New Delhi: Falling just short of big bang reforms called for by his own economic survey, Finance Minister Arun Jaitley on Saturday presented a Rs 17.78 lakh crore national budget for the next fiscal that seeks to put more money in the hands of the average citizen, tackle the menace of black money more effectively and end an era of corruption.
In his 93-minute budget speech in the Lok Sabha, the finance minister said a new law on black money stashed abroad will call for an imprisonment of up to 10 years on its perpetrators with a penalty of 300 per cent, while another proposed legislation will clamp down on benami property in India with both confiscation and prosecution. He also proposed a new public procurement law for the consideration of the house that can encourage transparency in the way government buys goods and services while removing the reluctance in decision-making among the bureaucracy due to the fear of being questioned by probe agencies.
GAAR deferred; fresh gold monetisation scheme
The finance minister said while individual tax payers would stand to gain as much as Rs 4,40,200 by way of enhanced exemptions he has proposed in his two budgets since July last year, the corporate sector can benefit from a cut in tax rates from 30 per cent to 25 per cent over four years, albeit with a sharp reduction in the exemptions.
The other highlights of Jaitley’s budget include universal social security with health insurance coverage for the poor, a new bankruptcy law, a fresh gold monetisation scheme, the deferment of much-criticised General Anti-Avoidance Rule (GAAR) by two years with prospective effect, a pan-India goods and services tax regime from April 1, 2017, tax-free bonds to fund rail, roads and irrigation projects and five new ultra mega power projects. Transport allowance exemption has also been hiked to Rs 1,600, from Rs 800 per month, while service tax has been hiked to 14 per cent. First and business class air travellers will find flying costlier from the next fiscal with an almost two per cent hike in service tax rate proposed in the general budget. “After the enactment of the Finance Bill, service tax will increase by 1.64 per cent, and almost all services in the service tax net, the transportation cost, mobile bills and restaurant services etc will become more expensive,” said Shilpa Sharma, Head - Indirect Tax of Vaish Associates Advocates.
Education, women safety addressed in budget
Among the various welfare programmes, the finance minister outlined a new student loan scheme for higher education, Rs 8.5-lakh credit for farmers, significant hikes in the allocations for women safety, rural job guarantee scheme, and mid-day meal programme, a new pension fund and several skilling schemes for the youth. He also made several references to two of Prime Minister Modi’s pet projects, and said while policies outlined by him and various tax proposals were aimed to giving an impetus to “Make in India” campaign, particularly aimed at the youth and manufacturing, he also announced 100-per cent tax rebate on money spent by the corporate sector towards the Swachh Bharat Abhiyan. Other proposals include the abolishment of wealth tax, with a cess, instead, on the super rich, and the significant enhancement of the exemption limits for individual tax-payers in areas like insurance and excise.
He added that he is sticking to the fiscal deficit target of 4.1 per cent of GDP for the current fiscal and 3.9 per cent for the next, and pruning it to 3.5 per cent and 3 per cent over another two fiscals. This, despite a near six per cent increase in the total expenditure at Rs 1,777,477 crore for the next year over the revised estimates for the current fiscal.
Pay more for
>> Aerated water, iced tea, lemonade and other beverages, waters, including mineral water and aerated water, containing added sugar or other sweetening matter or flavour
>> Cigarettes and cement will now be costlier
>> Condensed milk in containers
>> Peanut butter
>> Sacks and bags (including cones) of plastics
>> Paan masala and gutkha
Pay less for
>> Bituminous coal, ulexite ore, liquefied butane, ethylene dichloride, vinyl chloride monomer and styrene monomer, butyl acrylate, anthraquinone
>> Wind power generators, solar water heater system
>> Wafers for manufacture of integrated circuit (IC) modules for smart cards LED drivers and MCPCB for LED lights, fixtures and lamps
>> Tablet computers
>> Leather footwear priced over Rs 1,000 per pair
Budgetat a glance
>> No change in personal Income Tax
>> Health Insurance Premium deduction hiked from Rs 15,000 to R25,000; for senior citizens to Rs 30,000
>> Transport allowance exemption hiked to Rs 1,600, from Rs 800 per month
>> Additional 2 per cent surcharge on people earning over Rs 1 cr; to fetch Rs 9,000 cr; Wealth tax abolished
>> Rs 50,000 deduction for contribution to New Pension Scheme
>> 2015-16 growth between 8-8.5 per cent, double digit growth feasible
>> Incentivise use of credit, debit cards; disincentivise cash transaction to curb black money
>> 13 per cent hike in budget allocation for higher education; AIIMS to be set up in J&K, Punjab, Assam, Tamil Nadu and Himachal Pradesh
>> To create world class IT hub
>> Rs 2,362.74 crore for the Northeast
>> National Skill Mission to be launched, to develop employability of youth
>> Visa on arrival scheme to be expanded to 150 countries
>> Customs duty on OLED TV abolished
>> 50 lakh toilets built under Swachh Bharat Abhiyan, 6 crore toilets targeted
>> Rs 5,900 cr for nuclear power, research