Highlights of Union Budget 2016-2017

Highlights of the Union Budget Speech of Hon’ble Finance Minister, Sh. Arun Jaitley on 29th Feb, 2016:

— Health Insurance Scheme being announced to benefit atleast 1/3rd of Indian Population

— Significant changes expected in the FDI policy

Following are the 9 pillars of this Budget:

a. Agriculture and farmers welfare

b. Rural employment and infrastructure

— Digital Literacy mission scheme to cover over 6 crore households

— Revamp of National Land records programme and to be implemented as a Central scheme under Digital India Campaign

c. Social sector

— Measures to make available supply of cooking gas to all households

— New Health Protection Scheme upto Rs. 1 Lacs per family

— PM Jan Aushadhi Yojna for affordable medicines. 3000 drug stores to be opened for medicines.

— Entrepreneurship to be encouraged amongst SC/ST

— Aim for 100 % village electrification by 1st May, 2018

— National Pension Scheme: Upto 40 % withdrawal from the Corpus will be tax free at the time of retirement

d. Educational, skills and job creation

— Digital depository for degrees, certificates

— 1500 multi skill training institutes to be set up

— National Board for Skill Development to be set up

— Entrepreneurship trainings to be provided through open online courses

—  Job creation by extending companies tax relief for hiring unemployed with salaries below Rs25,000 should give some boost to job creation

— Model Shops and Establishments bill to be circulated which may me adopted by States on a voluntary basis…..Mom and Pop shops should be allowed to remain open for all 7 days just like Malls.

—  Govt. will pay EPF contribution of 8.33% for all new employees for 1st three years

e. Infrastructure

—  Road transport in passenger segment to be opened up to private sector

— Public utility resolution disputes bill to be introduced to resolve disputes in construction contracts

— 100 % FDI through FIPB route in the marketing of food produced, procured and manufactured in India

f. Financial Structure reforms

— Comprehensive code of resolution of financial firms to deal bankruptcy of banks/insurance companies

including the Insolvency and Bankruptcy law

— Financial data management centre to be set-up for integrated data mining and analysis

— New derivative products to be developed by SEBI in the Commodities market

— SEBI to have more benches of Securities Appellate Tribunal to deal with illicit deposit schemes

— Recapitalisation of Public Sector Banks

— Process for Debt Recovery Tribunal to be strengthened for faster disposal of cases

g. Governance and Ease of doing business

— Aadhar number to be used for targeting beneficiaries. Bill to be introduced for the same. Social security platform to be introduced.

— Bill to amend Companies Act, 2013 to be introduced in the Budget session of Parliament

h. Fiscal discipline

— The difference between Planned and Non Planned Expenditure to be removed from FY 17-18; Instead every scheme to have outcomes and review mechanism

i Tax reforms to reduce compliance procedures

— Relief to small tax payer

— No change in tax slab

— Ceiling of tax rebate u/s 87A (for assesses whose taxable income is less than Rs. 5 Lacs) – Rs. 2,000 to Rs. 5,000

— Increase the limit of rent paid u/s 80GG (who is not entitled to HRA) from Rs. 24,000 pa to Rs. 60,000 pa

— For non professionals i.e. traders etc: Increase the turnover limit to Rs. 2 crores from Rs. 1 crores  under Section 44AD i.e. no audit required and tax is payable on presumptive income of 8 %

— For professionals: Presumptive income tax scheme under Section 44Ad to all professionals for turnover up to Rs. 50 Lacs with presumptive income of 50 % of gross revenue (optional for the assessee)

— Benefit of deduction of research to be limited to 150 % in FY 16-17 and 100 % in FY 17-18

— Sunset clause for SEZs: Benefits under Section 10AA to new SEZ entities to be available for entities who commencement of production before 31st Mar, 2020

— New manufacturing Companies incorporated on or after 1st Apr, 2016 to be taxed at 25 % for 3 years out the first 5 years provided they do not take any investment allowance.

— Turnover not exceeding Rs. 5 crores for FY ending 15-16- Tax @29 % plus surcharge plus cess from FY 16-17

— NBFCs to get deduction of 5 % for bad and doubtful debts

— GAAR to be implemented from 1st Apr, 2017

— Services provided by EPFO exempted from service tax

— Krishi Kalyan Cess of 0.5% on all taxable services from 1st June 2016

— Pension society

— Affordable housing

— Additional interest benefit of Rs. 50,000 pa for loans up to 35 Lacs where house value does not exceed 50 Lacs

— Service tax exempted for housing construction of houses less than 60 square metre

— Reducing litigation

— Tax @ 10 % on dividend > 10 Lacs p.a. on the recipients of Dividend. This is over and above the Dividend Distribution Tax deposited by Companies.

— Surcharge increased from 12 % to 15 % on income exceeding Rs. 1 crores pa

—  Securities Transaction Tax (STT) increased from 0.017% to 0.05 % on options

— Holding period for determining Long Term capital gain on transfer of shares of unlisted companies reduced from 3 years to 2 years

— Excise duty @ 1 % (without input tax credit) or 12.5 % with input tax credit on branded jewellery (excluding silver jewellery and excluding diamond studded jewellery)

— Voluntary disclosure scheme for old undisclosed income – Tax @ 45 % including surcharge from 1st June, 2016 to 31st Dec, 2016

— Income Tax Disputes: Process to be made simpler

—  Penalty: Under reporting on income: 50 %; Misreporting: 200 % (Current penalty as discreatio  of thr Assessing Officer 100-300 %)

— 11 new benches being created of CESTAT; Limit of single member bench to be increased from Rs. 15 Lacs to Rs. 50 Lacs

— Simplification

— Higher rate will not apply to non residents without PAN upon submission of alternate documents

— Technology

— eAssessments for all assesses in 7 mega cities soon

— No face to face contact with the IT department soon

— Govt will pay interest @ 9 % (instead of 6 %) in delay beyond 90 days for refunds

Other announcements

—  Forex reserves are at highest levels at USD 350 billion

— CPI inflation down to 5.4 %

— GDP growth has accelerated to 7.6 %

— No mention of GST


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