Finance Minister Arun Jaitley’s Budget has drawn praise from several quarters, with the markets giving it a big thumbs up. Prime Minister Narendra Modi has called the Budget “excellent” and “historic” and said it fulfils the “dreams” of every section of society. Softening the demonetisation blow, the Budget had tax sops for the middlle class. Here are the important decisions announced in the Union Budget.
More money for honest taxpayers
The change in the personal income tax rate for individual assessees between Rs 2.5 lakh and Rs 5 lakh income would reduce the tax liability+ of all persons below Rs 5 lakh to either to zero (with rebate) or 50 per cent of their existing liability.
While the taxation liability of people with income upto Rs 5 lakh is being reduced to half, all other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person.
In the case of senior citizens above 60 years, there will be no tax upto Rs 3 lakh, while the exemption will be upto Rs 5 lakh in case of citizens above 80 years. Both the categories will attract income tax of 20 per cent on income between Rs 5 lakh and Rs 10 lakh and 30 per cent for income above Rs 10 lakh.
Small firms get tax sops
Finance Minister Arun Jaitley has reduced the income tax for small companies with annual turnover of up to Rs 50 crore to 25 per cent with a view to making MSME companies more viable and encouraging firms+ to migrate to company format.
Unveiling the Budgetary proposals for 2017-18, Jaitley said: “As per the data of assessment year 2015-16, there are 6.94 lakh companies filing returns, out of which 6.67 lakh companies fall in this category. Therefore percentage wise, the 96 per cent companies will get the benefit of this lower taxation”.
The Finance Minister pointed out that as a result of the move, the companies with annual turnover of up to Rs 50 crore will have to pay 5 per cent less tax.
This will make our MSME (micro, small and medium enterprises) sector more competitive as compared to larger companies, Jaitley said, adding that the revenue foregone estimate for this measure is expected to be Rs 7,200 crore per annum.
As per the data of assessment year 2015-16, there are 6.94 lakh companies filing returns, out of which 6.67 lakh companies fall in this category. Therefore percentage wise, 96 per cent of India’s companies will get the benefit of lower taxation. imp step This will make our MSME sector more competitive as compared to larger companies. The revenue foregone estimate for this measure is expected to be Rs 7,200 crore per annum.
Ease of doing business: Govt decides to phase out FIPB
Seeking to improve the ease of doing business, the government today abolished FIPB and decided that foreign investment proposals requiring government approval would be cleared by the ministries concerned.
Finance Minister Arun Jaitley also promised to liberalise further FDI policy in more sectors in due course.
“In the meantime, further liberalisation of FDI policy is under consideration and necessary announcements will be made in due course,” he said while presenting the Budget for 2017-18.
He said that 90 per cent of the FDI is coming through automatic route and only 10 per cent has to go through the Foreign Investment Promotion Board (FIPB).
The minister later said that in most of the foreign investment proposals under the government approval route, an investor has to seek identical approvals.
With the abolition of the FIPB, the proposal can be cleared by the ministry concerned itself.
Infra sector grabs lion’s share at Rs 3.96 lakh crore
Allocating lion’s share of Rs 3.95 lakh crore for infrastructure development and terming the sector as top priority+ of the government, Finance Minister Arun Jaitley today said the magnitude of investment in the space is bound to spur growth.
Terming railways, roads and rivers as the “lifeline” of the country, the Finance Minister while presenting the Budget for 2017-18, said, “Total allocation for infrastructure stands at a record level Rs 3,96,135 crore in 2017-18.”
“This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities,” he said.
Jaitley said infrastructure was the thrust area of the government for efficiency, productivity and quality of life and approach was to spend more on infrastructure development.
In a move to push digital payments+ , the government today removed all duties on devices used in the process of cashless transactions like point of sales machines, finger print readers etc.
Finance Minister Arun Jaitley said in his budget speech, “To promote cashless transactions, I propose to exempt BCD (basic custom duties), excise duties, CVD (countervailing duties), SAD (special additional duty) on miniaturised card readers and mPOS micro atms standards for version 1.5.1, finger print readers, scanners and iris scanners.”
Industry status for affordable housing
The real estate sector has given a strong thumbs-up to Union Finance Minister Arun Jaitley’s Budget 2017, with insiders largely expressing happiness with two initiatives – industry status to low-cost housing and the easing of capital gains tax norms.
The prime mover of the mood in the sector was the fact that Jaitley had granted it a long term demand. The infrastructure status to affordable housing development, they said, has been complemented by raising the allocation to the rural housing programme by about 50 percent.
Political parties can now receive cash donations of only Rs 2000
Henceforth, political parties can receive only up to Rs 2000 in cash donations per source+ as part of a major move proposed in the Budget to cleanse the electoral system of black money.
Announcing this, Finance Minister Arun Jaitley said political parties will be entitled to receive donations by cheque or digital mode from their donors.
As of now, the limit to accept political donations in cash is Rs 20,000.
“As an additional step, an amendment is being proposed to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the government would frame in this regard,” he said in the Lok Saha.
Under the scheme, a donor could purchase bonds from authorised banks against cheque and digital payments only. They will 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.
The proposal said every political party would have to file its return within the time prescribed in accordance with the provision of the Income Tax Act.
Cash dealings above Rs 3 lakh banned from Apr 1: Jaitley
Continuing with government steps to clamp down on black money, Finance Minister Arun Jaitley today proposed to ban all cash transactions above Rs 3 lakh beginning April 1, 2017.
The decision to ban cash transactions beyond a threshold is based on the recommendation of the Special Investigation Team on black money that was set up by the Supreme Court, Jaitley said while presenting Union Budget 2017-18 in Parliament.
All cash transactions above Rs 3 lakh will be banned, he said.
The SIT, headed by Justice M B Shah (retired), in July had submitted its fifth report to the Supreme Court on steps needed to curb black money.
Noting that a large amount of unaccounted wealth is stored in cash, SIT had said: “Having considered the provisions which exist in this regard in various countries and also having considered various reports and observations of courts regarding cash transactions, the SIT felt that there is a need to put an upper limit to cash transactions.”
It recommended a total ban on cash transactions of Rs 3 lakh and above and that “an Act be framed to declare such transactions as illegal and punishable under law”.
Govt mulls law to seized assets of ‘big time offenders’ who flee abroad
Government is considering new measures to seize the assets of “big time offenders” who flee abroad+ , the finance minister said Wednesday, after tycoon Vijay Mallya left for Britain last year owing over Rs 9,000 crore.
Arun Jaitley flagged a proposal to confiscate the domestic holdings of criminals and financial offenders who have escaped the jurisdiction of Indian authorities.
“In the recent past there have been instances of big time offenders — including economic offenders — fleeing the country to escape the reach of the law. We have to ensure the law is allowed to take its course,” he told parliament.
“The law will have constitutional safeguards and the assets in India would stand confiscated until the person submits himself or herself to the law.”
Jaitley did not expand on the proposal or refer to specific cases.
Mallya has refused to return home from exile in England despite repeated efforts by India’s financial crimes agency to question him.
Rs 1 lakh crore for railway safety fund
With railways plagued by repeated derailments, government today proposed setting up of a special safety fund of Rs 1 lakh crore+ that will cover upgradation of tracks and signalling besides elimination of unmanned level crossings.
The Railway Budget, merged with General Budget 2017-18, also provides for commissioning of new railway lines of 3,500 km will against 2,800 kms in 2016-17.
Finance minister Arun Jaitley announced the Plan size for the next fiscal for the Railways at Rs 1,31,000 crore as against Rs 1.21 lakh crore last year.
He proposed creation of ‘Rashtriya Rail Sanraksha Kosh’ (National Rail Safety Fund) with a corpus of Rs 1 lakh crore.
Emphasising on safety, the Budget proposed elimination of all unmanned level crossings on the broad gauge network by 2020.