Government committed to eliminate Black Money component from the economy

Budget’s thrust on stimulating growth, relief to Middle Class, Affordable Housing, Curbing Black Money, promoting Digital Economy, transparency of Political Funding and simplification of Tax Administration

Government committed to eliminate Black Money component from the economy

MSME companies to pay income tax @ 25%

Custom duty on LNG reduced from 5% to 2.5%

Small and medium tax payers to pay less under presumptive income tax scheme

Measures announced to ensure transparency in Electoral funding

Income tax reduced from 10% to 5% for individual having income in the slab of Rs. 2.5 Lakh to Rs. 5 Lakh

Individuals  in the slab of Rs. 50  Lakh to  Rs.  1 Crore will have to pay surcharge of 10%

GST council’s recommendations on major  issues finalised

            Presenting the General Budget 2017-18 in Parliament here today, the Union Minister of Finance and Corporate Affairs Shri Arun Jaitley said that the major thrust of his Budget proposals is on stimulating growth, relief to middle class, affordable housing, curbing black money, promoting digital economy, transparency of political funding and simplification of tax administration. 

            Presenting the overall economic scenario of the country, Shri Jaitley said that we are largely a tax non-compliant society.  Among the 3.7 crore individuals who filed the tax returns in 2015-16, only 24 lakh people show income above Rs. 10 lakh.  Of the 76 lakh individual assesses who declared income above Rs. 5 lakh, 56 lakh are from salaried class.  The number of people showing income more than Rs. 50 lakh in the entire country is only 1.72 lakh, while more than 1.25 crore cars have been sold in the last five years and  over 2 crore people flew abroad in the year 2016. 

            Highlighting the priorities of the Government, the Finance Minister Shri Jaitley in his Budget Speech said that one of the main priorities is to eliminate the black money component from the economy.  He said that the Government is committed to make our taxation rates more reasonable, our tax administration more fair and expand the tax base in the country.  Presenting a revealing picture after the demonetization, he said that during the period from 8^th November to 30^th December, 2016 deposits between Rs. 2 lakh and Rs. 80 lakh were made in about 1.09 crore accounts with an average deposit size of Rs. 5.03 lakh.  Deposits of more than Rs. 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs. 3.31 crore.  This data mining will help the Government immensely in expanding the tax net as well as increasing the revenues, which was one of the main objectives of demonetization. 

            For the second year in a row, the growth rate of tax revenue will be 17% as per the RE of 2016-17.  Because of the serious efforts made by the Government, the rate of growth of advance tax in personal income tax in the first three quarters of the Current Financial Year is 34.8%. The tax collections both in Direct and Indirect taxes in the current financial year even after demonetization have shown a remarkable surge.

Mentioning the measures for promoting affordable housing in real estate sector, the Finance Minister said that the scheme for profit linked income tax exemption for promoters of affordable housing will be broad based.  Instead of built-up area of 30 and 60 sq. mtrs., the carpet area of 30 and 60 sq. mtr. will be counted.  Also the 30 sq. mtr. will apply only in case of municipal limits of four metropolitan cities while for the rest of the country limit of 60 sq. mtr. will apply.  In order to be eligible, the scheme was to be completed in three years after commencement.  Now, it will be extended to five years.  The tax on notional rental income will be applicable after one year of the end of the year in which completion certificate is received so that builders get some breathing time for liquidating their inventory.  Announcing changes in the capital gain taxation provisions in respect of land and building, Shri Arun Jaitley said that the holding period for considering gain from immovable property is being reduced to two years from existing three years now.  Also, the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.  In respect of new capital for State of Andhra Pradesh, persons holding land on 2.6.2014 whose land is being pooled for creation of  new capital city under the Government  Scheme,  will be exempted from capital gain tax. 

            Delineating measures for stimulating growth, Shri Jaitley said that a concessional withholding rate of 5% being charged on interest earned by foreign entities in external commercial borrowings or in bonds in Government securities is proposed to be extended to 30.6.2020.  For the purpose of carry forward of losses in respect of start ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoters continues.  Also, the profit linked deduction available to the start ups for three years out of five years is being changed to three years out of seven years.    Shri Arun Jaitley said that it is not practical to remove or reduce Minimum Alternate Tax (MAT).   However, in order to allow companies to use MAT credit in future years, carry forward of  MAT upto a period of 15 years instead of 10 years at present will be allowed.   Announcing tax benefits to medium and small enterprises to make them more viable and to encourage them to migrate to company format, the income tax for smaller companies with annual turnover upto   Rs. 50 crore will be reduced to 25% .  As per data of Assessment Year 2015-16, there are         6.94 lakh companies filing returns of which   6.67 lakh companies fall in this category.  This will make MSME sector more competitive as compared to large companies.  The revenue forgone estimate for this measure is expected to be Rs. 7200 crore per annum. 

            To give a boost to Banking Sector, allowable provision for non performing asset is being increased to 8.5% from 7.5%.  This will reduce the tax liability of Banks.  In respect of NPA accounts, interest receivable on actual receipts instead of accrual basis will be taxed.  This will remove hardship of having to pay tax even when interest income is not realized.  Shri Jaitley further announced reduction in basic custom duty on LNG from 5% to 2.5% in view of wide range of use of LNG as fuel as well as feed stock for petro-chemical sector. 

In order to incentivize domestic value addition and to promote Make In India, Shri Jaitley announced changes in Customs & Central Excise duties on several items related to the Renewable Energy Sector. This includes all items of machinery required for - fuel based power generating system to be set-up in the country for demonstration purposes; systems operating on biogas/ biomethane/ byproduct Hydrogen; LED lights or fixtures etc.

Proposals for reduction in Customs duty on inputs and raw materials to reduce costs have been submitted for certain items like Liquefied Natural Gas (LNG), Nickel, Vegetable Tanning Extracts and certain Capital Goods.

Proposal to hike Excise duties and to levy additional duties under Sec 85 of the Finance Act, 2005 on several tobacco and tobacco related products have also been made in the Budget.

           

Mentioning measures to promote digital economy/cashless transactions, Shri Arun Jaitley said that BCD, Excise/CV duty and SAD on miniaturized POS card reader for m-POS, micro ATM standards version 1.5.1, Finger Print Readers/Scanners and Iris Scanners will be exempted.  Also, parts and components for manufacture of such devices so as to encourage domestic manufacturing of these devices will be exempted.  No transaction above Rs. 3 lakh will be permitted in cash.  The cash expenditure allowable as deduction, both for revenue as well as capital expenditure will be limited to Rs. 10,000. Similarly, the limit of cash donation which can be received by charitable trust is being reduced to Rs. 2000 from Rs. 10,000.  As regards, scheme of presumptive income tax for small and medium tax payers whose turnover is upto Rs. 2 crore,  6%  of their turnover instead of 8% at present  will be counted as presumptive income.  

            Expressing concern over funds being received by political parties through anonymous donations shown in cash, Shri Jaitley said that the measures taken in the past to check such donations has only marginally improved the situation.  A transparent method of funding political parties which is vital to the system of free and fair elections needs to be evolved.  Shri Jaitley proposed the following  schemes to cleanse the system of funding of political parties:

a)     The maximum amount of cash donation that a political party can receive will be            Rs. 2000/- from one person, b) Political party will be entitled to receive donations by cheque or digital mode from their donors.  c) Reserve Bank of India Act will be amended to enable the issuance of electoral bonds in accordance with a scheme to be framed by the Government in this regard.  Under this Scheme, a donor could purchase bonds from authorized Banks against cheque and digital payments only.  They shall be redeemable only in the designated account of a registered political party.  These bonds will be redeemable within the prescribed time limit from issuance of bond.  d) Every political party would have to file its return within the time prescribed in accordance with the provisions of Income Tax Act. 

Mentioning ease of doing business measures, Shri Arun Jaitley said that in order to reduce the compliance burden due to domestic transfer pricing provision, the scope of domestic transfer pricing will be restricted if one of the entity involved in related party transaction enjoys specified profit linked deduction.  The threshold limit for audit of business entities opting for presumptive income scheme is being increased from Rs. 1 crore to Rs. 2 crore.  Similarly, threshold maintenance of books for individuals and HUF is being increased from turnover of Rs. 10 lakh to Rs. 25 lakhs or income from Rs. 1.2 lakh to Rs. 2.5 lakh. 

      Shri Jaitley further announced to exempt Foreign Portfolio Investor (FPI) Category I & II from indirect transfer provision.  Indirect transfer provision will not be applicable in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India.  He further announced that a TDS of 5%  being deducted from Commission payable to individual insurance agents will be exempted subject to their filing a self declaration that their income is below taxable limit.  Professionals with receipt upto Rs. 50 lakh per annum will be given benefit in terms of paying advance tax in one instalment instead of four under presumptive taxation scheme.  The time period for revising a tax return is being reduced to 12 months from completion of financial year to allow the people to claim the refund  expeditiously.  Also, the time for completion of scrutiny assessment is being compressed further from 21 months to 18 months for assessment year 2018-19 and further to 12 months for assessment year 2019-20 and thereafter. 

Giving details of proposals on personal income tax, the Finance Minister said that the existing rate of taxation for individual assesses between income of Rs. 2.5 lakh to Rs. 5 lakh will be reduced to 5% from the present rate of 10%.  This would reduce the tax liability of all persons below Rs. 5 lakh income either to zero (with rebate) or 50% of their existing liability.  In order not to have duplication of benefit, the existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs. 2500 available only to assesses upto income of Rs. 3.5 lakh.  The combined effect of both these measures will mean that there would be zero tax liability for people getting income upto Rs. 3 lakh per annum.  And the tax liability will only be Rs. 2500 for people with income between Rs. 3 and 3.5 lakh.  If the limit of Rs. 1.5 lakh under Section 80C  for investment is used fully the tax would be zero for people with income of Rs. 4.5 lakh.  While the taxation liability of people with income upto Rs. 5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs. 12500 per person.  The total amount of tax forgone on account of this measure is Rs. 15500 crore, Shri Jaitley said. 

A surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs. 50 lakh and one crore, will be levied.  The existing surcharge of 15% of tax on people earning more than 1 crore will continue.  This is likely to give additional revenue of     Rs. 2700 crore.  A simple one page form to be filed as Income Tax Return will be made for the category of Individual having taxable income upto Rs. 5 lakh other than business income.  Also, a person of this category to file Income Tax Return for the first time would not be subjected to any scrutiny in the first year unless there is specific information available with the Department regarding his high value transactions.  Shr Jaitley appealed to all citizens of India to contribute to Nation Building by making a small payment of 5% tax if their income is falling in the lowest slab of Rs. 2.5 lakh to Rs. 5 lakh.  The Finance Minister further announced that in line with exemption available to the Prime Minister’s Relief Fund and certain other funds, the income of the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund shall be exempted from tax. 

Mentioning Goods and Service Tax as a path-breaking reform, Shri Arun Jaitley said that preparatory work for GST is Government’s top priority.  The GST Council has finalized its recommendations on almost all the issues based on consensus.  The preparation of  IT system for GST is also on schedule.  The extensive reach out efforts to trade and industry for GST will start from 1^st April, 2017 to make them aware of the new taxation system.  Without compromising the spirit of cooperative federalism, Government shall continue to strive to achieve the goal of implementation of GST.  Shri Jaitley expressed hope that GST will bring more taxes both to Central and State Governments because of widening of tax net. 

Making a mention of Prime Minister’s approach of RAPID (Revenue, Accountability, Probity, Information and Digitization), Shri Arun Jaitley said that Government is trying to bring in maximum use of information technology to remove human contact with assesses as well as to plug tax avoidance.  He assured everyone that honest, tax compliant persons would be treated with dignity and courtesy.  The Direct Tax proposals for exemptions would result in revenue loss of  Rs. 22700 crore  while revenue gain through additional resource mobilization proposals would be at Rs. 2700 crore i.e. the  net revenue loss in Direct Tax would come to Rs. 20000 crore. 

Concluding his Budget Speech, Shri Arun Jaitley outlined the Government’s overarching agenda: “Transform, Energise and Clean India’.  Government’s emphasis will be on implementing all these proposals for the benefit of the farmers, the poor and the under privileged sections of the society, the Finance Minister added. 

The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley presented the General Budget 2017-18

Ministry of Finance01-February, 2017 14:30 IST

The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley presented the General Budget 2017-18 in Parliament today

Total expenditure in Budget for 2017-18 has been placed at`21.47 lakh crores and this is expected to have multiplier effects and lead to higher growth.

The total resources being transferred to the States and the Union Territories with Legislatures is Rs. 4.11 lakh crores in 2017-18, as against Rs.3.60 lakh crores in BE 2016-17.

Defence expenditure excluding pensions stands at Rs. 2,74,114 crore

For the first time, a consolidated Outcome Budget, covering all Ministries and Departments, is being laid along with the General Budget

FM: Revenue Deficit for next year is pegged at 1.9%  as against 2% mandated by the FRBM Act.

FM: India seen as an engine of global growth and is expected to be one of the fastest growing major economies in 2017.

Terming demonization a right cause, Finance Minister recalled Mahatma’s quote that  “A right cause never fails”.

FM: Agenda is (TEC)- to transform the quality of governance, energise various sections of society and to clean the country from evils of corruption, black money and non-transparent political funding.

FM:Approach is to spend more in rural areas, on infrastructure and poverty alleviation while maintaining fiscal prudence.

The Government will undertake a Mission Antyodaya to bring one crore households out of poverty and to make 50,000 gram panchayats poverty free by 2019, the year marking the 150th birth anniversary of Gandhiji.

Mahila Shakti Kendras to be set up at village level

Budget for the welfare of Women and Children stepped up from Rs. 1,56,528 crores

to Rs 1,84,632 crores in 2017-18.

Allocation for infrastructure development in 2017-18 is Rs.3,96,135 crores.

Railways expenditure will be Rs. 1,31,000 crores, Rs.55,000 crores to be provided by the Government .

Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18.

Further liberalisation of FDI policy is under consideration.

Government decided to abolish the Foreign Investment Promotion Board

FIPB in 2017-18.

An integrated Public Sector ‘Oil Major’,

to match the performance of huge international and domestic private sector oil

and gas companies, is proposed.

The shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed

in stock exchanges.

The Finance Minister announced that a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18.

Rs. 10,000 crores is provided for recapitalization of Banks in 2017-18. The Finance Minister says that an additional allocation will be provided, as may be required.

For  the The Pradhan Mantri Mudra Yojana the lending  target has been set at Rs. 2.44 lakh crores in 2017-18, doubling it from the ones in 2015-16 with priority to be given to Dalits, Tribals, Backward Classes, Minorities and Women.

The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley presented the General Budget 2017-18 in Parliament here today. This is the first of its kind which included the Railway Budget. This year’s Union Budget also does not have Plan and Non-plan classifications and  has been advanced by a month to the beginning of February. The Finance Minister Shri Jaitley in his Budget speech said that the agenda is “Transform, Energise and Clean India” (TEC)- to transform the quality of governance for better quality of life. The aim is to energise various sections of society, especially the youth and the vulnerable and to clean the country from the evils of corruption, black money and non-transparent political funding. He says, the approach is to spend more in rural areas, on infrastructure and poverty alleviation while maintaining fiscal prudence. Economic reforms will be continued promote higher investments and accelerate growth for the benefit of the poor and the underprivileged.

 

Total expenditure in Budget for 2017-18 has been placed at Rs.21.47 lakh crores.  Shri Arun Jaitley said that this is expected to have multiplier effects and lead to higher growth.

The total resources being transferred to the States and the Union Territories with Legislatures is Rs. 4.11 lakh crores, against Rs.3.60 lakh crores in BE 2016-17.

Defence expenditure excluding pensions, is to be Rs. 2,74,114 crores.

The Finance Minister said that he has taken into consideration the need for higher public expenditure in the context of sluggish private sector investment and slow global growth. He however said that he had kept in mind the recommendation of the FRBM Committee that a sustainable debt should be the underlying basis of prudent fiscal management. He said that considering aspects in the committee report, the fiscal deficit for 2017-18 has been pegged at 3.2% of GDP. The Minister said that he remains committed to achieve 3% in the following year. Shri Jaitley also asserted that the Revenue Deficit for next year is pegged at 1.9% , against 2% mandated by the FRBM Act.

 

For the first time, a consolidated Outcome Budget, covering all Ministries and Departments, is being laid along with the Union Budget

Shri Arun Jaitley announced that the target for agricultural credit in 2017-18 has been fixed at a record level of Rs. 10 lakh crores. A dedicated Micro Irrigation Fund with an initial corpus of Rs.5,000 crores with an objective to achieve the goal, ‘per drop more crop’ besides the  Long Term Irrigation Fund with total corpus of this Fund to Rs. 40,000 crores will be set he added.

The Finance Minister said that a model law on contract farming would be prepared and circulated among the States for adoption. He also said that Dairy Processing and Infrastructure Development Fund with a corpus of Rs. 8,000 crores over 3 years would be set up in NABARD. Initially, the Fund is to start with a corpus of Rs.2,000 crores.

Shri Arun Jaitley announced that the Government will now undertake a Mission Antyodaya to bring one crore households out of poverty and to make 50,000 gram panchayats poverty free by 2019, the year marking the 150th birth anniversary of Gandhiji. He says the strategy is to utilise the existing resources more effectively along with annual increases and a focused micro plan for sustainable livelihood for every deprived household.

Under the reoriented MGNREGA to support our resolve to double farmers’ income, about 10 lakh farm ponds are expected to be completed by March 2017 against the targeted 5 lakh farm ponds. This will contribute greatly to drought proofing of gram panchayats. The budgetary provision of Rs.38,500 crores under MGNREGA in 2016-17 has been increasedto Rs. 48,000 crores in 2017-18, the highest ever allocation for MGNREGA, the Finance Minster added..

The pace of construction of The Pradhan Mantri Gram Sadak Yojana (PMGSY) has accelerated to reach 133 km roads per day in 2016-17, as against an average of 73 km during the period 2011-2014, Shri Arun Jaitley said that the government is committed to complete the current target under PMGSY by 2019. A sum of Rs. 19,000 crores in 2017-18 for this scheme and together with the contribution of States, an amount of Rs. 27,000 crores is to be spent on PMGSY in 2017-18.

An allocation of Rs. 23,000 crores for Pradhan Mantri Awaas Yojana – Gramin from crores is made in 2017-18 against Rs.15,000 in BE 2016-17. Finance Minister said the government proposes to complete 1 crore houses by 2019 for the houseless and those living in kutcha houses. He said the allocation for Prime Minister's Employment Generation Programme (PMEGP) and credit support schemes has been increased more than 3 times.

Shri Arun Jaitley asserted that the total allocation for the rural, agriculture and allied sectors in 2017-18 is Rs.1,87,223 crores, which is 24% higher than the previous year.

In the Sector of education and skill development to benefit you several new measures have been announced in this year’s budget . The Pradhan Mantri Kaushal Kendras (PMKK) have presently promoted in more than 60 districts are proposed to be extended  to more than 600 districts across the country.

A programme called SANKALP  - Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme to provide market relevant training to 3.5 crore youth with a budget of Rs. 4,000 crores has been announced . The next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) is also be launched in 2017-18 at a cost of Rs.2,200 crores to focus on improving the quality and market relevance of vocational training provided in ITIs and strengthen the apprenticeship programmes through industry cluster approach.

A National Testing Agency is proposed to be established as an autonomous and self-sustained premier testing organisation to conduct all entrance examinations for higher education institutions in the country.

Leveraging Information Technology, a platform called SWAYAM is proposed to be launched to teach at least 350 courses by the best faculty online. This will enable students to virtually, attend the courses taught, access high quality reading resources; participate in discussion forums; take tests and earn academic grades.

For higher education reforms in UGC and for secondary education an Innovation Fund to encourage local innovation for ensuring universal access, gender parity and quality improvement with initial focus on 3479 educationally backward blocks are proposed.

For schools flexibility in curriculum to promote creativity through local innovative content with  emphasis on science education and introduction of a system for measuring annual learning outcomes is proposed.

Shri Arun Jaitley announced that Mahila Shakti Kendras will be set-up at village level with an allocation of Rs. 500 crores in 14 lakh ICDS Anganwadi Centres. He said these Kendras  are for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition.

Recalling announcements made by the Prime Minister, the Finance Minister made on 31st December, 2016 as a part of the nationwide scheme Rs. 6,000 each will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and to vaccinate their children. 

Budget for the welfare of Women and Children stepped up from Rs. 1,56,528 crores in BE 2016-17 to Rs 1,84,632 crores in 2017-18.

As a part of strengthening overall health infrastructure in the country the Finance Minister announced setting up of two new All India Institutes of Medical Sciences in the States of Jharkhand and Gujarat. He said the Government is committed to take necessary steps for structural transformation of the Regulatory framework of MedicalEducation and Practice in India which includes several steps for increasing post graduate medical seats.

The allocation for the welfare of Scheduled Castes has been stepped up from Rs.38,833 crores in BE 2016-17 to Rs.52,393 crores in 2017-18, representing an increase of about 35%. The allocation for Scheduled Tribes has been increased to Rs.31,920 crores and for Minority Affairs to Rs.4,195 crores. The Government will introduce outcome based monitoring of expenditure in these sectors by the NITI Aayog ,Shri Arun Jaitley.

The Finance Minister asserted that investments in infrastructure sector are in line with the agenda set for this year budget that is to transform the quality of governance for better quality of life to people, to energise various sections of society to enable them to unleash their true potential; and to clean the country from the evils of corruption, black money and non-transparent political funding.

The Finance Minister said that accordingly a total allocation of Rs.3,96,135 crores is made for infrastructure development in 2017-18, out of which Rs. 2,41,387 crores is for  rail, roads, shipping.

The total capital and development expenditure on Railways for 2017-18 is to be Rs. 1,31,000 crores. Out of this Rs.55,000 crores provided by the Government . Railway lines of 3,500 kms will be commissioned in 2017-18, as against 2,800 kms in 2016-17. A Rashtriya Rail Sanraksha Kosh will be created with a corpus of Rs. 1 lakh crores over a period of 5 years, for passenger safety. Government will lay down clear cut guidelines and timeline for implementing various safety works to be funded from this Kosh.

The Finance Minister said that a new Metro Rail Policy will be announced with focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software. He also said that a new Metro Rail Act will be enacted by rationalising  the existing laws to facilitate greater private participation and investment in construction and operation.

For the road sector, a Budgetery allocation of Rs. 64,900 crores is made for 2017-18 for highways against Rs. 57,976 crores in BE 2016-17. He said 2,000 kms of coastal connectivity roads have been identified for construction and development to facilitate better connectivity with ports and remote villages.

Shri Arun Jaitley  said that the Airport Authority of India Act will be amended to enable effective monetisation of land assets. The resources, so raised, will be utilised for airport upgradation.  The Minister said that select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode.

 The Finance Minister said by the end of 2017-18, high speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats, with wifi hot spots and access to digital services at low tariffs. He said accordingly the budget for Bharat Net Project has been stepped up to Rs.10,000 crores in 2017-18. He pointed out that under the BharatNet Project, OFC has already been laid in 1,55,000 kms. The Minister said that a ‘DigiGaon’ initiative will be launched to provide tele-medicine, education and skills through digital technology.

The Minister also talked of strengthening our Energy sector. He said the Government has now decided to take up the second phase of Solar Park development for additional 20,000 MW capacities. Similarly in the second phase the government has decided to set up two more Strategic Crude Oil Reserves one Chandikhole in Odisha and other in Bikaner in Rajasthan besides the three set up earlier.

Shri Arun Jaitley announced that a new and restructured Central scheme, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18.

The Finance Minister has announced that the government has decided to abolish the Foreign Investment Promotion Board (FIPB) in 2017-18.  He said that a roadmap for the same will be announced in the next few months. The minister said that this became possible as The Foreign Investment Promotion Board (FIPB) has successfully implemented e-filing and online processing of FDI applications and more than 90% of the total FDI inflows are now through the automatic route. In the meantime, further liberalisation of FDI policy is under consideration and necessary announcements will be made in due course, the minister added.

Shri Arun Jaitley asserted that a bill will be introduced in the Parliament to curtail the menace of illicit deposit schemes, after the draft bill, placed in the public domain, has been finalized. He said this is part of this budget’s and the Government’s ‘Clean India’ agenda. The Minister said that an amendment Bill to change the Arbitration and Conciliation Act 1996 will be introduced to streamline institutional arrangements for resolution of disputes in infrastructure related  construction contracts, PPP and public utility contracts.

The Minister asserted that the disinvestment policy announced in the last budget will continue and the Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges.

Shri Arun Jaitley announced that a Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established and it will work in close coordination with all financial sector regulators and other stakeholders.

Other proposals announced by the Minister are:

1.      The commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks.

2.      The process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers, etc. will be made fully online by SEBI to improve ease of doing business.

3.      A common application form for registration, opening of bank and demat accounts, and issue of PAN will be introduced for Foreign Portfolio Investors (FPIs). SEBI, RBI and CBDT will jointly put in place the necessary systems and procedures. This will greatly enhance operational flexibility and ease of access to Indian capital markets.

4.       Steps will be taken for linking of individual demat accounts with Aadhar.

5.       Presently institutions such as banks and insurance companies are categorised as Qualified Institutional Buyers (QIBs) by SEBI. They are eligible for participation in IPOs with specifically earmarked allocations. It is now proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorised as QIBs. This will strengthen the IPO market and channelize more investments.

6.       Listing and trading of Security Receipts issued by a securitisation company or a reconstruction company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows in to the securitisation industry and will particularly be helpful to deal with bank NPAs.

The Finance Minister announced that the Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges.

He announced that the shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed in stock exchanges.

Shri Arun Jaitley  said that government also proposes to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oiland gas companies. He said the Government sees possibilities of strengthening our CPSEs throughconsolidation, mergers and acquisitions.

Rs. 10,000 crores for recapitalization of Banks in 2017-18 has been allocated. Additional allocation will be provided, as may be required. The Minister said that Listing and trading of Security Receipts issued by a securitization company or a reconstruction company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows into the securitization industry and will particularly be helpful to deal with bank NPAs.

For  the The Pradhan Mantri Mudra Yojana the lending  target has been set at Rs. 2.44 lakh crores in 2017-18, doubling it from the ones in 2015-16 with priority to be given to Dalits, Tribals, Backward Classes, Minorities and Women.

The Finance Minister announced that a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18.

Shri Arun Jaitley said that India is now on the cusp of a massive digital revolution. He said that earlier initiative of our Government to promote financial inclusion and the JAM trinity were important precursors to our current push for digital transactions. He hoped the BHIM app has launched would unleash the power of mobile phones. The Minister said that Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly to  specifically benefit those who do not have debit cards, mobile wallets and mobile phones for digital payments and financial inclusion. The minister said that a Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 throughUPI, USSD, Aadhar Pay, IMPS and debit cards. He said there is a proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration. The minister also pointed out that Necessary amendments are proposed in the Finance Bill 2017  to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems. Government is also considering the option of amending the Negotiable Instruments Act suitably to ensure that the payees of dishonoured cheques to be

able to realise the payments.

Saying that the Government is committed to improve the standards of public service and transparent governance, the Finance minister announced that the fallowing measures will be take:

Government now proposes to utilise the Head Post Offices as front offices for rendering passport services to people in far flung areas.

A comprehensive web based interactive Pension Disbursement System for Defence Pensioners will be established to receive pension proposals and make payments centrally.

A Centralised Defence Travel System has now been developed through which travel tickets can be booked online by oursoldiers and officers.

Government is considering introduction of legislative changes, or even a new law, to confiscate the assets within our country of such economic offenders who flee the country,, till they submit to the jurisdiction of the appropriate legal forum.

The government proposes to rationalise the number of tribunals and merge tribunals wherever appropriate.

Recalling that Service to the people was the life-long commitment of the Father of the Nation, Mahatma Gandhi, the Minister said that a High Level Committee under the Chairmanship of the Prime Minister is proposed to be set up to take steps to celebrate the 150th Birth Anniversary of the Mahatma,

The total expenditure in Budget for 2017-18 has been placed at`21.47 lakh crores.

Salient Features of Direct Tax Proposals in Union Budget 2017

Salient Features of Direct Tax Proposals in Union Budget 2017

The Union Budget 2017 was laid before the Parliament today by the Hon’ble Finance Minister of India. The salient features of Direct Tax proposals are summarised below:

I.          Affordable Housing:

1.         Three concessions in the scheme of Income Tax exemption for affordable housing:

(a)          Area of 30 and 60 Sq.mtr. to be counted as carpet area and not built-up area;

(b)          30 Sq.mtr. only in 4 metropolitan city limits and 60 Sq.mtr. for the rest of the country;

(c)          Completion period extended from 3 years to 5 years.

           

2.         Tax on Notional rental income for builders to be calculated only after 1 year from the end of the year in which completion certificate is received.

           

3.         Changes in Capital Gain taxation for immovable properties:

(a)     Holding period reduce for computation of long term capital gain from three years to two years

(b)     Base year for counting the cost of property shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.

4.         Basket of financial instrument in which capital gain can be invested without payment of tax to be expanded.

5.         For joint development agreement, the liability to pay capital gain tax will arise in the year in which project is completed.

            6.         For Andhra Pradesh capital, land belonging to owners as on 2.6.2014 to be exempted from capital gain if the same is offered under land-pooling mechanism.

           

II.        Measures for stimulating growth:

            1.         Concessional withholding rate of 5 per cent. for interest received by foreign entities on loans given in India to be continued for another 3 years beyond 30.6.2017.

            2.         Start-ups to get two relaxations under the scheme of Income Tax holiday given last year.

(a)          The condition of continuous holding of 51 per cent. voting rights to be relaxed as long as the original investment of promoter is not diluted.

(b)          Exemption available for three years out of any 7 years from the date of establishment instead of 3 out of 5 years

            3.         The period of carry forward of MAT/AMT credit increased from 10 years to 15 years.

            4.         The corporate income tax to be reduced from 30% to 25% for companies with turnover upto Rs.50 crore in 2015-16. This will benefit 96% of existing 6.67 lakh companies.  This will result into tax saving of 16.67% for these companies.

            5.         Deduction for provision for NPA of Banks to be increased from to 8.5% instead of 7.5% of profit.   

            6.         In case of NPA of non-scheduled cooperative banks, interest to be recognised as income only when received.

III       Promoting Digital Economy:

1.         In the presumptive income tax for small traders, income to be taken as 6% of turnover which is received by digital or banking means.

2.         Cash expenditure allowable to be reduced to Rs.10,000 from the existing Rs.20,000.

3.         Cash transaction of above Rs.3 lakh not to be permitted. The penalty of equal amount to be levied in case of breach.

            IV        Transparency in Electoral Funding:

           

1.         The cash donation to political parties from one person limited to Rs.2,000/-.

           

2.         Electoral Bond to be introduced for facilitating donation to political parties from explained sources.

            3.         Political parties to file their return in time limit prescribed in the Income Tax Act.

            V.        Ease of Doing Business:

1.         Domestic transfer pricing to be applied only if one of the two companies enjoys specified profit-linked deduction.

2.         The audit limit for business entities opting for presumptive scheme to be increased from Rs.1 crore to Rs.2 crore.

3.         Individuals and HUFs not required to keep books of accounts if their turnover is up to Rs.25 lakhs or income is upto Rs.2.5 lakhs.

            4.         Investment in Category 1 and 2 foreign portfolio investors registered with SEBI to be exempted from provisions of indirect transfer.

            5.         TDS of 5% not to be deducted for individual insurance agents if they certify their income to be below taxable limit.

            6.         Professionals in presumptive scheme to pay advance tax only in one instalment in March instead of four.

            7.         The time limit for revising a tax return reduced to 12 months. Also time limit for completion of scrutiny will be brought down to 12 months from Assessment Year 2019-20 onwards.

            VI        Personal Income Tax:

            1.         Personal income tax for people with income in the slab of 2.5 lakh to 5 lakh to be reduced to 5% instead of 10%. This will reduce their tax liability to half while all other tax payers above this slab will also be benefited in terms of lesser tax of Rs.12,500 per individual (revenue loss ofRs.15,500 crores).

           

2.         Surcharge of 10% to be levied on individuals with income between Rs.50 lakhs to Rs.1 crore (revenue gain of Rs.2,700 crore).

VII.     Miscellaneous:

1.         TCS exemption for state transport corporation in respect of purchase of vehicles.

2.         Income of Chief Minister’s relief fund exempt from tax.

3.         Penalty on accountant, registered valuer and merchant banker for furnishing incorrect information.

4.         In order to ensure timely filing of return and expeditious issue of refund, a fee shall be levied for delay in filing of return.