Prime Minister Narendra Modi government’s first full budget, is it ripe for long-awaited reforms to kickstart the economy? In the maiden budget, Finance Minister, Shri Arun Jaitley said, we have lived up to people's trust and dramatically established macro-economic stability. World is predicting, it is India's chance to fly. States are empowered more than before. Below is the gist of Budget speech by the Finance Minister.
Infrastructure
• Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year
• Plans to set up national investment infrastructure fund
• Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects
• Proposes 5 "ultra mega" power projects for 4,000 MW each
• Second unit of Kudankulam nuclear power station to be commissioned
• Will need to build additional 100,000 km of road
• Ports in public sector will be encouraged to corporatize under Companies Act
Taxation
• To abolish wealth tax
• Replaces wealth tax with additional 2 pct surcharge on super rich
• Proposes to cut to 25 percent corporate tax over next 4 years
• Corporate tax of 30 percent is uncompetitive
• Net gain from tax proposals seen at 150.68 billion rupees
• Proposes to rationalise capital gains tax regime for real estate investment trusts
• Expects to implement goods and services tax by April 2016
• To reduce custom duty on 22 items
• Proposes to increase service tax rate and education cess to 14 percent from 12.36 percent
• Plans to introduce direct tax regime that is internationally competitive on rates without exemptions
• Exemptions for individual tax payers to continue
• To enact tough penalties for tax evasion in new bill
• Tax dept to clarify indirect transfer of assets and dividend paid by foreign firm
General Anti-Avoidance Rules (GAAR)
• Government defers rollout of anti-tax avoidance rules GAAR by two years
• GAAR to apply prospectively from April 1, 2017
• Retrospective tax provisions will be avoided
Investment
• Propose to do away with different types of foreign investment caps and replace them with composite caps
• To allow foreign investment in alternative investment funds
• Public investment needed to catalyse investment
Personal Income Tax
• Health Insurance Premium deduction hiked from Rs 15,000 to Rs 25,000; for senior citizens to Rs 30,000
• Transport allowance exemption hiked to Rs 1,600, from Rs 800 per month
• No change in tax slabs
• Individual tax payer will benefit to the extent of /rs 4,44,200
1. Additional 2% surcharge on people earning over Rs 1 cr; to fetch Rs 9,000 cr
2. Wealth tax abolished
3. Direct Taxes Code (DTC) dropped
4. Rs 50,000 deduction for contribution to New Pension Scheme
5. To lower Corporate Tax to 25% over next four years
6. GAAR implementation deferred by 2 years to April 2017
7. Service Tax rate hiked to 14%, from 12.36%
8. Tax free bonds for roads, railways, irrigation projects
9. 2015-16 growth between 8-8.5%, double digit growth feasible
10. Retail inflation close to 5% by March, room for monetary policy easing
11. To achieve fiscal deficit of 3% of GDP by 2017-18
12. Fiscal Deficit target 3.9% in 2015-16, 3.5% in 2016-17
13. Revenue Deficit to be 2.8% in 2015-16
14. Current Account Deficit for 2014-15 to be below 1.3% of GDP
15. To introduce comprehensive law to deal with black money
16. Benami property transaction bill to tackle black money transaction in real estate soon
17. 100% deduction for contribution to Swachh Bharat, Clean Ganga projects
18. GST to be put in place by April 1, 2016
19. Internationally competitive direct tax regime to be put in place to incentivise saving
20. Incentivise use of credit, debit cards; disincentivise cash transaction to curb black money.
To read full text of Finance Minister Arun Jaitley's 2015 Budget speech, Please Click here
By Premji
