Several
New Schemes Announced
Micro
Units Development Refinance Agency (MUDRA) Bank To
Refinance Micro Finance Institutions
Pradhan Mantri Suraksha Bima Yojana
To Cover Accidental Death Risk Of Rs. 2 Lakh For Just Rs. 12 Per Year Premium
Atal Pension Yojana
For Defined Pension, Government To Contribute 50% Of
The Premium
Pradhan Mantri Jeevan Jyoti Bima
Yojana To Cover Both Natural
And Accidental Death Risk
Proposal
To Create Senior Citizen Welfare Fund
National
Investment And Infrastructure Fund Proposed
Tax
Free Infrastructure Bonds For Projects In Rail,
Road And Irrigation Sectors
SETU(Self-Employment And Talent Utilisation) Mechanism To Support Start-Up Businesses
5
New Ultra Mega Power Projects To Be Set Up
Gold
Monetisation Scheme To
Replace Present Gold Deposit And Gold Metal Loan Schemes
Another Rs. 1,000 Crore For Nirbhaya Fund
New
Institutions Including AIIMS, IIT And IIM To Be Set Up
Total
Expenditure Estimated To Be Rs. 17,77,477 Crore, Fiscal Deficit To Be 3.9% Of GDP
Objective
Of Stable Taxation Policy And A Non-Adversarial Tax
Administration
Fight
Against Scourge Of Black Money To Be Taken Forward
Efforts
On Various Fronts To Implement GST From Next Year
No
Change In Rate Of Personal Income Tax
Proposal
To Reduce Corporate Tax From 30% To 25% Over The Next
Four Years, Starting From Next Financial Year
Rationalization
And Removal Of Various Tax Exemptions
Incentives
To Reduce Tax Disputes And Improve Administration
Exemption
To Individual Tax Payers To Continue To Facilitate
Savings
Finance Minister Shri
Arun Jaitley has said that
the Indian Economy has turned around dramatically in the last nine months with
the real GDP growth expected to accelerate to 7.4% making India the fastest
growing large economy in the world. Presenting the General Budget for the year
2015-16 in Lok Sabha today,
he said macro-economic stability has been restored and conditions have been
created for sustainable poverty elimination, job creation and durable double
digit economic growth. Shri Jaitley
specifically talked about three key achievements of the Government, the Jan Dhan Yojana which brought over
12.5 crores families into financial mainstream in a
short period of 100 days, transparent coal block auctions to augment resources
of the states and ‘Swachh Bharat’ which has become a
movement to regenerate India. Shri Jaitley said that India has now embarked on two more game changing
reforms which are GST and the JAM Trinity-Jan Dhan, Aadhar and Mobile-to implement direct transfer of benefits.
He added that GST will put in place a state-of-the art indirect tax system by 1st
April 2016 while the JAM Trinity will allow transfer benefits in a
leakage-proof, well-targetted and cashless manner.
Describing the declining inflation as
one of the major achievements of the Government, the Finance Minister said that
this represents a structural shift. He said CPI inflation is expected to remain
at close to 5% by the end of the year which will allow further easing of
monetary policy. Shri Jaitley
said a Monetary Policy Framework Agreement has been concluded with the RBI to
keep inflation below 6%.
Stating that while based on the new series,
estimated GDP growth for 2014-15 is 7.4%, Shri Jaitley said growth in the next financial year is expected
to be between 8 to 8.5% and aiming for a double-digit
rate seems feasible very soon. The Minister underlined that India has to think
in terms of a quantum jump. He said the year 2022 will be the Amrut Mahotsav, the 75th
year, of India’s independence. He added the vision of what the Prime Minister
has called ‘Team India’ led by the States and guided by the Central Government
should include a roof for each family which will require to complete two crore houses in urban areas and four crore
houses in rural areas with each house having 24 hour power supply, clean
drinking water, a toilet and road connectivity. He said the vision includes
that at least one member from each family should have access to the means of
livelihood, substantial reduction in poverty, electrification of the remaining
20,000 villages including off-grid solar power by 2020, connecting each of the
1,78,000 un-connected habitation, providing medical services in each village
and city, ensuring a Senior Secondary School within 5 km reach of every child,
strengthening rural economy-increase irrigated area, ensuring communication
connectivity to all villages, to make India, the manufacturing hub of the world
through Skill India and the Make in India Programmes,
encourage and grow the spirit of entrepreneurship and development of Eastern
and North Eastern regions on par with the rest of the country.e sHeHHH
The Finance Minister counted five major
challenges faced by the Indian economy which are agricultural income under
stress, weak private sector investment in infrastructure, decline in
manufacturing, resource crunch in view of higher devolution in taxes to states
and maintaining fiscal discipline. Shri Jaitley assured that the country will meet the challenging
fiscal deficit target of 4.1% of GDP, that the
Government had inherited. Talking about the fiscal roadmap Shri
Jaitley said that the Government is firm to achieve
fiscal target of 3% of GDP. He added that the journey for fiscal deficit target
of 3% will be achieved in three years rather than two years.
Stating that the Government is committed in its resolve, as Indians, to regain
its pre-eminence as a just and compassionate country, Shri
Jaitley said that what is needed is a well targetted system of subsidy delivery. He emphasized on need
to cut subsidy leakages, to achieve which the Government is committed to the
process of rationalizing subsidies. He said the direct transfer of benefits,
started mostly in scholarship schemes, will be further expanded with a view to
increasing the number of beneficiaries from the present 1 crore
to 10.3 crore.
Reiterating that the Government’s commitment to farmers runs deep, the Finance
Minister proposed to fully support Agriculture Ministry’s organic farming
scheme – “Paramparagat Krishi
Vikas Yojana”. Stating that
the Pradhanmantri Gram Sinchai
Yojana is aimed at irrigating the field of every
farmer and improving water use efficiency to provide ‘ Per Drop More Crop’’ , Shri Jaitley proposed allocation
of Rs. 5,300 crore to support micro-irrigation,
watershed development and the Pradhan Mantri Krishi Sinchai
Yojana.
In order to support the agriculture sector with the help of effective
agriculture credit and focus on small and marginal farmers, the Finance
Minister proposed to allocate Rs. 25,000 crore to the corpus of Rural Infrastructure Development
fund (RIDF) set up in NABARD, Rs. 15,000 crore for
Long Term Rural Credit Fund; Rs. 45,000 crore for
Short Term Cooperative Rural Credit Refinance Fund; and Rs. 15,000 crore for Short Term RRB Refinance Fund. He said that the
Government has set up an ambitious target of Rs. 8.5 lakh
crore of agricultural credit. Stating the
Government’s commitment to supporting employment through MGNREGA, The Minister
proposed an initial allocation of Rs. 34,699 crore
for the programme.
The Finance Minister proposed to create a Micro Units Development Refinance
Agency (MUDRA) Bank, with a corpus of Rs. 20,000 crore,
and credit guarantee corpus of 3,000 crore, which
will refinance Micro-Finance Institutions through a Pradhan
Mantri Mudra Yojana,. He added that priority will be given to SC/ST
enterprises in lending.
While showing concern over a large proportion of India’s population being
without any kind of insurance, Shri Jaitley said that the soon-to-be- launched Pradhan Mantri Suraksha Bima Yojana,
will cover accidental death risk of Rs. 2 lakh for a
premium of just Rs. 12 per year. Similarly, he said, the Government will also
launch the Atal Pension Yojana,
which will provide a defined pension, depending on the contribution, and its
period. To encourage people to join this scheme, the Government will contribute
50% of the beneficiaries’ premium limited to Rs. 1,000 each year, for five
years, in the new accounts opened before 31st December, 2015. The
third Social Security Scheme that the Minister announced is the Pradhan Mantri Jeevan Jyoti Bima
Yojana which covers both natural and accidental death
risk of Rs. 2 lakhs. The premium will be Rs. 330 per
year, or less than one rupee per day, for the age group 18-50.
Mentioning about unclaimed deposits of about Rs. 3,000 crores
in the PPF and approximately Rs. 6,000 crores in the
EPF corpus, the Minister said that the amounts will be
appropriated to a corpus, which will be used to subsidize the premiums on these
social security schemes through creation of a Senior Citizen Welfare fund in
the Finance Bill. He reiterated the Government’s commitment to the on-going
schemes for the welfare of SCs, STs and Women.
The Finance Minister underlined the pressing need to increase public investment
in infrastructure. He said that he proposes increased outlays on both the roads
and the gross budgetary support to the railways, by Rs. 14,031 crore and Rs. 10,050 crore
respectively. He said the CAPEX of the public sector units is expected to be
Rs. 3,17,889 crore, an
increase of approximately Rs. 80,844 crore over
RE 2014-15. He also proposed to establish National Investment and
Infrastructure Fund (NIIF) with an annual flow of Rs. 20,000 crore. He said that he also intends to permit tax
free infrastructure bonds for the projects in the rail, road and irrigation
sector. He said the PPP mode of infrastructure development has to be revisited
and revitalized.
Shri Jaitley proposed to
establish the Atal Innovation Mission(AIM)
in NITI which will provide Innovation Promotion Platform involving
academicians, and drawing upon national and international experiences. A sum of
Rs. 150 crore is proposed to be earmarked for the
mission.
The Finance Minister said that the Government is establishing a mechanism to be
known as SETU (Self-Employment and Talent Utilisation)
which will support all aspects of start-up businesses, and other
self-employment activities, particularly in technology-driven areas. Rs. 1,000 crore have been initially
earmarked in NITI Aayog for the purpose.
Shri Jaitley said the
Government also proposes to set up 5 new Ultra Mega Power Projects each of 4000
MWs in the plug-and-play mode.
In order to promote investment in the country, the Minister proposed to set up
a Public Debt Management Agency (PDMA) which will bring both India’s external
borrowings and domestic debt under one roof. He also proposed to merge the
Forwards Markets Commission with SEBI to strengthen regulation of commodity
forward markets and reduce wild speculation. He said enabling legislation,
amending the Government Securities Act and the RBI Act is proposed in the
Finance Bill, 2015.
Regarding the Employees Provident Fund (EPF), the Minister said the employees
need to be provided two options, EPF or the New Pension Scheme (NPS). He said,
for employees below a certain threshold of monthly income, contribution to EPF
should be optional, without affecting or reducing the employer’s contribution.
Stating that India is one of the largest consumers of gold in the world, Shri Arun Jaitley
proposed to introduce a Gold Monetisation Scheme,
which will replace both the present Gold Deposit and Gold metal Loan Schemes.
The New scheme will allow the depositors of gold to earn interest in their
metal accounts and the jewelers to obtain loans in their metal account.
Banks/other dealers would also be able to monetize this gold. He also proposed
a Sovereign Gold Bond, as an alternative to purchasing metal gold. He also
announced commencing work on developing Indian Gold Coin, which will carry the
Ashok Chakra on its face.
Highlighting need for increasing investments from all sources, the Finance
Minister proposed to allow foreign investments in Alternate Investment
Funds. He said in order to catalyze investments from the Indian Private
Sector in South East Asia, a Project Development Company will set up
manufacturing hubs in Cambodia, Myanmar, Laos and Vietnam.
In order to support Programmes for women security,
advocacy and awareness, the Minister proposed to provide another Rs. 1,000 crore to the Nirbhaya Fund.
Shri Jaitley said resources
will be provided to start work along landscape restoration, signage and
interpretation centres, parking, access for the
differently abled, visitors’ amenities, including
securities and toilets, illumination and plans for benefiting communities
around them at various heritage sites.
Expressing concern over environmental degradation,
the Minister said that the target of renewable energy capacity has been revised
to 1,75,000 MW till 2022. He said the Government is
also launching a Scheme for Faster Adoption and manufacturing of Electric
Vehicles (FAME) with an initial outlay of Rs. 75 crore.
The Minister emphasized on formal skill training and said the Government will
soon launch a National Skills Mission which will consolidate skill initiatives
spread across several Ministries. He said Rs. 1,500 crore
has been set apart for Deen Dayal
Upadhyay Gramin Kaushal Yojana. He proposed to
set up a fully IT based Student Financial Aid Authority to administer and
monitor Scholarship as well Educational Loan Schemes, through the Pradhan Mantri Vidya Lakshmi Karyakram.
The Minister proposed to set up several New Institutions. An IIT will be set up
in Karnataka and Indian School of Mines, Dhanbad will
be upgraded in to a full-fledged IIT. New All India Institutes of Medical
Sciences (AIIMS) will be set up in J&K, Punjab, Tamil Nadu, Himachal
Pradesh and Assam. Another AIIMS like institution will be set up in Bihar. A
post graduate institute of Horticulture Research & Education will be set up
in Amritsar. Three new National Institutes of Pharmaceutical Education and
Research will be set up in Maharashtra, Rajasthan and Chattisgarh
and one institute of Science and Education Research will be set up in Nagaland
and Odisha each. IIMs will be setup in J&K and
Andhra Pradesh.
Shri Jaitley said India is
making good progress towards digital India. He said the National Optical Fibre Network Programme (NOFNP)
of 7.5 lakh kms networking
2.5 lakh villages is being further speeded up by
allowing willing States to undertake its execution.
The Minister said that in spite of the large increase in the devolution to
states, adequate provision is being made for the schemes for the poor with
allocation of Rs. 68,968 crore to the education
sector including mid-day meals, Rs. 33,152 crore to
the health sector and Rs. 79,526 crore for rural
development activities including MGNREGA, Rs. 22,407 crore
for housing and urban development, Rs. 10,351 crore
for women and child development, Rs. 4,173 crore for
Water Resources and Namami Gange.
The Minister said that adequate funds have been provided for the needs of the
armed forces. As against likely expenditure of this year of Rs. 2,22,370 crore the budget
allocation for 2015-16 is Rs. 2,46,727 crore.
Shri Arun Jaitley while giving the budget estimates for 2015-16 said
Non-Plan expenditure estimates for the Financial Year are Rs. 13,12,220 crore. Plan expenditure is estimated to be Rs. 4,65,277 crore, which is very near
to the R.E. of 2014-15. Total Expenditure has accordingly been estimated at Rs.
17,77,477 crore. Gross Tax
receipts are estimated to be Rs. 14,49,490 crore. Devolution to the States is estimated to be Rs. 5,23,958 crore. Share of Central
Government will be Rs. 9,19,842 crore.
Non Tax Revenues for the next fiscal are estimated to be Rs. 2,21,733 crore. He said with the
above estimates, fiscal deficit will be 3.9 percent of GDP and Revenue Deficit
will be 2.8 percent of GDP.
TAX
PROPOSALS
The
Finance Minister Shri Arun Jaitley has said that a very important dimension to our tax
administration is the fight against the scourge of black money. He said
that taxation is an instrument of social and economic engineering. Tax
collections help the Government to provide education, healthcare, housing and
other basic facilities to the people to improve their quality of life and to
address the problems of poverty, unemployment and slow development. To
achieve these objectives, it has been our endeavour
in the last nine months to foster a stable taxation policy and non-adversarial
tax administration.
Shri Jaitley said that Goods and
Services Tax (GST) introduced in the last Session will play a transformative
role in the way our economy functions. This transformative piece of
legislation in indirect taxation needs to be matched with transformative
measures in direct taxation. He said that the rate of corporate tax is
proposed to be reduced from 30% to 25% over the next four years. This
will lead to higher level of investment, higher growth and more jobs. The broad
things adopted in finalizing the tax proposals include:-
A.
Measures
to curb black money
B.
Job
creation through revival of growth and investment and promotion of domestic
manufacturing and ‘Make in India’;
C.
Minimum
government and maximum governance to improve the ease of doing business;
D.
Benefits
to middle class taxpayers;
E.
Improving
the quality of life and public health through Swachch
Bharat initiatives; and
F.
Stand
alone proposals to maximize benefits to the economy.
Shri Jaitley said that a
considered decision has been taken to enact a comprehensive new law on black
money to specifically deal with such money stashed away abroad. The Bill
in this regard is proposed to be introduced in the current Session of the Parliament.
The key features of the bill will include punishment of rigorous imprisonment
up to ten years for concealment of income and assets and evasion of tax in
relation to foreign assets. This offence will be made non-compoundable
and offenders will not be permitted to approach the Settlement
Commission. Penalty for such concealment of income and assets at the rate
of 300 per cent of tax shall be levied. Non-filing of return or filing of
return with inadequate disclosure of foreign assets will be punishable with
rigorous imprisonment up to seven years.
As
regards curbing domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced
in the current Session of the Parliament. Shri Jaitley said that this law will enable confiscation of benami property and provide for prosecution, thus, blocking
a major avenue for generation and holding of black money in the form of benami property, especially in real estate. Quoting
of PAN is being made mandatory for any purchase or sale exceeding the value of
Rs.1 lakh. To improve enforcement, CBDT and
CBEC will leverage technology and have access to information in each other’s
data-base.
Mentioning
job creation as the second pillar of taxation proposals Shri
Jaitley said that this will be ensured through
revival of growth and investment and promotion of domestic manufacturing and
‘Make in India’. The tax ‘pass through’ is proposed to be allowed to both
Category-1 and Category-2 alternative investment fund so that tax is levied on
the investors in these funds and not on the funds per se. To rationalize the
capital gain regime for the sponsors exiting at
the time of listing of the units of Real Estate Investment Trusts (REITs) and
Infrastructure Investment Trusts (InvITs) subject to
payment of Securities Transaction Tax (STT) is proposed, he said.
Permanent
Establishment (PE) norm will be modified to encourage fund managers to relocate
to India. The Finance Minister said that General Anti Avoidance Rule (GAAR)
will be deferred by two years. It will apply to investments made on or
after 01-04-2017, when implemented. In order to facilitate young
entrepreneurs rate of income tax on royalty and fees
for technical services will be reduced from 25 per cent to 10 per
cent. To generate greater employment opportunities the benefit of
deduction for employment of new regular workman to all business entities will
be extended. The eligibility threshold of minimum 100 regular workmen will
be reduced to 50.
Recognizing
the importance of indirect taxes in the context of promotion of domestic
manufacturing and ‘Make in India’, the Finance Minister said basic custom duty
on certain inputs, raw materials, intermediates and components in 22 items is
proposed to be reduced to minimize the impact of duty evasion. All goods
except populated printed circuit boards for use in manufacture of ITA bound
items are proposed to be exempted from SAD. Subject to actual user
condition SAD will be reduced on import of certain other imports and raw
materials.
Shri Jaitley said wealth tax is
proposed to be abolished and replaced with an additional surcharge of 2 per
cent on the super rich with the taxable income of over Rs.1 Crore.
With this 2 per cent additional surcharge a collection of Rs.9,000 Crore is targeted against a
tax sacrifice of Rs.1,008 Crore. To eliminate the
scope for discretionary exercise of power and provide a hassle-free structure
to the tax payers, Shri Jaitley
proposed to increase the threshold limit from Rs.5 Crore
to Rs.20 Crore.
In
order to rationalize the MAT provisions for FIIs, profits corresponding to
their income from capital gains on transactions in securities which are liable
to tax at a lower rate, shall not be subject to MAT, Shri
Jaitley said.
Education
cess and the Secondary and Higher education cess is proposed to be subsumed in central excise
duty. The general rate of central excise duty of 12.36 per cent including
the cesses will be rounded off to 12.5 per
cent. The Ad-valorem rates of excise duty lower than 12 per cent and
those higher than 12 per cent with a few exceptions are not proposed to be
increased. Excise duty on foot-wears with leather uppers and having retail
price of more than Rs.1,000 per pair is proposed to be
reduced to 6 per cent. Shri Jaitley
said on-line central excise and service tax registration will be done in two
working days. As a measure of business facilitation time limit for CENVAT
credit on inputs and input services to be increased from 6 months to one
year. Service tax plus education cess is
proposed to be increased from 12.36 per cent to 14 per cent to facilitate
transaction to GST.
Shri Jaitley said that
cleanliness of households and clean environment are very important social
causes. As an initiative to Swachh
Bharat Abhiyan Shri Jaitley proposed 100 per cent reduction for contribution,
other than by way of CSR contributions, to the Swachh
Bharat Kosh. A similar tax treatment is
also proposed for the Clean Ganga Fund, he said. Shri Jaitley proposed an increase
in clean energy cess from Rs.100 to Rs.200 per metric
tonne of coal, etc. to finance clean environment
initiatives. He further said that excise duty of sacks and bags of
polymers of ethylene other than for industrial use is proposed to be increased
from 12 per cen to 15 per cent. He also
mentioned an enabling provision to levy Swachh Bharat
Cess at the rate of 2 per cent or less on all or
certain services if need arises. Shri Jaitley said that services by common affluent treatment
plant will be exempt from service tax. He also proposed concessions on
customs and excise duty available to electrically operated vehicle and hybrid
vehicle extended up to 31-03-2016.
The
Finance Minister proposed no change in the rate of personal income tax and rate
of tax for companies in respect of income earned in the finance year 2015-16,
assessable in Assessment Year 2016-17. Shri Jaitley proposed to levy a surcharge @ 12 per cent on
individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative
societies and local authorities having income exceeding Rs.1 Crore. Surcharge in the case of domestic companies
having income exceeding Rs.1 Crore and up to Rs.10 Crore is proposed to be levied @ 7 per cent and surcharge @
12 per cent is proposed to be levied on domestic companies having income
exceeding Rs.10 Crore.
He further proposed that in the case of foreign
companies the surcharge will continue to be levied @ 2 per cent if the income
exceeds Rs.1 Crore and is up to Rs. 10 Crore, and @ 5 per cent if the income exceeds Rs.10 Crore.
It
is also proposed to levy a surcharge @ 12 per cent as against current rate of
10 per cent on additional income tax payable by companies on distribution of
dividends and buyback of shares, or by mutual funds and securitization trusts
on distribution of income.
The
education cess on income tax @ 2 per cent for fulfilment of the commitment of the Government to provide
and finance universalized quality based education and 1 per cent of additional
surcharge called ‘Secondary and Higher Education Cess’
on tax and surcharge is proposed to be continued for the financial year 2015-16
for all taxpayers, the Minister said.
Describing
the extension of benefits to middle class tax payers as the priority of the
government, Shri Jaitley
proposed the following concessions:-
A.
Increase
in the limit of deduction in respect of health insurance premium from Rs.15,000 to Rs.25,000.
(1)
For
senior citizens the limit will stand increased to Rs.30,000
from the existing Rs.20,000.
(2)
For
very senior citizens of the age of 80 years or more, who are not covered by
health insurance, deduction of Rs.30,000 towards
expenditure incurred on the treatment will allowed.
B.
The
deduction limit of Rs.60,000 towards expenditure on
account of specified diseases of serious nature is proposed to be enhanced to
Rs.80,000 in case of very senior citizens.
C.
Additional
deduction of Rs.25,000 will be allowed for differently
abled persons under Section 80DD and Section 80U of
the Income-tax Act.
D.
The
limit on deduction on account of contribution to a Pension Fund and the New
Pension Scheme is proposed to be increased from Rs.1 lakh
to Rs.1.5 lakh.
E.
To
provide social safety net and the facility of pension to individuals and
additional deduction of Rs.50,000 is proposed to be
provided for contribution to the New Pension Scheme under Section 80
CCD. This will enable India to become a pensioned society instead
of a pensionless society.
F.
Investments
in Sukanya Samriddhi Scheme
is already eligible for deduction under Section
80C. All payments to the beneficiaries including interest payment on
deposit will also be fully exempt.
G.
Transport
allowance exemption is being increased from Rs.800 to Rs.1,600
per month.
H.
For
the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.
Mentioning
change, growth, jobs and genuine effective up-liftment
of the poor and the under-privileged as Government’s commitment and
re-affirming its commitment to the Constitutional principles of equality and
justice for all without concern for caste, creed or religion, Shri Jaitley ended his budget
speech with the Upanishad-inspired mantra-
Om
Sarve Bhavantu Sukhinah…..
(OM!
May All Be
Happy)….
*****
DSM/GG/MA/DM/RV