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Union budget 2016-17 Key Highlights

... Editorial Team

Finance minister Arun Jaitley presented Union Budget 2016-17 in Parliament on Monday. Here are the key highlights of his speech:

Fiscal Discipline:

  • Budget estimates and revised estimates for FY15-16 at 3.9% and 3.5% of GDP respectively
  • Fiscal deficit target retained at 3.5% for FY 17. Revenue deficit target at 2.5% of GDP
  • Plan/Non-plan classification to be done away with from FY17-18
  • GDP Growth has accelerated to 7.6% in 2015-16 and Current account deficit will be 1.4% of gross domestic product (GDP) at the end of fiscal.
  • Additional burden expected in FY 17 due to One Rank One Pension, Seventh Pay Commission recommendations

Tax reforms:

  • Ceiling of tax rebate at Rs.5,000 for income less than Rs.5 lakh
  • Deduction for rent paid will be raised from Rs.20,000 to Rs.60,000
  • Presumptive taxation schemes—to increase turnover limit to Rs.2 crore & extending presumptive taxation scheme to all professionals with gross receipts up to Rs.50 lakh
  • Corporate tax rate for establishments with turnover less than Rs.5 crore lowered to 29% of surcharge plus cess
  • Make in India—100% deduction of profits for start-ups adhering to certain conditions; MAT will apply
  • GAAR to come into effect from 1 April 2017
  • 100% deduction on profits for flats up to 30 sq.m in metro cities from 2016-19; MAT will apply
  • First-time home buyers to get relief on housing loans for up to Rs.50 lakh
  • Surcharge on luxury cars costing more than Rs.10 lakh
  • 0.5% Krishi Kalyan surcharge cess on all taxable services from 1 June 2016, to be given to agriculture development
  • Environment—Pollution cess on all vehicles, clean energy cess on coal, others
  • Limited period compliance window to declare undisclosed income. A new dispute resolution scheme will be set up where taxpayer can settle case by paying disputed tax and interest with certain conditions
  • One-time scheme for dispute resolution for pending retrospective tax amendment case.
  • To expand scope of e-assessment for taxpayers in 7 big cities
  • Impact of tax proposals will lead to revenue gain of Rs.19,610 crores

 

Infra and investment:

  • Total allocation of Rs.2.18 trillion for roads and railways
  • Total outlay for infrastructure in Budget Estimates is at Rs.2.21 trillion
  • 100% FDI through Foreign Investment Promotion Board route for marketing of food products produced and processed in India

Financial sector reforms:

  • Bankruptcy code to be introduced
  • RBI Act 1934 to be amended to provide statutory basis for monetary policy framework
  • Banks—Rs.25,000 crore to be provided for recapitalization of public sector banks, which are grappling with stressed assets;
  • Banking board bureau to be operationalized during this year
  • Debt recovery tribunals to be strengthened for speedier dispute resolution

Agriculture

  • Govt will look to double farmer income by 2020
  • 28.5 lakh hectares land will be brought under irrigation. A dedicated irrigation fund with Rs.20,000 crore under Nabard
  • Pradhan Mantri Gram Sadak Yojana to be allocated Rs.19,000 crore in FY17; Rs.27,000 crore in total—to advance completion target to 2019 from 2022
  • E-market portal for connecting breeders and farmers

Rural areas:

  • Rs.38,500 crore allocated for MNREGA in 2016-17, the highest ever if entire amount is spent
  • 2.87 trillion to be given grant-in-aid for gram panchayats and municipalities; it is quantum jump of 228%
  • Govt committed to achieve 100% village electrification by 1 May 2018
  • We need to spread digital literacy in rural areas—plan to launch digital literacy mission for more than 6,000 households in rural areas
  • Modernization of land records essential—to be implemented as a central sector scheme

Social sector

  • Propose to start National Dialysis Programme with fund generated under PPP scheme
  • 3,000 stores to be opened for quality medicines under PM Jan Ausadhi Yojana in 2016-17
  • SC and ST entrepreneurs—Rs.500 crore to promote this under Stand-Up India
  • Next big step by focusing on quality education—commitment to improve higher education institutions
  • Decided to set up a higher education financing agency (non-profit)—initial corpus of Rs.1,000 crore
  • Entrepreneurship education and training o be provided in schools and colleges

Job creation:

  • Will pay EPF contribution of 3.33% for all new employees joining EPFO to incentivize employers
  • National Career Service—35 million job-seekers have registered; propose to interlink state employment exchanges with National Career Service.
  • Initiatives include introducing targeted delivery of subsidies through Aadhaar, with a social security platform for use of Aadhaar

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