Budget 2016-2017 Simplified.

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With big investments in the rural sector and a break for small tax payers, finance minister Arun Jaitley’s Budget 2016 on Monday was largely pro-rural and pro-poor. Read more about the Budget 2016-2017 –

INTRODUCTION-

Apart from being a very social budget, which was rural centric and pro agriculture it also stood out in the following areas-

Tax:

  • Infrastructure and agriculture tax to be levied.
  • Excise duty raised from 10 to 15 per cent on tobacco products other than beedi’s
  • 1 per cent service charge for purchase of luxury cars over Rs. 10 lakh and cash purchase of goods and services over Rs. 2 lakh.
  • SUVs, Luxury cars to be more expensive. 4% high capacity tax for SUVs.
  • Companies with revenue less than Rs 5 crore to be taxed at 29% plus surcharge.
  • Limited tax cap window from Jun 1 – Sep 30 for declaring undisclosed income at 45%. Surcharge and penalties included.
  • Excise duty of 1 per cent imposed on articles of jewellery, excluding silver.
  • 5 per cent Krishi Kalyan Tax to be levied on all services.
  • Pollution Tax of 1 per cent on small petrol, LPG and CNG cars, 2.5 per cent on diesel cars of certain specifications and 4 per cent on higher-end models.
  • Returns in excess of Rs. 10 lakh per annum to be taxed at additional 10 per cent.

Personal Finance:

  • No changes whatsoever have been made on existing income tax slabs.
  • Rs 1,000 crore allocated for the EPF (Employees’ Provident Fund) scheme.
  • Government 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 for the benefit of those living in rented houses.
  • Additional exemptions for Rs. 50,000 for housing loans up to Rs.35 lakh, provided cost of house is not above Rs.50 lakh.
  • Service tax exempted for construction of houses less than 60 sq m.
  • 15 per cent surcharge on income above Rs.1 crore DF.

Social:

  • 38,500 crore for Mahatma Gandhi MGNREGA for 2016-17.
  • Swacch Bharat Abhiyan allocated Rs.9,500 crores.
  • 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 the family – Rs 2000 crore allocated for 5 years for BPL families.
  • 87 lakh crore 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:

  • 2 lakh renal patients added every year in India. Basic dialysis equipment gets major relief.
  • A new health protection scheme for health will cover up to 1 lakh per family.
  • National Dialysis Service Program with funds thru 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 stores to be opened this year.

Education:

  • Scheme to get Rs.500 crore 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. Rs. 1,000 crore for higher education financing.
  • 1,700 crore for 1500 multi-skill development centers.
  • 62 new navodaya vidyalayas to provide quality education.
  • Digital literacy scheme to be launched to cover 6 crore additional rural households.
  • Entrepreneurship training to be provided across schools, colleges and massive online courses.
  • Objective to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojna.
  • National Skill Development Mission has imparted training to 76 lakh youth. 1500 Multi-skill training institutes to be set up.

Energy:

  • 3000 crore earmarked for nuclear power generation.
  • Government drawing a comprehensive plan to be implemented in next 15-20 years for exploiting nuclear energy.
  • Government to provide incentive for deep-water gas exploration.
  • Deep-water gas gets new disc to get calibrated market freedom, pre-determined ceiling price based on landed price of alternate fuels.

Investments and infrastructure:

  • 27,000 crore to be spent on roadways.
  • 65 eligible habitats to be connected via 2.23 lakh 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.
  • 55,000 crore for roads and highways. Total allocation for road construction, including PMGSY, – Rs 97,000 crore.
  • India’s highest-ever production of motor vehicles was recorded in 2015.
  • Total outlay for infrastructure in Budget 2016 now stands at Rs. 2,21,246 crore.
  • New Greenfield ports to be developed on east and west coasts.
  • Revival of underserved 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.
  • of Disinvestment to be renamed as Dept. of Investment and Public Asset Management.
  • Government 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 Rs.1060 crore, indirect tax proposals result in gain of Rs.20,670 crore.

Agriculture:

  • Total allocation for agriculture and farmer welfare at Rs 35984 crores.
  • 5 lakh hectares of land will be brought under irrigation.
  • 5 lakh acres to be brought under organic farming over a three year period.
  • Rs 60,000 crore for recharging of ground water recharging as there is urgent need to focus on drought hit areas cluster development for water conservation.
  • Dedicated irrigation fund in NABARD of Rs.20.000 crore.
  • Nominal premium and highest ever compensation in case of crop loss under the PM Fasal Bima Yojna.

Banking:

  • Banks get a big boost: Rs 25,000 crore towards recapitalisation of public sector banks.
  • Target of disbursement under MUDRA increased to 1,80,000 crore.
  • 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.

 

GIST:
The Union Budget 2016 is for Gao, Garib, Kisan, Mazdoor and Yuva. It well balanced and promising. The budget proposals have laid out a road map for all round development of the country based on 9 pillars prioritized for investment and 9 elements of tax reforms.
Agriculture sector, rural development, social sector including health and education, infrastructure and recapitalization of public sector has been rightly identified as priorities for 2016-17.
By providing 100% deduction from taxation of profits on construction of affordable housing, the budget aims to achieve the Prime Minister’s dream of “Housing For All” by 2022.