh
per annum for taking tax benefit. Exemption from service tax for Annuity
services provided by NPS and Services provided by EPFO to employees.
§ Reduce
service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of
the premium paid in certain cases.
PROMOTING AFFORDABLE HOUSING
§ 100%
deduction for profits to an undertaking in housing project for flats upto 30
sq. metres in four metro cities and 60 sq. metres in other cities, approved
during June 2016 to March 2019 and completed in three years. MAT to apply.
§ Deduction for additional
interest of `50,000 per annum for loans
up to `35 lakh
sanctioned in 2016-17
for first time home buyers, where
house cost does not exceed ` 50 lakh.
§
Distribution made out of income of SPV to the REITs
and INVITs having specified shareholding will not be subjected to Dividend
Distribution Tax, in respect of dividend distributed after the specified date.
§ Exemption from service tax
on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government
including PPP Schemes.
§
Extend excise duty exemption, presently available to
Concrete Mix manufactured at site for use in construction work to Ready Mix
Concrete.
RESOURCE MOBILIZATION FOR AGRICULTURE, RURAL ECONOMY AND CLEAN ENVIRONMENT
§ Additional tax at the rate of 10% of gross amount of dividend will be payable by the recipients receiving dividend in excess of ` 10 lakh per annum.
§ Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above ` 1 crore.
§ Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding value of ` ten lakh and purchase of goods and services in cash exceeding ` two lakh.
Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.
Equalization levy of 6% of gross amount for payment made to non- esidents
exceeding ` 1
lakh a year in case of B2B transactions.
Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016.
Proceeds would be exclusively used for financing initiatives for improvement of
agriculture and welfare of farmers. Input tax credit of this cess will be
available for payment of this cess.
§
Infrastructure cess, of 1% on small petrol, LPG, CNG
cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine
capacity vehicles and SUVs. No
credit of this cess will be available nor credit of any other tax or duty be
utilized for paying this cess.
§
Excise duty of ‘1% without input tax credit or 12.5%
with input tax credit’ on articles of jewellery [excluding silver jewellery,
other than studded with diamonds and some other precious stones], with a higher
exemption and eligibility limits of ` 6 crores
and ` 12 crores respectively.
§
Excise on readymade garments with retail price of ` 1000
or more raised to 2% without input tax
credit or 12.5% with input tax credit.
§
‘Clean Energy Cess’ levied on coal, lignite and peat
renamed to ‘Clean Environment Cess’ and rate increased from `200 per tonne to `400 per
tonne.
§
Excise duties on various tobacco products other than
beedi raised by about 10 to 15%.
§
Assignment of right to use the spectrum and its
transfers has been deducted as a service leviable to service tax and not sale
of intangible goods.
PROVIDING CERTAINITY IN TAXATION
§
Committed to providing a stable and predictable
taxation regime and reduce black money.
§
Domestic taxpayers can declare undisclosed income or
such income represented in the form of any asset by paying tax at 30%, and
surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the
undisclosed income. Declarants will have immunity from prosecution.
§
Surcharge levied at 7.5% of undisclosed income will be
called Krishi Kalyan surcharge to be used for agriculture and rural economy.
§
New Dispute Resolution Scheme to be introduced. No
penalty in respect of cases with
disputed tax up to ` 10 lakh. Cases with disputed tax exceeding ` 10 lakh to
be subjected to 25% of the minimum of the imposable penalty. Any pending appeal against a penalty order
can also be settled by
paying 25% of the minimum of the imposable penalty and tax interest on quantum
addition.
§
High Level Committee chaired by Revenue Secretary to
oversee fresh cases where assessing officer applies the retrospective amendment.
§
One-time scheme of Dispute Resolution for ongoing
cases under retrospective amendment.
§
Penalty rates to be 50% of tax in case of
underreporting of income and 200% of tax where there is misreporting of facts.
§
Disallowance will be limited to 1% of the average
monthly value of investments yielding exempt income, but not exceeding the
actual expenditure claimed under rule 8D of Section 14A of Income Tax Act.
§ Time limit
of one year for disposing petitions of the tax payers seeking waiver of
interest and penalty.
§
Mandatory for the assessing officer to grant stay of
demand once the assesse pays 15% of the disputed demand, while the appeal is
pending before Commissioner of Income-tax (Appeals).
§ Monetary
limit for deciding an appeal by a single member Bench of ITAT enhanced from ` 15 lakhs to
` 50 lakhs.
§ 11 new
benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
SIMPLIFICATION AND RATIONALIZATION OF TAXES
§ 13 cesses,
levied by various Ministries in which revenue collection is less than ` 50 crore in a year to be abolished.
§
For non-residents providing alternative documents to
PAN card, higher TDS not to apply.
§ Revision of return extended
to Central Excise assesses.
§
Additional options to banking companies and financial
institutions, including NBFCs, for reversal of input tax credits with respect
to non- taxable services.
§ Customs Act to provide
for deferred payment
of customs duties
for importers and exporters with
proven track record.
§
Customs Single Window Project to be implemented at
major ports and airports starting from beginning of next financial year.
§
Increase in free baggage allowance for international
passengers. Filing of baggage only for those carrying dutiable goods.
TECHNOLOGY FOR ACCOUNTABILITY
§
Expansion in the scope of e-assessments to all
assessees in 7 mega cities in the coming years.
§
Interest at the rate of 9% p.a against normal rate of
6% p.a for delay in giving effect to Appellate order beyond ninety days.
§
‘e-Sahyog’ to be expanded to reduce compliance cost,
especially for small taxpayers.
