Finance Minister Arun Jaitley specified “nine pillars” for India, which will be focus areas for the government. The agenda for next year is to undertake transformative measures based on these nine pillars, Jaitley said in his speech. The pillars listed by the Finance Minister are – agriculture, rural sector, social sector, education and job creation, infrastructure investment, financial sector reforms, governance and ease of doing business, fiscal discipline and tax reforms.
KISAN CESS: Across-the-board cess of 0.5 percent on services towards farmer welfare, which will add 50 paise for every Rs.100 one spends on food to mobile bills. The FM, a lawyer by profession, decided to bring his fellow practitioners, too, under the service tax net of 14 percent.
CASH SUBSIDY: The direct cash benefit transfers, currently in areas like cooking gas, will be extended to the fertilizer sector
RECAPTAILISATION: Rs.25000 crore has been earmarked for recapitalisation of State-run banks that are under financial stress on account of mounting bad loans. More money will follow as and when warranted, hinted the Finance Minister. “The budget is not the last word on this,” he said, adding he was also open to consolidation of commercial banks.
GLOBAL INVESTOR: The DFM has sent out signals to the global investor by seeking to ease the foreign equity norms. Notably, 100 percent such equity will now be permitted in multi-brand retailing where the produce sold has been processed and sourced locally.
BOOST TO ENTREPRENEURSHIP: A lower corporate tax rate has been proposed for small firms with a turnover of below Rs.5 crore, to 29 plus surcharge and cess.
FOR STARTUPS: 100 percent deduction of profits for three out of five years for start-ups set up between April 2016 and March 2019.
CESS ON CARS: There will be one percent infrastructure cess on small petrol, LPG, and CNG cars, 2.5 percent on diesel cars of certain capacity and four percent on higher engine capacity vehicles and sports utility vehicles. Renaming the Clean Energy Cess as Clean Environment Cess, the FM has proposed to increase the rate from Rs.200 per ton to Rs.400 per ton.
EASE OF DOING BUSINESS: The FM has also announced a proposal that seeks to amend the Companies Act for “ease of doing policy;”it will enable registration of a new company in just one day.
HOUSING LOAN I-T DEDUCTION: The FM has allowed additional income-tax deduction of Rs 50,000 in interest beyond the current limit of Rs 2 lakh on housing loan up to Rs 35 lakh to the self-occupied home owners, provided house value doesn’t exceed Rs 50 lakh. Tax payers and industry were expecting Rs 1 lakh to Rs 3 lakh more, at least in metropolitan cities, as the current limit of Rs 2 lakh is insignificant.
AFFORDABLE HOUSING: To promote affordable housing and promote real estate sector, which is facing a huge slowdown, the FM also exempted service tax on construction of affordable houses up to 30 sq metres in four metros and 60 sq metres in other cities but only to projects approved between June 2016 and March 2019 and completed within three years. Minimum alternate tax will, however, apply on these builders. Also extended was the excise duty exemption to ready mix concretes that is already available to the concrete mix manufactured at site for construction.
RENT RELIEF: Tax rebate ceiling under Section 87A has been raised from Rs 2,000 to Rs 5,000 for those with annual income up to Rs 5 lakh to benefit 2 crore tax payers; also, those living on rent will now be allowed deduction of Rs 60,000 a year instead of Rs 24,000, but that means a rental of Rs 5,000 per month not available in reality.
TAX DISPUTE RESOLUTION: FM has also come out with a direct tax dispute resolution scheme to resolve income tax cases pending in courts and tribunals or before commissioners for want of arbitration and mediation. The defaulters are now required to pay principal tax, interest, penalty and interest on penalty. “Now they can simply pay off principal amount and the entire interest and the penalty can be waived off,” said Revenue Secretary Hasmukh.
TAILPIECE
RACE COURSE WINS: As if to encourage horseracing, the threshold limit for tax deducted at source for winnings from horse race has been increased to Rs.10000.
