Three Key achievements:
* Financial Inclusion – 12.5 crores families financially
mainstreamed in 100 days.
* Transparent Coal Block auctions to augment
resources of the States.
* Swachh Bharat is not only a programme to improve
hygiene and cleanliness but has become a movement
to regenerate India.
* Game changing reforms on the anvil: . Goods and
Service Tax (GST) . Jan Dhan, Aadhar and Mobile
(JAM) – for direct benefit transfer.
STATE OF ECONOMY
Inflation
* Inflation declined – a structural shift * CPI inflation
projected at 5% by the end of the year, consequently,
easing of monetary policy. * Monetary Policy
Framework Agreement with RBI, to keep inflation below
6%. * GDP growth in 2015-16, projected to be between
8 to 8.5%.
Amrut Mahotsav – The year 2022, 75th year of
Independence
Vision for “Team India” led by PM
* Housing for all – 2 crore houses in Urban areas and 4
crore houses in Rural areas.
* Basic facility of 24×7 power, clean drinking water, a
toilet and road connectivity.
* At least one member has access to means for
livelihood.
* Substantial reduction in poverty.
* Electrification of the remaining 20,000 villages
including off-grid Solar Power- by 2020.
* Connecting each of the 1,78,000 un-connected
habitation.
* Providing medical services in each village and city.
* Ensure a Senior Secondary School within 5 km reach
of every child, while improving quality of education and
learning outcomes.
* To strengthen rural economy – increase irrigated area,
improve the efficiency of existing irrigation systems,
and ensure value addition and reasonable price for
farm produce.
* Ensure communication connectivity to all villages.
To make India, the manufacturing hub of the World
through Skill India and the Make in India Programmes.
* Encourage and grow the spirit of entrepreneurship –
to turn youth into job creators.
* Development of Eastern and North Eastern regions on
par with the rest of the country.
Major Challenges Ahead
* Five major challenges: Agricultural income under
stress, increasing investment in infrastructure, decline
in manufacturing, resource crunch in view of higher
devolution in taxes to states, maintaining fiscal
discipline.
* To meet these challenges public sector needs to step
in to catalyse investment, make in india programme to
create jobs in manufacturing, continue support to
programmes with important national priorities such as
agriculture, education, health, MGNREGA, rural
infrastructure including roads.
* Challenge of maintaining fiscal deficit of 4.1% of GDP
met in 2014-15, despite lower nominal GDP growth due
to lower inflation and consequent sub-dued tax
buoyancy.
Fiscal Roadmap
* Government firm on journey to achieve fiscal target
of 3% of GDP.
* Realistic figures shown in fiscal account without
showing exaggerated revenue projections.
With improved economy, pressure to accelerate fiscal
consolidation too has decreased.
* Accordingly, journey for fiscal deficit target of 3% will
be achieved in 3 years rather than 2 years. The fiscal
deficit targets are 3.9%, 3.5% and 3.0% in FY 2015-16,
2016-17 & 2017-18 respectively.
* Additional fiscal space will go to funding
infrastructure investment.
* Need to view public finances from a National
perspective and not just the perspective of the Central
Government. Aggregate public expenditure of the
Governments, as a whole can be expected to rise
substantially.
* Disinvestment to include both disinvestment in loss
making units, and some strategic disinvestment.
Good governance
* Need to cut subsidy leakages, not subsidies
themselves. To achieve this, Government committed to
the process of rationalizing subsidies.
* Direct Transfer of Benefits to be extended further
with a view to increase the number of beneficiaries
from 1 crore to 10.3 crore.
Agriculture
* Major steps take to address the two major factors
critical to agricultural production, that of soil and
water.
* ‘Paramparagat Krishi Vikas Yojana’ to be fully
supported.
* ‘Pradhanmantri Gram Sinchai Yojana’ to provide ‘Per
Drop More Crop’.
* Rs 5,300 crore to support micro-irrigation, watershed
development and the ‘Pradhan Mantri Krishi Sinchai
Yojana’. States urged to chip in.
* Rs 25,000 crore in 2015-16 to the corpus of Rural
Infrastructure Development Fund (RIDF) set up in
NABARD; Rs 15,000 crore for Long Term Rural Credit
Fund; Rs 45,000 crore for Short Term Co-operative
Rural Credit Refinance Fund; and Rs 15,000 crore for
Short Term RRB Refinance Fund.
* Target of Rs 8.5 lakh crore of agricultural credit
during the year 2015-16.
* Focus on improving the quality and effectiveness of
activities under MGNREGA.
* Need to create a National Agriculture Market for the
benefit farmers, which will also have the incidental
benefit of moderating price rises. Government to work
with the States, in NITI, for the creation of a Unified
National Agriculture Market.
Funding the Unfunded
* Micro Units Development Refinance Agency (MUDRA)
Bank, with a corpus of Rs 20,000 crores, and credit
guarantee corpus of Rs 3,000 crores to be created.
* In lending, priority will be given to SC/ST enterprises.
MUDRA Bank will be responsible for refinancing all
Micro-finance Institutions which are in the business of
lending to such small entities of business through a
Pradhan Mantri Mudra Yojana.
* A Trade Receivables discounting System (TReDS)
which will be an electronic platform for facilitating
financing of trade receivables of MSMEs to be
established.
* Comprehensive Bankruptcy Code of global standards
to be brought in fiscal 2015-16 towards ease of doing
business.
* Postal network with 1,54,000 points of presence
spread across villages to be used for increasing access
of the people to the formal financial system.
* NBFCs registered with RBI and having asset size of
Rs 500 crore and above may be considered for
notifications as ‘Financial Institution’ in terms of the
SARFAESI Act, 2002.
From Jan Dhan to Jan Suraksha
* Government to work towards creating a functional
social security system for all Indians, specially the poor
and the under-privileged.
* Pradhan Mantri Suraksha Bima Yojna to cover
accidental death risk of Rs 2 Lakh for a premium of
just Rs 12 per year.
* Atal Pension Yojana to provide a defined pension,
depending on the contribution and the period of
contribution. Government to contribute 50% of the
beneficiaries’ premium limited to Rs 1,000 each year,
for five years, in the new accounts opened before 31st
December 2015.
* Pradhan Mantri Jeevan Jyoti Bima Yojana to cover
both natural and accidental death risk of Rs 2 lakh at
premium of Rs 330 per year for the age group of
18-50.
* A new scheme for providing Physical Aids and
Assisted Living Devices for senior citizens, living below
the poeverty line.
* Unclaimed deposits of about Rs 3,000 crores in the
PPF, and approximately Rs 6,000 crores in the EPF
corpus. The amounts to be appropriated to a corpus,
which will be used to subsidize the premiums on these
social security schemes through creation of a Senior
Citizen Welfare Fund in the Finance Bill.
* Government committed to the on-going schemes for
welfare of SCs, STs and Women.
Infrastructure
* Sharp increase in outlays of roads and railways.
Capital expenditure of public sector units to also go up.
* National Investment and Infrastructure Fund (NIIF),
to be established with an annual flow of Rs 20,000
crores to it.
* Tax free infrastructure bonds for the projects in the
rail, road and irrigation sectors.
* PPP mode of infrastructure development to be
revisited and revitalised.
* Atal Innovation Mission (AIM) to be established in
NITI to provide Innovation Promotion Platform involving
academicians, and drawing upon national and
international experiences to foster a culture of
innovation, research and development. A sum of Rs
150 crore will be earmarked.
* Concerns of IT industries for a more liberal system of
raising global capital, incubation facilities in our
Centres of Excellence, funding for seed capital and
growth, and ease of Doing Business etc. would be
addressed for creating hundreds of billion dollars in
value.
* (SETU) Self-Employment and Talent Utilization) to be
established as Techno-financial, incubation and
facilitation programme to support all aspects of start-
up business. Rs 1000 crore to be set aside as initial
amount in NITI.
* Ports in public sector will be encouraged, to
corporatize, and become companies under the
Companies Act to attract investment and leverage the
huge land resources.
* An expert committee to examine the possibility and
prepare a draft legislation where the need for multiple
prior permission can be replaced by a pre-existing
regulatory mechanism. This will facilitate India
becoming an investment destination.
* 5 new Ultra Mega Power Projects, each of 4000 MW,
in the Plug-and-Play mode.
Financial Market
* Public Debt Management Agency (PDMA) bringing
both external and domestic borrowings under one roof
to be set up this year.
* Enabling legislation, amending the Government
Securities Act and the RBI Act included in the Finance
Bill, 2015.
* Forward Markets commission to be merged with
SEBI.
* Section-6 of FEMA to be amended through Finance
Bill to provide control on capital flows as equity will be
exercised by Government in consultation with RBI.
* Proposal to create a Task Force to establish sector-
neutral financial redressal agency that will address
grievance against all financial service providers.
* India Financial Code to be introduced soon in
Parliament for consideration.
* Vision of putting in place a direct tax regime, which
is internationally competitive on rates, without
exemptions.
* Government to bring enabling legislation to allow
employee to opt for EPF or New Pension Scheme. For
employee’s below a certain threshold of monthly
income, contribution to EPF to be option, without
affecting employees’ contribution.
Monetising Gold
* Gold monetisation scheme to allow the depositors of
gold to earn interest in their metal accounts and the
jewellers to obtain loans in their metal account to be
introduced.
* Sovereign Gold Bond, as an alternative to purchasing
metal gold scheme to be developed.
* Commence work on developing an Indian gold coin,
which will carry the Ashok Chakra on its face.
Investment
* Foreign investments in Alternate Investment Funds to
be allowed.
* Distinction between different types of foreign
investments, especially between foreign portfolio
investments and foreign direct investments to be done
away with. Replacement with composite caps.
* A project development company to facilitate setting
up manufacturing hubs in CMLV countries, namely,
Cambodia, Myanmar, Laos and Vietnam.
Safe India
* Rs 1000 crores to the Nirbhaya Fund
Tourism
* Resources to be provided to start work along
landscape restoration, signage and interpretation
centres, parking, access for the differently abled ,
visitors’ amenities, including securities and toilets,
illumination and plans for benefiting communities
around them at various heritage sites.
* Visas on arrival to be increased to 150 countries in
stages.
Green India
* Target of renewable energy capacity revised to
175000 MW till 2022, comprising 100000 MW Solar,
60000 MW Wind, 10000 MW Biomass and 5000 MW
Small Hydro.
* A need for procurement law to contain malfeasance
in public procurement.
* Proposal to introduce a public Contracts (resolution
of disputes) Bill to streamline the institutional
arrangements for resolution of such disputes.
* Proposal to introduce a regulatory reform Bill that will
bring about a cogency of approach across various
sectors of infrastructure.
Skill India
* Less than 5% of our potential work force gets formal
skill training to be employable. A national skill mission
to consolidate skill initiatives spread accross several
ministries to be launched.
* Deen Dayal Upadhyay Gramin Kaushal Yojana to
enhance the employability of rural youth.
* A Committee for 100th birth celebration of Shri Deen
Dayalji Upadhyay to be announced soon.
* A student Financial Aid Authority to administer and
monitor the front-end all scholarship as well
Educational Loan Schemes, through the Pradhan Mantri
Vidya Lakshmi Karyakram.
* An IIT to be set up in Karnataka and Indian School of
Mines, Dhanbad to be upgraded in to a full-fledged IIT.
* New All India Institute of Medical Science (AIIMS) to
be set up in J&K, Punjab, Tamil Nadu, Himachal
Pradesh and Assam. Another AIIMS like institutions to
be set up in Bihar.
* A post graduate institute of Horticulture Research &
Education is to be set up in Amritsar.
* 3 new National Institute of Pharmaceuticals
Education and Research in Maharashtra, Rajasthan &
Chattisgarh and one institute of Science and Education
Research is to be set up in Nagaland & Orissa each.
* An autonomous Bank Board Bureau to be set up to
improve the governance of public sector bank.
* The National Optical Fibre Network Programme
(NOFNP) to be further speeded up by allowing willing
states to execute on reimbursement of cost basis.
* Special assistance to Bihar & West Bengal to be
provided as in the case of Andhra Pradesh.
* Government is committed to comply with all the legal
commitments made to AP & Telengana at the time of
their re-organisation.
* Inspite of large increase in devolution to state
sufficient fund allocated to education, health, rural
development, housing, urban development, women and
child development, water resources & cleaning of
Ganga.
* Part of Delhi-Mumbai Industrial Corridor (DMIC);
Ahmedabad-Dhaulera Investment region and Shendra-
Bidkin Industrial Park are now in a position to start
work on basic infrastructure.
* Made in India and the Buy and the make in India
policy are being carefully pursued to achieve greater
self-sufficiency in the area of defence equipment
including air-craft.
* The first phase of GIFT to become a reality very
soon. Appropriate regulations to be issued in March.
BUDGET ESTIMATES
* Non-Plan expenditure estimates for the Financial
Year are estimated at Rs 13,12,200 crore.
* Plan expenditure is estimated to be Rs 4,65,277
crore, which is very near to the R.E. of 2014-15.
* Total Expenditure has accordingly been estimated at
Rs 17,77,477 crore.
* The requirements for expenditure on Defence,
Internal Security and other necessary expenditures are
adequately provided.
* Gross Tax receipts are estimated to be Rs 14,49,490
crore.
* Devolution to the States is estimated to be Rs
5,23,958.
* Share of Central Government will be Rs 9,19,842.
* Non Tax Revenues for the next fiscal are estimated
to be Rs 2,21,733 crore.
* Fiscal deficit will be 3.9 per cent of GDP and
Revenue Deficit will be 2.8 per cent of GDP.
TAX PROPOSAL
* Objective of stable taxation policy and a non-
adversarial tax administration.
* Fight against the scourge of black money to be taken
forward.
* Efforts on various fronts to implement GST from next
year.
* No change in rate of personal income tax.
* Proposal to reduce corporate tax from 30% to 25%
over the next four years, starting from next financial
year.
* Rationalisation and removal of various tax exemptions
and incentives to reduce tax disputes and improve
administration.
* Exemption to individual tax payers to continue to
facilitate savings.
Broad themes:
. Measures to curb black money; . Job creation through
revival of growth and investment and promotion of
domestic manufacturing, Make in India; . Improve ease
of doing business – Minimum Government and
maximum governance; . Improve quality of life and
public health, Swachh Bharat; . Benefit to middle class
tax-payers; and . Stand alone proposals to maximise
benefit to the economy.
Black Money
* Generation of black money and its concealment to be
dealt with effectively and forcefully.
* Investigation into cases of undisclosed foreign assets
has been given highest priority in the last nine months.
* Major breakthrough with Swiss authorities, who have
agreed to:
. Provide information in respect of cases independently
investigated by IT department; . Confirm genuineness
of bank accounts and provide non-banking
information; . Provide such information in time-bound
manner; and . Commence talks for automatic exchange
of information.
* New structure of electronic filing of statements by
reporting entities to ensure seamless integration of
data for more effective enforcement. * Bill for a
comprehensive new law to deal with black money
parked abroad to be introduced in the current session.
Key features of new law on black money:
. Evasion of tax in relation to foreign assets to have a
punishment of rigorous imprisonment upto 10 years, be
non-compoundable, have a penalty rate of 300% and
the offender will not be permitted to approach the
Settlement Commission.
. Non-filing of return/filing of return with inadequate
disclosures to have a punishment of rigorous
imprisonment upto 7 years.
. Undisclosed income from any foreign assets to be
taxable at the maximum marginal rate.
. Mandatory filing of return in respect of foreign asset.
. Entities, banks, financial institutions including
individuals all liable for prosecution and penalty.
. Concealment of income/evasion of income in relation
to a foreign asset to be made a predicate offence
under PML Act, 2002.
. PML Act, 2002 and FEMA to be amended to enable
administration of new Act on black money.
* Benami Transactions (Prohibition) Bill to curb
domestic black money to be introduced in the current
session of Parliament.
* Acceptance or re-payment of an advance of Rs
20,000 or more in cash for purchase of immovable
property to be prohibited.
* PAN being made mandatory for any purchase or sale
exceeding Rupees 1 lakh.
* Third party reporting entities would be required to
furnish information about foreign currency sales and
cross border transactions.
* Provision to tackle splitting of reportable
transactions.
* Leverage of technology by CBDT and CBEC to access
information from either’s data bases.
Make in India
* Revival of growth and investment and promotion of
domestic manufacturing for job creation.
* Tax “pass through” to be allowed to both category I
and category II alternative investment funds.
* Rationalisation of capital gains regime for the
sponsors exiting at the time of listing of the units of
REITs and InvITs.
* Rental income of REITs from their own assets to
have pass through facility.
* Permanent Establishment (PE) norm to be modified
to encourage fund managers to relocate to India.
* General Anti Avoidance Rule (GAAR) to be deferred
by two years.
* GAAR to apply to investments made on or after
01.04.2017, when implemented.
* Additional investment allowance (@ 15%) and
additional depreciation (@35%) to new manufacturing
units set up during the period 01-04-2015 to 31-03-2020
in notified backward areas of Andhra Pradesh and
Telangana.
* Rate of Income-tax on royalty and fees for technical
services reduced from 25% to 10% to facilitate
technology inflow.
* Benefit of deduction for employment of new regular
workmen to all business entities and eligibility
threshold reduced.
* Basic Custom duty on certain inputs, raw materials,
inter mediates and components in 22 items, reduced to
minimise the impact of duty inversion.
* All goods, except populated printed circuit boards for
use in manufacture of ITA bound items, exempted from
SAD.
* SAD reduced on import of certain inputs and raw
materials.
* Excise duty on chassis for ambulance reduced from
24% to 12.5%.
*Balance of 50% of additional depreciation @ 20% for
new plant and machinery installed and used for less
than six months by a manufacturing unit or a unit
engaged in generation and distribution of power is to
be allowed immediately in the next year.
* Ease of doing business – Minimum Government
Maximum Governance
* Simplification of tax procedures.
* Monetary limit for a case to be heard by a single
member bench of ITAT increase from Rs 5 lakh to Rs
15 lakh.
* Penalty provision in indirect taxes are being
rationalised to encourage compliance and early dispute
resolution.
* Central excise/Service tax assesses to be allowed to
use digitally signed invoices and maintain record
electronically
* Wealth-tax replaced with additional surcharge of 2
per cent on super rich with a taxable income of over
Rs 1 crore annually.
* Provision of indirect transfers in the Income-tax Act
suitably cleaned up.
* Applicability of indirect transfer provisions to
dividends paid by foreign companies to their
shareholders to be addressed through a clarificatory
circular. * Domestic transfer pricing threshold limit
increased from Rs 5 crore to Rs 20 crore.
* MAT rationalised for FIIs and members of an AOP.
* Tax Administration Reform Commission (TARC)
recommendations to be appropriately implemented
during the course of the year.
* Education cess and the Secondary and Higher
education cess to be subsumed in Central Excise Duty.
* Specific rates of central excise duty in case of
certain other commodities revised.
* Excise levy on cigarettes and the compounded levy
scheme applicable to pan masala, gutkha and other
tobacco products also changed.
Excise duty on footwear with leather uppers and having
retail price of more than Rs 1000 per pair reduced to
6%.
* Online central excise and service tax registration to
be done in two working days.
* Time limit for taking CENVAT credit on inputs and
input services increased from 6 months to 1 year.
* Service-tax plus education cesses increased from
12.36% to 14% to facilitate transition to GST.
* Donation made to National Fund for Control of Drug
Abuse (NFCDA) to be eligible for 100% deduction u/s
80G of Income-tax Act.
* Seized cash can be adjusted towards assessees tax
liability.
Swachh Bharat
* 100% deduction for contributions, other than by way
of CSR contribution, to Swachh Bharat Kosh and Clean
Ganga Fund.
* Clean energy cess increased from Rs 100 to Rs 200
per metric tonne of coal, etc. to finance clean
environment initiatives.
* Excise duty on sacks and bags of polymers of
ethylene other than for industrial use increased from
12% to 15%.
* Enabling provision to levy Swachh Bharat cess at a
rate of 2% or less on all or certain services, if need
arises.
* Services by common affluent treatment plant exempt
from Service-tax.
* Concessions on custom and excise duty available to
electrically operated vehicles and hybrid vehicles
extended upto 31.03.2016.
Benefits to middle class tax-payers
* Limit of deduction of health insurance premium
increased from Rs 15000 to Rs 25000, for senior
citizens limit increased from Rs 20000 to Rs 30000.
* Senior citizens above the age of 80 years, who are
not covered by health insurance, to be allowed
deduction of Rs 30000 towards medical expenditures.
* Deduction limit of Rs 60000 with respect to specified
decease of serious nature enhanced to Rs 80000 in
case of senior citizen.
* Additional deduction of Rs 25000 allowed for
differently abled persons.
* Limit on deduction on account of contribution to a
pension fund and the new pension scheme increased
from Rs 1 lakh to Rs 1.5 lakh.
* Additional deduction of Rs 50000 for contribution to
the new pension scheme u/s 80CCD.
* Payments to the beneficiaries including interest
payment on deposit in Sukanya Samriddhi scheme to
be fully exempt.
* Service-tax exemption on Varishtha Bima Yojana.
* Concession to individual tax-payers despite
inadequate fiscal space.
* Lot to look forward to as fiscal capacity improves.
* Conversion of existing excise duty on petrol and
diesel to the extent of Rs 4 per litre into Road Cess to
fund investment.
* Service Tax exemption extended to certain pre cold
storage services in relation to fruits and vegetables so
as to incentivise value addition in crucial sector.
* Negative List under service-tax is being slightly
pruned to widen the tax base.
* Yoga to be included within the ambit of charitable
purpose under Section 2(15) of the Income-tax Act.
* To mitigate the problem being faced by many
genuine charitable institutions, it is proposed to modify
the ceiling on receipts from activities in the nature of
trade, commerce or business to 20% of the total
receipts from the existing ceiling of Rs 25 lakh.
* Most provisions of Direct Taxes Code have already
been included in the Income-tax Act, therefore, no
great merit in going ahead with the Direct Taxes Code
as it exists today.
* Direct tax proposals to result in revenue loss of Rs
8315 crore, whereas the proposals in indirect taxes are
expected to yield Rs 23383 crore. Thus, the net impact
of all tax proposals would be revenue gain of Rs 15068
crore.
Others
* Increase in basic custom duty:
. Metallergical coke from 2.5 % to 5%. . Tariff rate on
iron and steel and articles of iron and steel increased
from 10% to 15%. . Tariff rate on commercial vehicle
increased from 10 % to 40%.
* Basic custom duty on digital still image video camera
with certain specification reduced to nil.
* Excise duty on rails for manufacture of railway or
tram way track construction material exempted
retrospectively from 17-03-2012 to 02-02-2014, if not
CENVAT credit of duty paid on such rails is availed.
* Service-tax to be levied on service provided by way
of access to amusement facility, entertainment events
or concerts, pageants, non recoganised sporting events
etc.
Service-tax exemption:
. Services of pre-conditioning, pre-cooling, ripening etc.
of fruits and vegetables. . Life insurance service
provided by way of Varishtha Pension Bima Yojana. .
All ambulance services provided to patients. .
Admission to museum, zoo, national park, wile life
sanctuary and tiger reserve. . Transport of goods for
export by road from factory to land customs station.
* Enabling provision made to exclude all services
provided by the Government or local authority to a
business entity from the negative list. * Service-tax
exemption to construction, erection, commissioning or
installation of original works pertaining to an airport or
port withdrawn.
* Transportation of agricultural produce to remain
exempt from Service-tax.
* Artificial heart exempt from basic custom duty of 5%
and CVD.
* Excise duty exemption for captively consumed
intermediate compound coming into existance during
the manufacture of agarbathi.
wellsindia 