The BJP-led NDA government on March 01, 2015, presented the much hyped Budget for 2015-16. Presenting its first full budget, finance minister Mr. Arun Jaitley clearly sent a strong message to middle-class, masses that there is nothing much for them in this budget; they should take care of themselves. The budget has disappointed masses as the finance minister has not handed out soaps as they expected.
However, the government has termed the budget a high growth oriented, pro-investment saying the pace of cutting the fiscal deficit would slow as it seeks to boost investment and ensures that middle-class benefit.
Here are the highlights of Jaitley’s budget that would begin on 1st April:
Table Content
Taxation / Personal Income Tax
- Service tax rate and Edu Cess raised to 14% from 12.36%
- Income tax exemption on premium paid for health insurance policy raised to Rs 20,000 from current Rs.
- 15,000. For senior and most senior citizens (age above 80 years) exemption will be up to Rs 30,000, at present it is Rs 20,000.
- Income tax exemptions limit for individual tax payers continues to be same
- An additional exemption of Rs 25,000 for the disabled
- Limit on exemption for investment under pension fund and new pension scheme (NPS) increased to Rs 150,000 rupees from existing Rs 100,000
- Transport allowance exemption raised to Rs 1,600/month
- Import tax on iron and steel increased to 15% , an increase by 5%
- Import tax on metallurgical coke doubled to 5%
- Puts an end to wealth tax
- Additional 2% surcharge on super rich (annual income of Rs 1 crore or above)
- Reduces corporate tax by 5% to 25% over next four years, saying current 30% corporate tax is uncompetitive
Goods and services tax to be implement by April 2016 - Custom duty on 22 items to be reduced
- Basic custom duty on commercial vehicle raised to 20%, at present-10%
- Tough penalties for tax evasion (can be awarded 10 years of imprisonment)
Fiscal Deficit:
- Fiscal deficit is at 3.9% of GDP in 2015-16
- Govt. sets to achieve fiscal target of 4.1% of GDP
- Current account deficit below 1.3 % of GDP
Growth:
- Government aims to achieve double digit growth rate.
- GDP growth seen between 8 % to 8.5 % y/y
Inflation:
- Government to expect consumer inflation to remain close to 5 % by March.
- Objectives of monetary policy framework agreement with the RBI to keep inflation below 6 %
Disinvestment:
- Target to garner Rs 410 bn from stake sales in companies
- Total stake sale in 2015-16 at Rs 695 bn
Market Reforms:
- Proposal to merge commodities regulator with SEBI
- Proposal to set up public debt management agency
- Proposal to introduce a public contract resolution of disputes bill
- Government to set up an autonomous bank board bureau to enhance management of PSU banks
Policy Reforms:
- FM plans to bring a comprehensive new law to curb black money
- Government to create a universal social security system for all Indians
- In order to increase employability of rural youth, government to bring a national skills mission
- Visa-on-arrival facility to 150 countries, currently it’s for 43 countries
- An allocation of Rs 346.99 bn for rural employment guarantee scheme
General anti-avoidance rules (GAAR):
- Rollout of anti-tax avoidance rules GAAR deferred by two years
- Retrospective tax provisions to be avoided
Infrastructure:
- Investment in infrastructure expected to go up by Rs 700 bn in 2015-16 over previous year
- Govt. to set up national investment infrastructure fund
- Proposal to introduce tax-free infrastructure bonds for projects in railway, roads and irrigation
- Five ‘ultra mega’ power projects for 4 thousand megawatt each
- Second unit of ‘Kudankulam Nuclear Power Station’ to be commissioned
- Target to build additional one lakh kilometers of road
- Public sector ports to be corporatise under Companies Act
Expenditure:
- Allocation of Rs 2.46 trillion for defence spending
- Allocation of Rs 331.5 billion for health sector
Investment:
- A proposal to bring different type of foreign investment ceiling, to replace with a composite ceiling
- Govt. to allow foreign investments in alternative investment funds
Gold:
- Proposal to bring a sovereign gold bond
- To bring gold monetisation scheme with a view to allow depositors earn interest
- A proposal to introduce made in India gold coin to discourage demand of foreign gold coins
Cigarettes:
- Excise duty on cigarettes raised by 25% of length up to 65 mm
- Cigarettes of other lengths, excise duty raised by 15%