Following are the highlights of 2016-17 budget presented by India's finance minister Arun Jaitley in Parliament on February 29. Citing that the CPI inflation has come down to 5.4% from 9 plus, he said it was a huge relief for the public.
Tax
Excise duty raised from 10 to 15 per cent on tobacco products other than beedis. One per cent service charge on purchase of luxury cars of over Rs 1000,000 and in-cash purchase of goods and services over Rs 200,000. SUVs, Luxury cars to be more expensive; 4% high capacity tax for SUVs.
Companies with revenue less than £5 million to be taxed at 29% plus surcharge. Limited tax compliance window from June 1 - Sept 30 for declaring undisclosed income at 45%, including surcharge and penalties
Excise duty of 1 per cent imposed on articles of jewellery, excluding silver. 0.5 per cent Krishi Kalyan Cess to be levied on all services. Pollution cess of 1 per cent on small petrol, LPG and CNG cars; 2.5 per cent on diesel cars of certain specifications; 4 per cent on higher-end models.
Dividend in excess of Rs 1000,000 per annum to be taxed at additional 10 per cent.
Personal Finance
No changes have been made to existing income tax slabs. Pound 100 million allocated for new EPF (Employees' Provident Fund) scheme. Govt will pay EPF contribution of 8.33% for all new employees for first three years. Deduction for rent paid will be raised from Rs 20,000 to Rs 60,000 to benefit those living in rented houses. Additional exemption of Rs 50,000 for housing loans up to Rs 3500,000, provided cost of house is not above Rs 5000,000.
Service tax exempted for housing construction of houses less than 60 sq. m. 15 per cent surcharge on income above £1 million
Social
Pound 3.85 billion for Mahtma Gandhi MGNREGA for 2016-17. Swacch Bharat Abhiyan allocated £1 m950 million.
Hub to support SC/ST entrepreneurs. Government is launching a new initiative to provide cooking gas to BPL families with state support. LPG connections to be provided under the name of women members of family: £200 million allocated for 5 years for BPL families. Pound 28.70 billion grants to gram panchayats and municipalities - a quantum jump of 228%. 300 urban clusters to be set up under Shyama Prasad Mukherji Rurban Mission. Four schemes for animal welfare.
Health
Basic dialysis equipment gets some relief. A new health protection scheme for health cover up to Rs 100,000 per family. National Dialysis Service Prog with funds through PPP mode to provide dialysis at all district hospitals. Senior citizens will get additional healthcare cover of Rs 30,000 under the new scheme. PM Jan Aushadhi Yojana to be strengthened, 300 generic drug store to be opened
Education
Scheme to get £50 million for promoting entrepreneurship among SC/ST. 10 public and 10 private educational institutions to be made world-class. Digital repository for all school leaving certificates and diplomas. Pound 100 million for higher education financing. £170 million for 1,500 multi-skill development centres. 62 new navodaya vidyalayas to provide quality education. Digital literacy scheme to be launched to cover 60 million additional rural households. Entrepreneurship training to be provided across schools, colleges and massive online courses.
Objective to skill 100 million youth in the next 3 years under the PM Kaushal Vikas Yojna. National Skill Development Mission has imparted training to 7600,000 youth. 1,500 Multi-skill training institutes to be set up.
Energy
Pound 300 million earmarked for nuclear power generation. Govt drawing comprehensive plan to be implemented in next 15-20 years for exploiting nuclear energy. Govt to provide incentive for deepwater gas exploration.
Investments and infrastructure
Pound 2.70 billion to be spent on roadways. 65 eligible habitats to be connected via 223,000 kms of road. Current construction pace is 100 kms/day. Shops to be given option to remain open all seven days in a week across markets. Pound 5.50 billion for roads and highways. Total allocation for road construction, including PMGSY, £9.70 billion. India's highest-ever production of motor vehicles was recorded in 2015. Total outlay for infrastructure in Budget 2016 now stands at £22.13 billion.
New greenfield ports to be developed on east and west coasts
Revival of under-served airports. Centre to partner with States to revive small airports for regional connectivity. 100 per cent FDI in marketing of food products produced and marketed in India. Dept. of Disinvestment to be renamed as Dept. of Investment and Public Asset Management. Govt will amend Motor Vehicle Act in passenger vehicle segment to allow innovation. MAT will be applicable for startups that qualify for 100 per cent tax exemption.
Direct tax proposals result in revenue loss of £106 million, indirect tax proposals result in gain of £12.07 billion.
Agriculture
Total allocation for agriculture and farmer welfare at £3.60 billion. 28.5 lakh heactares of land will be brought under irrigation. 500,000 acres to be brought under organic farming over a three year period. £6 billion for recharging of ground water as there is urgent need to focus on drought hit areas cluster development for water conservation. Dedicated irrigation fund in NABARD of £2 billion. Nominal premium and highest ever compensation in case of crop loss under the PM Fasal Bima Yojna.
Banking
Banks get a big boost: Pound 2.5 billion towards recapitalisation of public sector banks. Jaitley says: Banking Board Bureau will be operationalised, we stand solidly behind public sector banks. Target of disbursement under MUDRA increased to £18 billion. Process of transfer of government stake in IDBI Bank below 50% started. General Insurance companies will be listed in the stock exchange. Govt to increase ATMs, micro-ATMs in post offices in next three years
Fiscal deficit
Fiscal deficit seen at 3.9 per cent of GDP in 2015/16. Fiscal deficit seen at 3.5 per cent of GDP in 2016/17. Planned expenditure seen at 5.5 trillion rupees in 2016/17. Proposes to set up panel to review fiscal responsibility management act
Growth
Nominal GDP growth seen at 11 per cent year-on-year in 2016/17
Monetary Policy
Government along with central bank to set retail inflation target every 5 years. Monetary Policy Committee to have 6 members, including 3 appointed by federal government. Monetary Policy Committee to decide policy rates to achieve inflation target; decisions shall be binding on central bank. RBI act is being amended for implementing monetary policy framework
Policy reforms
Proposes to raise foreign portfolio investment limit in state-run companies except banks to 49 per cent from 24 per cent currently. Bankruptcy code for financial firms to be introduced in parliament in 2016/17. To list general insurances companies on stock exchanges. Companies Act 2013 to be amended to improve ease of doing business
Market reforms
Investment basket of foreign portfolio investors in corporate bonds will also include unlisted debt securities, pass-through securities. Proposes raising investment limit for foreign entities in local stock exchanges to 15 per cent from 5 per cent. Government proposes developing an electronic platform for repo in corporate bonds in 2016/17
Expenditure
Allocates £24.90 billion for defence sector in 2016/17
Subsidies
Total subsidy seen at £25 billion in 2016/17. Food subsidy seen at £13.5 billion. Petroleum subsidy estimated at 269.5 billion rupees. Fertilser subsidy seen at 700 billion rupees
Investment
100 per cent foreign direct investment to be allowed in food processing industry. Promises further reforms in foreign direct investment policy in insurance, pension, asset recast companies.
