Saturday, February 28, 2015

Arun Jaitley presents Budget 2015-16 in Parliament

Arun Jaitley presents Budget 2015-16 in Parliament
Feb 28,
aitley presented the first full year Budget of the NDA government in the Lok Sabha today. The Union Budget for 2015 - 16 proposes two new laws and major curbs on black money stashed at home and abroad. No change has been proposed in the personal Income tax rates but deduction hiked for Transport allowance and health insurance premium. Surcharge will be 12 per cent for income exceeding one crore. Wealth tax has been abolished and replaced with 2 per cent surcharge on the super-rich. Corporate tax will be reduced from 30 per cent to 25 per cent from next financial year.

Service Tax hiked from 12.36 to 14 per cent and amusement park in tax net. Standard rate of Basic excise duty hiked from 12 per cent to 12.5. Microwave ovens, refrigerators, TVs, LED lamps, Tablet computers, leather footwear, Solar water heating systems, pacemakers and ambulances will cost less. Fertilizers, digital video camera, optical fibre cables will also to cost less. Iron and Steel articles, mobile phones and import of commercial vehicles and sweetened mineral water to cost more. Part of the basic excise duty on petrol and diesel to fund 40,000 crore rupees to Road cess. Smokers to pay more.

The Finance Minster also proposed Gold monetisation scheme. General Anti Avoidance Rule, GAAR deferred for two years. Micro Units Development Refinance Agency Bank, (MUDRA) will be launched to promote small business. Atal Pension Yojana, ‘Nai Manzil’ scheme for minority youth education will be launched. It promises Housing for all by 2022.. Defence allocation has been hiked to 11 percent. The fiscal deficit has been pegged at 3.9 per cent of GDP this year, are the proposals in the Budget 2015-16.

Presenting the budget in the Lok Sabha today, the Finance Minister, Arun Jaitley focussed on boosting economic reforms, infrastructure development, Make in India, Skill India, Digital India, Clean energy, Job creation, Minimum government - Maximum governance and Public health. However, he put the measures to curb black money top in the list of broad themes he adopted in his budget. Mr. Jaitley said, the key measures include the proposed new law on black money to provide punishment of rigorous imprisonment upto 10 years for concealment of income and assets and evasion of tax in relation to foreign assets.

Penalty for such concealment will be at the rate of 300 per cent of the tax. No filing of return or inadequate disclosures of foreign assets will entail punishment of rigorous imprisonment upto 7 years. Date of opening of foreign account would be mandatory requirement in the returns. For curbing domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced in the current session of Parliament. This law will enable confiscation of benami property and also provide for prosecution. The Finance Minister also proposed a few other measures prohibiting acceptance or payment of an advance of 20,000 rupees or more in cash for purchase of immovable property. Quoting PAN is mandatory for any purchase or sale exceeding one lakh rupees.

Turning to Tax proposals, Mr. Jaitley did not make any change in the personal Income Tax rates. However, he proposed reduction in corporate tax from 30 per cent to 25 per cent over the next four years starting from next financial year. Transport allowance exemption for individuals has been increased from 800 rupees to 1600 rupees and deduction for health insurance premium has also been hiked from 15,000 rupees to 25,000 rupees. For senior citizens, the limit will be increased from 20,000 rupees to 30,000 rupees and for every senior citizens of the age of 80 years or more who not covered by health insurance, deduction of 30,000 rupees will be allowed for the money spent for treatment. For specified serious diseases the deduction has been hiked from 60,000 rupees to 80,000 rupees and for differently abled persons and additional deduction of 25,000 rupees will be allowed. The limit on deduction for contribution to a Pension fund and the new pension scheme will be increased to 1.5 lakh rupees, a hike of 50,000 rupees. Exemption to individual tax payers will continue to facilitate savings.

To help manufacturing sector, additional investment allowance at the rate of 15 per cent and additional depreciation at the rate of 35 per cent will be given to new manufacturing units in the backward regions of Andhra Pradesh and Telangana. Rate of income tax on royalty and fees for technical services reduced from 25 per cent to 10 per cent to facilitate technology flow.

Basic customs duty on inputs, raw materials, inter mediates and components in 22 items are proposed to be reduced to minimise the impact of duty inversion. These include microwave ovens, refrigerator compressors, metal parts in electrical insulators, sulphuric acid used in fertilizers, and components of still image video camera. The basic customs duty on the component - HDPE - used for making optical fibre cables for telecommunication sector has been reduced to nil from 7.5 per cent. The 10 percent customs duty on organic LED TV panels has also been abolished. Pacemakers will cost less and also solar heating system. Excise duty on chassis for ambulance reduced from 24 per cent to 12.5 per cent.

However, the tariff rate on iron and steel articles coming in the customs tariff category has been hiked from 10 per cent to 15 per cent. Customs duty on commercial vehicles has also been increased from 10 per cent to 40 percent. Excise duty structure for mobile handsets has been restructured. Concessional customs duty on specified parts of electrically operated vehicles and hybrid vehicles will be extended till March next year. To improve the quality of life and public health through Swach Bharat initiatives, the budget proposes hundred percent tax deduction for donations to Swach Bharat Kosh and clean Ganga fund. It also proposes a Swachh Bharat Cess on all or certain taxable services at 2 per cent rate.

Mr. Jaitley also proposed benefits to middle class tax payers to encourage saving and promote health. Investment in Sukanya Samriddhi Scheme will get full tax deduction. The budget also proposes to increase the limit of deductions for contributing to a pension fund of LIC or IRDA approved insurer from one lakh to 1.5 lakh rupees. Donation made to National Fund for drug abuse will get hundred per cent deduction. Making standalone proposals to maximize benefits to the economy, the budget proposes a uniform method of computation of period of stay in India for the purpose of determination of resident status in the case of an India seafarer. The budget proposes an increase in the service tax from 12.36 per cent plus Education cess to 14 per cent.

The budget says this will help smooth transition to introduction of GST, which is eagerly awaited by trade and industry. The Exemptions are being withdrawn on services provided by a mutual fund agent and selling or marketing agents of lottery tickets. Acknowledging yoga as a gift to the world, the budget proposes to include yoga within the ambit of charitable purposes. In order to rationalise the MAT, provisions of FIIs, profits corresponding to their income from capital gains on transactions in securities will not be subject to MAT.

In order to bring the country’s external borrowings and domestic debts under one roof, the Finance Minister proposes to set up a Public Debt Management Agency, PDMA. He also proposed to merge Forwards Markets, Commission with SEBI to strengthen regulations of commodity forward markets and reduce wild speculations. He said, it is proposed that government would exercise control in consultation with the RBI on capital flows as equity.

The Finance Minister said a National Skill Mission will be launched soon to consolidate skill initiatives and standardise procedures. 1,500 crore rupees has been set a part for the Deen Dayal Upadhyay Gramin Kaushal Yojana to boost employability of rural youth. The budget also proposes a student financial aid authority to administer and monitor scholarships and loan schemes through the Pradhan Mantri Vidya Lakshmi Karyakram. To support programmes of women security and awareness, another one thousand crore rupees has been proposed for the Nirbhaya Fund.

The budget proposed creation of a universal social security system for all Indians specially the poor and the under privileged. The Finance Minister said the Pradhan Mantri Suraksha Bima Yojana will be launched soon to cover accidental death risk of two lakh rupees for a premium of just 12 rupees per year. He also announced the Pradhan Mantri Jeevan Jyoti Bima Yojana covering both natural and accidental death risk. He said there is a pressing need to increase public investment in the infrastructure sector. He said the investment in infrastructure will go up by 70 thousand crore rupees over this year’s allocation.

The Finance Minister said that there are about 5.7 crore small business units involved in manufacturing, trading etc. He said 62 per cent of these are owned by SC/ST/OBCs, who find it difficult to access the formal system of credit. Mr. Jaitley proposed to create a Micro Units Development Refinance Agency Bank with a corpus of 20,000 crore rupees and a credit guarantee corpus of three thousand crore rupees. The budget proposed a road map for achieving fiscal deficit of 3 per cent in three years and pegged the fiscal deficit to 3.9 per cent for 2015-16.

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