Union Budget 2017 Highlights – Live from FM’s speech

Macro Economic 

• Forex Reserves at healthy 361 b $ representing 12 months of imports
• IMF GDP growth forecast at 7.2% in 2017 and 7.7% in 2018
• Demo and GST to have an affirmative impact in the long term

3 Changes for this Budget

• Budget date advanced to 1st Feb to enable approval of the Bill before 1st April
• Merger of the Railway Budget with the Union Budget: To bring railways in the centre stage of the fiscal policy
• Done away with the Plan and Non Plan expenditure: To give holistic view of expenditure

Theme for 2017-18: Transform, Energise and Clean India (TEC India)

Key Themes of this Budget

1. Farmers
   • Measures for easy availability of loans to Farmers
   • Soil Health cards: Mini labs to be set-up in Krishi Vigyan Kendras
   • Modern Law on Contract Farming to be proposed
2. Rural Population
   • 1 cr households and 50,000 Gram Panchayats to be brought out of poverty by 2019
   • MNREGA to be reoriented
   • 133 km  road constructed per day
   • 1 cr houses to be constructed by 2019 under Pradhan Mantri Aawas Yojna
   • 100 % village electrification to be achieved by 1st May, 2018
   • Promotion of skill development and livelihood opportunities
3. Youth
   • System of “Annual Learning Outcomes” in schools proposed
   • Focus on innovation
   • Reforms in UGC
   • Good institutions to have autonomy
   • Swayam Platform to be launched with 350 online courses linked with DTH channels
   • 100 India International skill centres to be set-up
   • 5 special tourism zones to be set-up: Incredible India campaign to be launched across the world
4. Poor
   • Affordable housing to get infrastructure status
   • Targeted elimination of diseases like TB, IMR, MMR and many more in a time bound manner
   • Focus on healthcare
   • Structural transformation for medical practitioners
   • 2 AIIMS to be set-up in Jharkhand and Bihar
   • Drugs and Cosmetics Act to be amended for availability of cheap drugs and generics
   • Labour Laws to be overhauled in the below 4 themes:
     • Wages
     • Industrial Relations
     • Social Security
     • Safety
   • LIC to start pension scheme for Senior citizens with guaranteed 8 % returns
5. Infrastructure (including Railways)
   • Passenger safety fund to be created for passenger safety measures for railways
   • 500 stations to be made differently enabled friendly
   • Measures for Swachh Railways including measures on waste management
   • Service charges for booking tickets through IRCTC to be withdrawn
   • New metro rail policy to be announced; New Metro Rail Act has already been enacted
   • 2.4 Lacs cr allocated for transport sector (air, sea and road)
   • Telecom: OFC network to be expanded; Broadband to be available to 1.5 Lacs gram panchayats
   • Solar: 2nd Phase of Solar Power Development for additional 20,000 mw capacity
   • Electronics Manufacturing: India to be made a global hub for electronics manufacturing
   • Trade Infrastructure Export Scheme to launched for promotion of exports
6. Financial Sector
   • More than 90 % FDI are through automatic route
   • Foreign Investment Promotion Board (FIPB) to be abolished
   • FDI to be further liberalised
   • Multi State Cooperative Act to be amended to prevent abuse by unscrupulous people
   • Computer Emergency Response Team (CERT) to be formed specifically for financial sector to focus on cyber security
   • Shares of IRCTS, IRFC to be listed
   • Shares of Central Public Sector Enterprises (CPSEs) to be listed
   • Lending target of banks and financial institutions doubled
   • Stand-up India scheme to be launched for Dalits and Women entrepreneurs
7. Digital Economy
   • India on the cusp of a solid digital revolution
   • BHIM app adopted by 125 Lacs people for UPI interface
   • Aadhar enabled payment system to be launched
   • Banks to issue 10 Lacs POS terminals by Mar, 17
   • Easy unsecured loans to be advanced on the basis of transaction history
   • Comprehensive review of Payments and Settlements Act, 2007
   • Payment Regulatory Board to be set-up for the Payments and Settlements Act, 2007
   • Amendments to be proposed in Negotiable Instruments Act for efficient resolution of cheque bouncing disputes
8. Public Service: Effective Governance
   • Central Defence Travel System (for easy online booking of tickets by Defence personnel)
   • Rationalise the number of Tribunals by merging them wherever required
   • Introduction of legislative changes to confiscate the assets of loan defaulters who abscond the country
9. Prudent Fiscal Management
   • Total Expenditure: Rs. 21.47 Lacs cr
   • Defence expenditure excluding Pension: 2.17 Lacs+ cr
   • Expert Committee Report: Debt to GDP proposed at 60 % by 2023; 3 % fiscal deficit recommended for the next 3 years with a deviation of 0.5 %.
   • Fiscal deficit for 2017-18 pegged at 3.2 % of the GDP and 3 % for next year
10. Tax Administration
    • No. of individuals filing returns is 1.74 cr against 4.2 cr  individuals employed in organised sector
    • No. of individuals filing returns is 1.81 cr against 5.6 cr individuals employed in unorganised sector (including proproietorships)
    • Out of 13.94 Lacs Companies, only 5.97 Lacs returns filed for AY 2016-17
    • 2.76  Lacs Companies show Nil Income / losses in AY 2016-17
    • Only 7781 Companies have shown Profits before Tax of 10 cr+
    • Out of 76 Lacs individual tax payers with income between 5 Lacs to 10 Lacs, 56 Lacs are salaried individuals
    • Largely a tax non compliant society and large scale tax evasion is rampant as indicated by 1.2 cr cars bought and 2 cr abroad visits taken for tourism /business trips
    • Growth in Advance Income Tax on Personal Income in 2016-17 of 34.8 % over last year
    • Holding period for identifying long term capital asset in case of immovable property reduced to 2 years from 3 years
    • Base year for indexation to be changed from 1.4.81 to 1.4.2001
    • Basket of instruments through which Capital gains can be exempted to be extended
    • Builders to be charged tax on notional rent on flats remaining unsold for more than 1 year from the date of completion certificate
    • Income tax exemption for start-ups: Tax exempted for any 3 years out of 7 years (instead of the total window of 5 earlier)
    • Carry forward of losses in case of Change in Management by more than 51 % limit allowed relaxed as long as the promoters remain same

• • MAT Carry forward to be allowed for 15 years instead of 10 years
  •  Corporate Tax for Companies up to Turnover of up to 50 cr to be reduced to 25 %
  • Basic Customs duty reduced to 2.5 % from 5 %
  • NPA to be increased from provisioning from 7.5 % to 8.5% for financial sector
  • Presumptive taxation u/s 44AD for Business Income: Rate reduced to 6 % from 8 % for turnover realised in non cash transaction
  • Cash expenditure limit to be reduced to Rs. 10,000 for revenue as well as capital expenditure
  • Cash receipts by Charitable organisations reduced from 10,000 to 2,000
  • No transaction above Rs. 3 Lacs to be permitted in cash
  • Maximum cash that a political party can receive is Rs. 2,000 from anyone source; Any amount can be received by cheque or through digital payment.
  • Electoral bonds to be issued by RBI for political party funding; Donors can fund political parties by purchasing these bonds and donating these bonds to the parties. Parties can get the bonds redeemed from RBI within the prescribed time frame.
  • BCD, Excise duty, SAD, CVD on manufacture of equipment supporting digital transactions like card readers, scanners etc.
  • Thresholds increased for maintaining books of accounts u/s44AA from Rs. 10 Lacs to 25 Lacs
  • TDS exempt for income of Insurance agents upon their self declaration
  • Time period of revising return reduced to 12 months from the closure of financial year (as opposed to 12 months from the close of AY earlier)
  • Time period of scrutiny assessment reduced to 18 months from AY 18-19 and 12 months for AY 19-20
  • No scrutiny for first time return filers unless in case of suspicious transactions
  • Income tax rate slabs for Individuals
    • Income 2.5 Lacs to 5 Lacs: 5 % (instead of 10 % earlier)
    • Other slabs remain same
    • Rebate u/s 87A reduced to Rs. 2,500 (from Rs. 5000) for assessees with taxable income up to 3.5 Lacs (from Rs. 5 Lacs earlier)
    • New Surcharge of 10 % for Income from Rs. 50 Lacs to 1 cr
    • Existing Surcharge for income above 1 cr continues @ 15 %
  • Simple 1 page form for Individual with income up to 5 Lacs other than business income
  • Maximisation of efforts for E-Assessments
  • Data mining to be done extensively to track tax evasion cases