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
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