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Union Finance minister Arun Jaitley presented Union Budget 2016-17 in Parliament on Monday i,e 29th February 2016.

Highlights of Budget –

Finance Minister’s speech highlights-

•CPI inflation was 9.4% in the last 3 years of previous government. It has come down to 5.5% now.

•Growth has accelerated to 7.6% in 2015-16 notwithstanding contraction of global exports.

•Current account deficit has declined to $14.4 billion this year, will be 1.4% of gross domestic product (GDP) at the end of fiscal.

•FY17 will cast an additional burden due to One Rank One Pension, Seventh Pay Commission recommendations

•Three major schemes to help underprivileged: Pradhan Mantri Fasal Yojana, health insurance scheme, launching initiative to ensure LPG connection for BPL families

•Key points to look forward to: Incentivize gas discovery and exploration of gas, dispute resolution in PPP projects, banking sector reforms

•Focus to pass GST and bankruptcy code

•Govt will undertake nine-point reforms including steps to ensure ease of business in governance, fiscal discipline to ensure benefits for people

Agriculture and farmers welfare:

•Look to double farmer income by 2020

•28.5 lakh hectares will be brought under irrigation

•Govt will reorient interventions in farming sector; we need to optimally utilize water resources

•Major programme for sustainable groundwater management

•A dedicated irrigation fund with Rs.20,000 crore under Nabard

•Access to market is critical for farmers

•Govt to set apart Rs.412 crore to encourage organic farming

•E-market portal for connecting breeders and farmers

•Implementing Pradhan Mantri Gram Sadak Yojana as never before—scheme to be allocated Rs.19,000 crore in FY17; Rs.27,000 crore in total—to advance completion target to 2019 from 2022

•We have to ensure benefit of minimum support price reaches all parts of country—remaining states will be encouraged to take up decentralized procurement, effective arrangement of pulse procurement

•To support farmers after calamities, special focus has been given to ensure timely flow of credit, target is Rs.9 trillion in FY17

•90% of domestic honey is now exported

•Visible rise in yield of honey

•Allocation of Rs.35,984 crore for farm sector: FM

Rural areas:

•Rs.38,500 crore allocated for MNREGA in 2016-17, the highest ever if entire amount is spent

•Cluster-facilitation teams under MGNREGA to optimize water resources

•2.87 trillion to be given grant-in-aid for gram panchayats and municipalities; it is quantum jump of 228%

•As of 1 April 2015, 18,542 villages were not electrified—as on 23 Feb 2016, 5,542 villages have been electrified

•We need to spread digital literacy in rural areas—plan to launch digital literacy mission for more than 6,000 households in rural areas

•Govt committed to achieve 100% village electrification by 1 May 2018

•Govt to develop 300 ‘rurban’ clusters

•Modernization of land records essential—to be implemented as a central sector scheme

Social sector

•Gratitude to 75 lakh households that have given up LPG subsidies

•To embark on scheme to provide LPG connections in womens’ names

•Propose to start National Dialysis Programme with fund generated under PPP scheme

•Almost 2.2 lakh new patients of end-stage renal diseases get added in India every year

•SC and ST entrepreneurs—Rs.500 crore to promote this under Stand-Up India

•3,000 stores to be opened for quality medicines under PM Jan Ausadhi Yojana in 2016-17

•Decided to set up a higher education financing agency (non-profit)—initial corpus of Rs.1,000 crore

•Next big step by focusing on quality education—commitment to improve higher education institutions

•Entrepreneurship education and training o be provided in schools and colleges

•Digital depository for school-leaving certificates other academic certificates

Job creation:

•National Career Service—35 million job-seekers have registered; propose to interlink state employment exchanges with National Career Service

•Small and medium-shops should be given option to remain open all 7 days on voluntary basis

•Will pay EPF contribution of 3.33% for all new employees joining EPFO to incentivize employers

•Model shops bill on voluntary basis for states to be adopted

•Retail trade—biggest employer in country

Infra and investment:

•Total allocation of Rs.2.18 trillion for roads and railways

•Roads sector: Nearly 85% of stalled projects back on track

•Speeded up road construction—to allocate Rs.55,000 crore for roads and highways, additional Rs.15,000 crore to be raised by National Highways Authority of India (NHAI) through bonds. Total allocation of Rs.97000 crore.

•Total outlay for infrastructure in Budget Estimates is at Rs.2.21 trillion

•Pace of completion of road projects to rise to 10,000km in 2016-17

•Ports—to develop new greenfield ports

•Passenger traffic on roads more efficient now—This is a totally unreformed sector; absolution of Permit Raj is the medium-term goal; to open up road transport sector in passenger segment; states will have choice of adopting new legal framework; provision for more efficient public transport sector

•Natural resources: To incentivise gas production from deep sea, high temperature areas

•Civil aviation—plan for reviving underserved airports; to partner with state govts to develop some of these airports

•Power sector—drawing up plan spanning 15-20 years to augment capacity in nuclear power sector

•Govt has achieved highest coal production growth in over 2 decades

•Duty drawback scheme widened to include more products, countries

•Initiative to reinvigorate private sector—public utility resolution of dispute bills; new credit rating system for infrastructure

•Further reforms in FDI policy—area of insurance and pension, stock exchanges etc

•Department of disinvestment to be renamed

•FDI policy should address farmers, food processing industry—100% FDI through Foreign Investment Promotion Board route for marketing of food products produced and processed in India

Financial sector reforms:

•RBI Act 1934 to be amended to provide statutory basis for monetary policy framework

•Bankruptcy code to be introduced

•Central legislation to deal with fraudulent schemes

•Financial data management centre to be set up

•Banks—Rs.25,000 crore to be provided for recapitalization of public sector banks, which are grappling with stressed assets; Govt stands solidly behind these banks.

•Stressed assets—ARCs have an important role—necessary amendment to Sarfaesi Act will be done

•Debt recovery tribunals to be strengthened for speedier dispute resolution

•To amend Sebi act for more benches for SAT

•To undertake massive rollout of ATMs over next 3 years

•Banking board bureau to be operationalized during this year

•Insurance firms owned by government will be listed on stock exchanges

Ease of doing business:

•Bill to amend Companies Act—enabling environment for start-ups

•Initiatives include introducing targeted delivery of subsidies through Aadhaar, with a social security platform for use of Aadhaar; direct benefit transfers on a pilot basis for fertilizers

•70th anniversary of Independence in 2017—Ek Bharat, Shresth Bharat is a part of this mission

•Create closer engagement between states and districts—Ek Bharat, Shresth Bharat

Fiscal situation:

•Budget and Revised estimates for FY15-16 at 3.9% and 3.5% of GDP respectively

•Fiscal Responsibility and Budget Management (FRBM) roadmap: Prudence lies in adhering to fiscal targets

•Retaining fiscal deficit target at 3.5% for FY17

•Total expenditure in budget—Rs.19.78 trillion

•Revenue deficit target at 2.5% of GDP

•Plan/Non-plan classification to be done away with from FY17-18

•Seventh Pay Commission—Made interim provisions while recommendations are being reviewed—restructured more than 1,500 central schemes; Allocated Rs.100 crore each for celebrating birth anniversaries of Pandit Deendayal Upadhyay and Guru Gobind Singh

•FRBM: Better to have a fiscal target range; Must review working of this Act—to set up A committee to review FRBM

Tax reforms:

•Ceiling of tax rebate at Rs.5,000 for income less than Rs.5 lakh

•Relief to small taxpayers, measures for moving towards pension society, reducing litigation, simplification of taxation

•Corporate tax rate reduction should be calibrated with benefits of phasing out exemptions

•Presumptive taxation schemes—to increase turnover limit to Rs.2 crore—relief for many in MSME category

•Relief to people living in rented houses—Deduction for rent paid will be raised from Rs.20,000 to Rs.60,000 to benefit those living in rented houses

•Extend presumptive taxation scheme to all professionals with gross receipts up to Rs.50 lakh

•Make in India—100% deduction of profits for start-ups adhering to certain conditions; MAT will apply

•Corporate tax rate for establishments with turnover less than Rs.5 crore lowered to 29% of surcharge plus cess

•To reduce customs duty on refrigerated containers

•To implement GAAR from 1 April 2017

•Affordable housing—100% deduction on profits for flats up to 30 sq.m in metro cities from 2016-19; MAT will apply

•Exemptions for braille paper

•Pension society—Exemption of service tax for NPS, EPFO to employees

•0.5% Krishi Kalyan surcharge cess on all taxable services from 1 June 2016, to be given to agriculture development

•First-time home buyers—relief on housing loans for up to Rs.50 lakh

•Surcharge on luxury cars costing more than Rs.10 lakh

•To impose additional duty on jewellery

•Environment—Pollution cess on all vehicles

•Revive clean energy cess on coal, others

•Change excise duty on branded ready-made garments

•Increase duty on tobacco products (other than beedi) by 10-15%

Reducing litigation:

•Limited period compliance window to declare undisclosed income

•Justice Easwar committee recommendation—abolishing 13% cesses levied by various ministries

•Tax evasion will be countered strongly

•On retrospective tax amendments—committed to providing stable tax regime; committee will be chaired by revenue secretary

•Black money—3 lakh tax cases pending before authority—a new dispute resolution scheme will be set up where taxpayer can settle case by paying disputed tax and interest with certain conditions

•Non-residents without PAN—higher rate won’t apply on furnishing alternate ID

•One-time scheme for dispute resolution for pending retrospective tax amendment case

•To amend customs act

•Rationalizing TDS provisions for income tax

Use of technology:

•To expand scope of e-assessment for taxpayers in 7 big cities

•Will use technology in tax department in a big way

•Impact of tax proposals will lead to revenue gain of Rs.19,610 crores

•Govt will pay interest @9% in case of delay in giving appellate orders beyond 90 days

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