Arun Jaitley's Budget Speech
Arun Jaitley's Budget Speech
Arun Jaitley's Budget Speech
PART - A
Page No.
Introduction
Rural Sector
11
13
17
19
Fiscal Discipline
20
PART - B
TAX REFORMS
Relief to small tax payers
23
24
26
26
27
27
29
31
32
Conclusion
33
Annexes
(ii)
Annexes to Part A
Annex-I :
Annex-II :
Proposed Changes/Reforms
in FDI and Related Policies
34
35
36
37
39
Annexes to Part B
Direct Tax
40
Indirect Tax
49
71
Budget 2016-2017
Speech of
Arun Jaitley
Minister of Finance
February 29, 2016
Madam Speaker,
I rise to present the Budget for the year 2016-17.
2.
I am presenting this Budget when the global economy is in serious
crisis. Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015.
Financial markets have been battered and global trade has contracted.
Amidst all these global headwinds, the Indian economy has held its ground
firmly. Thanks to our inherent strengths and the policies of this Government,
a lot of confidence and hope continues to be built around India.
3.
The International Monetary Fund has hailed India as a bright spot
amidst a slowing global economy. The World Economic Forum has said that
Indias growth is extraordinarily high. We accomplished this despite very
unfavourable conditions and despite the fact that we inherited an economy of
low growth, high inflation and zero investor confidence in Governments
capability to govern. We converted these difficulties and challenges into
opportunities.
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4.
Let us look at our achievements compared to the last three years of
the previous Government when growth had decelerated to 6.3%. The growth
of GDP has now accelerated to 7.6%. This was possible notwithstanding the
contraction of global exports by 4.4% compared to 7.7% growth in world
exports during the last three years of the previous Government. CPI inflation
was at 9.4% during the last three years of the previous Government. Under
our Government, CPI inflation has come down to 5.4%, providing big relief
to the public. This was accomplished despite two consecutive years of
monsoon shortfall of 13%, compared to normal rainfall in the last three years
of the previous Government.
5.
Our external situation is robust. The Current Account deficit has
declined from 18.4 billion US dollars in the first half of last year to 14.4
billion this year. It is projected to be 1.4% of GDP at the end of this year.
Our foreign exchange reserves are at the highest ever level of about 350
billion US dollars.
6.
Our initiatives in the last 21 months have not only placed the
economy on a faster growth trajectory but have bridged the trust deficit,
created by the previous Government. We had to work in an unsupportive
global environment, adverse weather conditions and an obstructive political
atmosphere.
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7.
We believe in the principle that money with the Government belongs
to the people and we have the sacred responsibility to spend it prudently and
wisely for the welfare of our people, especially the poor and the
downtrodden. We have increased our Plan expenditure at the RE stage in
2015-16 in contrast to the usual practice of reducing it. We achieved this
despite adopting the Fourteenth Finance Commission recommendations
which increased devolution to the States by 55%.
8.
We must now look ahead. The risks of further global slowdown and
turbulence are mounting.
This complicates the task of economic
management for India. It has three serious implications for us. First, we
must strengthen our firewalls against these risks by ensuring macroeconomic stability and prudent fiscal management. Second, since foreign
markets are weak, we must rely on domestic demand and Indian markets to
ensure that Indias growth does not slow down. And third, we must continue
with the pace of economic reforms and policy initiatives to change the lives
of our people for the better.
9.
We see these challenges as opportunities. The financial years
2015-16 and 2016-17 have been and will be extremely challenging for
Government expenditure. The 14th Finance Commission has reduced the
Central share of taxes to 58% from the 68%. In the financial year 2015-16,
we managed to improve upon the budgeted expenditure due to revenue
buoyancy, notwithstanding the steep reduction in the Central share of taxes.
The next financial year 2016-17 will cast an additional burden on account of
the recommendations of the 7th Central Pay Commission and the
implementation of Defence OROP. The Government, therefore, has to
prioritise its expenditure. We wish to enhance expenditure in the farm and
rural sector, the social sector, the infrastructure sector and provide for
recapitalisation of the banks. This will address those sectors which need
immediate attention. Once the Government discharges these priority
obligations, it shall then focus on other areas which are also of utmost
priority to the Government.
10.
While increasing the outlay of various social sector programmes, the
Government will undertake three major schemes to help the weaker sections
of the society. The Pradhan Mantri Fasal Bima Yojana has already been
announced to protect the farmer from the adverse consequences of nature.
The farmer will pay a nominal amount of insurance premium and get the
highest ever compensation in the event of any loss suffered. A health
insurance scheme which protects one-third of Indias population against
hospitalisation expenditure is also being announced. The Government is
also launching a new initiative to ensure that the BPL families are
provided with a cooking gas connection, supported by a Government
subsidy. This will significantly improve the health of women and those BPL
families who suffer adversely from the ill-effects of Chulha cooking.
11.
The Annual Budget is also an opportunity for the Government to
outline its priorities for the year to come. The priority of our Government is
clearly to provide additional resources for vulnerable sections, rural areas
and social and physical infrastructure creation. The Government shall also
endeavour to continue with the ongoing reform programme and ensure the
passage of the Constitutional amendments to enable the implementation of
the Goods and Service Tax, the passage of Insolvency and Bankruptcy law
and other important reform measures which are pending before the
Parliament.
12.
Additionally, as I will elaborate later, we will undertake significant
reforms, such as the enactment of a law to ensure that all Government
benefits are conferred upon persons who deserve it, by giving a statutory
backing to the AADHAR platform; bringing significant changes in the
legislative framework relating to the transport sector so as to free it from
constraints and restrictions; incentivising gas discovery and exploration by
providing calibrated marketing freedom; enactment of a comprehensive law
to deal with resolution of financial firms; providing legal framework for
dispute resolution in PPP projects and public utility contracts; undertaking
important banking sector reforms and public listing of general insurance
companies; and undertaking significant changes in FDI policy.
13.
Our agenda for the next year is, therefore, to Transform India in this
direction. My Budget proposals are, therefore, built on this transformative
agenda with nine distinct pillars. These include:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
14.
Let me first take up Agriculture and Farmers Welfare. We are
grateful to our farmers for being the backbone of the countrys food security.
We need to think beyond food security and give back to our farmers a
sense of income security. Government will, therefore, reorient its
interventions in the farm and non-farm sectors to double the income of the
farmers by 2022. Our total allocation for Agriculture and Farmers welfare
is ` 35,984 crore.
15.
We need to address issues of optimal utilisation of our water
resources; create new infrastructure for irrigation; conserve soil fertility with
balanced use of fertilizer; and provide value addition and connectivity from
farm to markets.
16.
Irrigation is a critical input for increasing agriculture production and
productivity. Out of 141 million hectares of net cultivated area in the
country, only 46% is covered with irrigation.
17.
The Pradhan Mantri Krishi Sinchai Yojana has been strengthened
and will be implemented in mission mode. 28.5 lakh hectares will be brought
under irrigation under this Scheme.
18.
Implementation of 89 irrigation projects under AIBP, which have
been languishing, will be fast tracked. This will help to irrigate 80.6 lakh
hectares. These projects require `17,000 crore next year and `86,500 crore
in the next five years. We will ensure that 23 of these projects are completed
before 31st March, 2017.
19.
A dedicated Long Term Irrigation Fund will be created in
NABARD with an initial corpus of about `20,000 crore. To achieve all
these, a total provision of `12,517 crore has been made through
budgetary support and market borrowings in 2016-17.
20.
Simultaneously a major programme for sustainable management
of ground water resources has been prepared with an estimated cost of
`6,000 crore and proposed for multilateral funding.
21.
At least 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh
compost pits for production of organic manure will be taken up by making
productive use of the allocations under MGNREGA.
22.
The Soil Health Card Scheme is now being implemented with greater
vigour. Through this, farmers get information about nutrient level of the soil
and can make judicious use of fertilizers. The target is to cover all 14 crore
farm holdings by March 2017. `368 crore has been provided for National
Project on Soil Health and Fertility. Besides, 2,000 model retail outlets of
Fertilizer companies will be provided with soil and seed testing facilities
during the next three years. Fertilizer companies will also co-market city
compost which increases the efficacy of chemical fertilizer. A policy for
conversion of city waste into compost has also been approved by the
Government under the Swachh Bharat Abhiyan.
23.
To increase crop yields in rain fed areas, which account for nearly
55% of the countrys arable land, organic farming is being promoted.
Towards this end, the Government has launched two important schemes.
First, the Parmparagat Krishi Vikas Yojana which will bring 5 lakh acres
under organic farming over a three year period. Second, the Government has
launched a value chain based organic farming scheme called Organic Value
Chain Development in North East Region. The emphasis is on value
addition so that organic produce grown in these parts find domestic and
export markets. A total provision of `412 crore has been made for these
schemes.
24.
Incentives are being given for enhancement of pulses production.
`500 crores under National Food Security Mission has been assigned to
pulses. The number of districts covered has been increased to 622.
25.
A national level competition will be held among 674 Krishi Vigyan
Kendras with a total prize money of `50 lakh to improve the efficiency
and performance of these Kendras.
26.
Access to markets is critical for the income of farmers. The
Government is implementing the Unified Agriculture Marketing Scheme
which envisages a common e-market platform that will be deployed in
selected 585 regulated wholesale markets. Amendments to the APMC Acts
of the States are a pre-requisite to join this e-platform. I am happy to inform
that 12 States have already amended their APMC Acts and are ready to come
on board. More States are expected to join this platform in the coming year.
The Unified Agricultural Marketing E Platform will be dedicated to the
Nation on the birthday of Dr. Baba Saheb Ambedkar on 14th April this
year.
27.
97 lakh MT of storage capacity was added to the Central pool stock
during the current year.
28.
We are implementing the Pradhan Mantri Gram Sadak Yojana
(PMGSY) as never before. This Scheme had suffered in the past because of
underfunding. The allocations in 2012-13 and 2013-14 were only `8,885
crore and `9,805 crore respectively. We have substantially increased the
allocation in the last two years and have now allocated `19,000 crore in
2016-17. Together with States share, totally about `27,000 crore will be
spent on this Yojana in 2016-17. Our goal is to advance the completion
target of the programme from 2021 to 2019 and connect the remaining
65,000 eligible habitations by constructing 2.23 lakh kms of roads.
Accordingly, the pace of construction which is currently 100 kms per day, as
compared to the average of 73.5 kms during 2011-14, will be substantially
stepped up.
29.
To support farmers in the aftermath of natural calamities,
Government has revised the norms of assistance under the National Disaster
Response Fund in April 2015.
30.
Special focus has been given to ensure adequate and timely flow of
credit to the farmers. Against the target of `8.5 lakh crore in 2015-16, the
target for agricultural credit in 2016-17 will be an all-time high of `9 lakh
crore. To reduce the burden of loan repayment on farmers, a provision of
`15,000 crore has been made in the BE 2016-17 towards interest subvention.
31.
Government has approved the path breaking Crop Insurance Scheme,
namely, Prime Minister Fasal Bima Yojana. For effective implementation of
this Scheme, I have provided a sum of `5,500 crore in the Budget 2016-17.
32.
We have to ensure that the benefit of MSP reaches farmers in all
parts of the country. Three specific initiatives will be taken up in 2016-17
for this. First, the remaining States will be encouraged to take up
decentralized procurement. Second, an online Procurement System will
be undertaken through the Food Corporation of India. This will usher
in transparency and convenience to the farmers through prior
registration and monitoring of actual procurement. Third, effective
arrangements have been made for pulses procurement.
33.
Farmers also take up other allied activities to supplement their family
income. To make dairying more remunerative to the farmers, four new
projects will be taken up: first, the Pashudhan Sanjivani, an animal
wellness programme and provision of Animal Health Cards (Nakul
Swasthya Patra); second, an Advanced breeding technology; third,
Creation of E-Pashudhan Haat, an e market portal for connecting
breeders and farmers; and fourth, a National Genomic Centre for
indigenous breeds. These projects will be implemented at a cost of `850
crores over the next few years.
34.
There has been a visible rise in the yield of honey, from an average of
18 to 20 kg per box per annum in the year 2013-14 to 25 kg per box per
annum by 2015-16. The total production of honey in the country has
increased from 76,150 metric tonnes in 2014-15 to 86,500 metric tonnes.
90% of the domestic honey is now exported.
II.
Rural Sector
35.
After agriculture, I now turn to the other segments of the rural
economy.
36.
A sum of `2.87 lakh crore will be given as Grant in Aid to Gram
Panchayats and Municipalities as per the recommendations of the 14th
Finance Commission. This is a quantum jump of 228% compared to the
previous five year period. The funds now allocated, translate to an average
assistance of over `80 lakh per Gram Panchayat and over `21 crore per
Urban Local Body. These enhanced allocations are capable of transforming
villages and small towns. Ministry of Panchayati Raj will work with the
States and evolve guidelines to actualise this.
37.
There is an urgent need to focus on areas of drought and rural
distress. Every block in these distress areas will be taken up as an intensive
Block under the Deen Dayal Antyodaya Mission. Formation of Self Help
Groups (SHGs) will be speeded up to promote multiple livelihoods. Cluster
Facilitation Teams (CFT) will be set up under MGNREGS to ensure water
conservation and natural resource management. These districts would also
be taken up on priority under Pradhan Mantri Krishi Sinchaii Yojna.
38.
A sum of `38,500 crore has been allocated for MGNREGS in
2016-17.
39.
300 Rurban Clusters will be developed under the Shyama Prasad
Mukherjee Rurban Mission launched by the Honourable Prime Minister
recently. These Clusters will incubate growth centres in rural areas by
providing infrastructure amenities and market access for the farmers. They
will also expand employment opportunities for the youth.
40.
As on 1st April, 2015, a total of 18,542 villages were not electrified.
The Honourable Prime Minister, in his address to the Nation on 15th August,
2015 announced that the remaining villages will be electrified within the
next 1000 days.
41.
As on 23rd February, 2016, 5542 villages have been electrified. This
is more than the total combined achievement of previous three years. The
Government is committed to achieve 100% village electrification by
1st May, 2018. ` 8,500 crore has been provided for Deendayal Upadhayaya
Gram Jyoti Yojna and Integrated Power Development Schemes.
42.
Swachh Bharat Mission is Indias biggest drive to improve sanitation
and cleanliness, especially in rural India. This subject was very close to the
heart of the Father of the Nation. For the first time since independence, the
Parliament held a comprehensive debate on sanitation. This has become a
topic of discussion in almost every home. We have introduced ranking of
urban areas in sanitation which has resulted in constructive competition
among towns and cities. ` 9,000 crore has been provided for Swachh Bharat
Abhiyan.
43.
In order to continue this momentum, priority allocation from
Centrally Sponsored Schemes will be made to reward villages that have
become free from open defecation.
44.
We need to derive greater benefit from our demographic advantage.
We need to spread digital literacy in rural India. Of the 16.8 crore rural
households as many as 12 crore households do not have computers and are
48.
When asked what he intends doing for regeneration of India, Swami
Vivekananda had said no amount of politics would be of any avail until the
masses in India are well educated, well fed and well cared for. I now
proceed to present the key elements of my proposals in the Social Sector.
49.
In our country, cooking gas cylinders were considered an upper
middle class luxury. Gradually it spread to the middle class. But the poor do
not have access to cooking gas. Women of India have faced the curse of
smoke during the process of cooking. According to experts having an open
fire in the kitchen is like burning 400 cigarettes an hour. The time has come
to remedy this situation.
50.
We have decided to embark upon on a massive mission to
provide LPG connection in the name of women members of poor
households. I have set aside a sum of `2,000 crore in this years Budget
to meet the initial cost of providing these LPG connections. This will
benefit about 1 crore 50 lakh households below the poverty line in 2016-17.
The Scheme will be continued for at least two more years to cover a total of
5 crore BPL households. This will ensure universal coverage of cooking gas
10
in the country. This measure will empower women and protect their health.
It will reduce drudgery and the time spent on cooking. It will also provide
employment for rural youth in the supply chain of cooking gas.
51.
I want to take this opportunity to express our gratitude and
appreciation for the 75 lakh middle class and lower middle class households
who have voluntarily given up their cooking gas subsidy, in response to the
call given by the Honble Prime Minister. Their gesture is a matter of pride
for the country.
52.
Catastrophic health events are the single most important cause of
unforeseen out-of-pocket expenditure which pushes lakhs of households
below the poverty line every year. Serious illness of family members cause
severe stress on the financial circumstances of poor and economically weak
families, shaking the foundation of their economic security. In order to
help such families, the Government will launch a new health protection
scheme which will provide health cover up to Rs.One lakh per family.
For senior citizens of age 60 years and above belonging to this category,
an additional top-up package up to `30,000 will be provided.
53.
Making quality medicines available at affordable prices has been a
key challenge. We will reinvigorate the supply of generic drugs. 3,000
Stores under Prime Ministers Jan Aushadhi Yojana will be opened during
2016-17.
54.
About 2.2 lakh new patients of End Stage Renal Disease get added in
India every year resulting in additional demand for 3.4 crore dialysis
sessions. With approximately 4,950 dialysis centres in India, largely in the
private sector and concentrated in the major towns, the demand is only half
met. Every dialysis session costs about `2,000 an annual expenditure of
more than `3 lakh. Besides, most families have to undertake frequent trips,
often over long distances, to access dialysis services, incurring heavy travel
costs and loss of wages.
55.
To address this situation, I propose to start a National Dialysis
Services Programme. Funds will be made available through PPP mode
under the National Health Mission, to provide dialysis services in all
district hospitals. To reduce the cost, I propose to exempt certain parts
of dialysis equipment from basic customs duty, excise/CVD and SAD.
56.
Scheduled Caste and Scheduled Tribe entrepreneurs are beginning to
show great promise in starting and running successful business enterprises.
The Prime Minister had given a call for promoting entrepreneurship among
11
59.
I would now like to highlight the steps proposed to be taken under
education, skill development and job creation which is the fourth pillar of my
Budget proposals.
Education
60.
After universalisation of primary education throughout the country,
we want to take the next big step forward by focusing on the quality of
education. An increasing share of allocation under Sarva Shiksha Abhiyan
will be allocated for this. Further, 62 new Navodaya Vidyalayas will be
opened in the remaining uncovered districts over the next two years.
61.
It is our commitment to empower Higher Educational Institutions to
help them become world class teaching and research institutions. An
enabling regulatory architecture will be provided to ten public and ten
private institutions to emerge as world-class Teaching and Research
Institutions. This will enhance affordable access to high quality education
for ordinary Indians. A detailed scheme will be formulated.
62.
We have decided to set up a Higher Education Financing Agency
(HEFA) with an initial capital base of `1,000 crores. The HEFA will be a
12
not-for-profit organisation that will leverage funds from the market and
supplement them with donations and CSR funds. These funds will be
used to finance improvement in infrastructure in our top institutions and will
be serviced through internal accruals.
63.
To help Students, Higher Education Institutions and Employers to
access degree certificates of candidates, it is proposed to establish a Digital
Depository for School Leaving Certificates, College Degrees, Academic
Awards and Mark sheets, on the pattern of a Securities Depository. This
will help validate their authenticity, safe storage and easy retrieval.
Skill Development
64.
Skill India mission seeks to capitalise our demographic advantage.
Since its launch, the National Skill Development Mission has created an
elaborate skilling eco-system and imparted training to 76 lakh youth. We
want to bring entrepreneurship to the doorsteps of youth through Pradhan
Mantri Kaushal Vikas Yojana (PMKVY). We have decided to set up 1500
Multi Skill Training Institutes across the country. I am setting aside an
amount of `1,700 crore for these initiatives.
65.
We have decided to set up a National Board for Skill Development
Certification in partnership with the industry and academia. We propose to
further scale up Pradhan Mantri Kaushal Vikas Yojna to skill one crore
youth over the next three years.
66.
Entrepreneurship Education and Training will be provided in
2200 colleges, 300 schools, 500 Government ITIs and 50 Vocational
Training Centres through Massive Open Online Courses. Aspiring
entrepreneurs, particularly those from remote parts of the country, will be
connected to mentors and credit markets.
Job Creation
67.
In order to incentivize creation of new jobs in the formal sector,
Government of India will pay the Employee Pension Scheme
contribution of 8.33% for all new employees enrolling in EPFO for the
first three years of their employment. This will incentivize the employers
to recruit unemployed persons and also to bring into the books the informal
employees. In order to channelize this intervention towards the target group
of semi-skilled and unskilled workers, the scheme will be applicable to those
with salary up to `15,000 per month. I have made a budget provision of
`1,000 crore for this scheme.
13
68.
Further, the Finance Bill, 2016 proposes to broaden and liberalize the
scope of the employment generation incentive available under Section
80JJAA of the Income Tax Act. The deduction will be available not only to
assessees deriving income from manufacture of goods in a factory but to all
assessees who are subject to statutory audit under the Act. Thus, a deduction
of 30% of the emoluments paid to such employees can be claimed for three
years. The minimum number of days for which they should be employed
during the year is proposed to be reduced from 300 to 240 days. No
deduction will, however, be admissible in respect of employees whose
monthly emoluments exceed `25,000. Also, no deduction will be admissible
in respect of employees for whom the Government is paying the entire EPS
contribution.
69.
A National Career Service was launched in July, 2015. Already 35
million jobs seekers have registered on this platform. We propose to make
100 Model Career Centres operational by the end of 2016-17. We also
propose to inter-link State Employment Exchanges with the National Career
Service platform.
70.
Retail Trade is the largest service sector employer in the country.
Many more jobs can be created in this sector, provided the regulations are
simplified. If Shopping Malls are kept open all seven days of the week,
why not the small and medium shops? These shops should be given the
choice to remain open on all seven days of the week on voluntary basis.
The interest of the workers in terms of mandatory weekly holiday, number of
working hours per day, etc., of course, have to be protected. We propose to
circulate a Model Shops and Establishments Bill which can be adopted by
the State Governments on voluntary basis.
V.
71.
The fifth support pillar of the Budget theme Transform India is
infrastructure and investment.
72.
In the road sector, there were more than 70 projects that were
languishing at the beginning of the year, due to legacy factors. Aggregate
length of these projects was about 8,300 kms involving more than `1 lakh
crore investment. With exemplary and proactive interventions, nearly 85%
of these projects have been put back on track.
73.
Indias highest ever kilometres of new highways were awarded in
2015. At the same time, Indias highest ever production of motor vehicles
was achieved in 2015. This is a sign of growth in the economy; but it
14
15
airports and air strips with State Governments which can be revived at an
indicative cost of `50 crore to `100 crore each. We will partner with the
State Governments to develop some of these airports for regional
connectivity. Similarly, 10 of the 25 non-functional air strips with the
Airport Authority of India will also be developed.
80.
India is blessed with rich natural resources including oil and gas.
However, their discovery and exploitation has been below our potential.
Imports of hydrocarbons occupy a large share of Indias total imports. There
is a situation of rising demand, near stagnation in production and consequent
rapid increase in imports. As part of our drive towards self-sufficiency, the
Government is considering to incentivise gas production from deep-water,
ultra deep-water and high pressure-high temperature areas, which are
presently not exploited on account of higher cost and higher risks. A
proposal is under consideration for new discoveries and areas which are
yet to commence production, first, to provide calibrated marketing
freedom; and second, to do so at a pre-determined ceiling price to be
discovered on the principle of landed price of alternative fuels.
81.
In the other segments of the infrastructure sector, our Government
has achieved the highest coal production growth in over two decades, highest
ever capacity addition in generation, highest ever increase in transmission
lines and in distribution of LED bulbs.
82.
In the power sector, we need to diversify the sources of power
generation for long term stability. Government is drawing up a
comprehensive plan, spanning next 15 to 20 years, to augment the
investment in nuclear power generation. Budgetary allocation up to `3,000
crore per annum, together with public sector investments, will be leveraged
to facilitate the required investment for this purpose.
83.
To augment infrastructure spending further, Government will permit
mobilisation of additional finances to the extent of `31,300 crore by NHAI,
PFC, REC, IREDA, NABARD and Inland Water Authority through raising
of Bonds during 2016-17.
84.
Our private sector plays an important role in the development of
infrastructure, many of which are implemented in the Public Private
Partnership (PPP) mode. I would like to announce three new initiatives to
reinvigorate this sector.
(i)
A Public Utility (Resolution of Disputes) Bill will be
introduced during 2016-17 to streamline institutional
16
(iii)
85.
I would like to announce further reforms in our FDI policy. The
changes proposed are in the areas of insurance and pension, Asset
Reconstruction Companies, Stock Exchanges, etc. Details of the changes are
given in Annex I of the Budget Speech.
86.
The duty drawback scheme has been widened and deepened to
include more products and countries. The Government will continue to take
measures to support the export sector.
87.
Our FDI policy has to address the requirements of farmers and food
processing industry. A lot of fruits and vegetables grown by our farmers
either do not fetch the right prices or fail to reach the markets. Food
processing industry and trade should be more efficient. 100% FDI will be
allowed through FIPB route in marketing of food products produced and
manufactured in India. This will benefit farmers, give impetus to food
processing industry and create vast employment opportunities.
88.
A new policy for management of Government investment in
Public Sector Enterprises, including disinvestment and strategic sale,
has been approved. We have to leverage the assets of CPSEs for generation
of resources for investment in new projects. We will encourage CPSEs to
divest individual assets like land, manufacturing units, etc. to release
their asset value for making investment in new projects. The NITI Aayog
will identify the CPSEs for strategic sale.
89.
We will adopt a comprehensive approach for efficient management
of Government investment in CPSEs by addressing issues such as capital
restructuring, dividend, bonus shares, etc. The Department of
Disinvestment is being re-named as the Department of Investment and
Public Asset Management (DIPAM).
17
VI.
90.
A vibrant financial sector is of critical importance to the growth of
every economy. In my last two Budgets, I had announced several measures
in this regard. I would now like to announce the following initiatives:
(i) A systemic vacuum exists with regard to bankruptcy situations
in financial firms. A comprehensive Code on Resolution of
Financial Firms will be introduced as a Bill in the Parliament
during 2016-17.
This Code will provide a specialised
resolution mechanism to deal with bankruptcy situations in
banks, insurance companies and financial sector entities. This
Code, together with the Insolvency and Bankruptcy Code 2015,
when enacted, will provide a comprehensive resolution
mechanism for our economy.
(ii)
18
(viii) In the recent past, there have been rising instances of people in
various parts of the country being defrauded by illicit deposit
taking schemes. The worst victims of these schemes are the
poor and the financially illiterate. The operation of such
schemes are often spread over many States. I, therefore,
propose to bring in comprehensive Central legislation in
2016-17 to deal with the menace of such schemes.
(ix) I also propose to amend the SEBI Act 1992 in the coming year
to provide for more members and benches of the Securities
Appellate Tribunal.
91.
As the Honourable Members are well aware, the strength of the
financial sector is dependent upon a strong and well-functioning Banking
system. We already have a comprehensive Plan For Revamping of Public
Sector Banks, INDRADHANUSH, which is under implementation. We are
now confronted with the problem of stressed assets in Public Sector Banks,
which is a legacy from the past. Several steps have already been taken in
this regard. We are not interfering in lending and personnel matters of the
Banks. Structural issues have been addressed in various sectors like Power,
Coal, Highways, Sugar and Steel. The Banks are putting in special efforts to
effect recoveries, with a focus on reviving stalled projects.
92.
To support the Banks in these efforts as well as to support credit
growth, I have proposed an allocation of `25,000 crore in BE 2016-17
towards recapitalisation of Public Sector Banks. If additional capital is
required by these Banks, we will find the resources for doing so. We stand
solidly behind these Banks.
93.
Our Public Sector Banks will have to be strong and competitive.
The Bank Board Bureau will be operationalized during 2016-17 and a
roadmap for consolidation of Public Sector Banks will be spelt out. The
process of transformation of IDBI Bank has already started. Government will
take it forward and also consider the option of reducing its stake to below
50%.
94.
For speedier resolution of stressed assets, the Debt Recovery
Tribunals will be strengthened with focus on improving the existing
infrastructure, including computerised processing of court cases, to support
reduction in the number of hearings and faster disposal of cases.
95.
The Pradhan Mantri Mudra Yojana (PMMY) was launched for the
benefit of bottom of the pyramid entrepreneurs. Banks and NBFC-MFIs
19
have reported that the amount sanctioned under PMMY had reached about
Rs.One lakh crore to over 2.5 crore borrowers by early February this year. I
propose to increase the target next year to `1,80,000 crore.
96.
To provide better access to financial services, especially in rural
areas, we will undertake a massive nationwide rollout of ATMs and Micro
ATMs in Post Offices over the next three years.
97.
Public shareholding in Government-owned companies is a means of
ensuring higher levels of transparency and accountability. To promote this
objective, the general insurance companies owned by the Government will
be listed in the stock exchanges.
VII.
98.
Our Government is giving unparalleled emphasis to good governance
with special focus on process reforms, IT-enabled Government processes,
etc.
The whole idea is to remove the irritants for the public in their
interface with Government agencies.
99.
A Task Force has been constituted for rationalisation of human
resources in various Ministries. A comprehensive review and rationalisation
of autonomous bodies is also underway.
100. A critical component of minimum Government and maximum
governance is to ensure targeted disbursement of Government subsidies and
financial assistance to the actual beneficiaries. Public money should reach
the poor and the deserving without any leakage. Three specific initiatives
are proposed to achieve this objective.
Third, of the 5.35 lakh Fair Price Shops in the country, automation
facilities will be provided in 3 lakh Fair Price Shops by March 2017.
20
21
consolidation and for boosting growth. I have weighed the policy options
and decided that prudence lies in adhering to the fiscal targets.
Consequently, the fiscal deficit in RE 2015-16 and BE 2016-17 have been
retained at 3.9% and 3.5% of GDP respectively. While doing so, I have
ensured that the development agenda has not been compromised.
108. The total expenditure in the Budget for 2016-17 has been projected
at `19.78 lakh crore, consisting of `5.50 lakh crore under Plan and `14.28
lakh crore under Non-Plan. The increase in Plan expenditure is in the order
of 15.3% over current year BE. Plan Allocations have given special
emphasis to sectors like agriculture, irrigation, social sector including health,
women and child development, welfare of Scheduled Castes and Scheduled
Tribes, minorities, infrastructure, etc. Continuing with the policy of higher
empowering States, the total resources being transferred to States are
`99,681 crore more over RE 2015-16 and `2,46,024 crore more over Actuals
of 2014-15. Details of allocations in certain vital sectors and schemes and
transfers to States are given in Annex III to the Speech.
109. This is the last year of the 12th Plan. Successive committees have
questioned the merit in having Plan and Non-Plan classification of
Government expenditure. A broad understanding over the years has been
that Plan expenditures are good and Non-Plan expenditures are bad. This
results in skewed allocations in the Budget. We need to correct this and give
greater focus to Revenue and Capital classification of Government
expenditure. We have, therefore, decided that the Plan-Non-Plan
classification will be done away with from fiscal 2017-18. The Finance
Ministry will closely work with the State Finance Departments to align
Central and State Budgets in this matter.
110. To improve the quality of Government expenditure, every new
scheme being sanctioned by Government will have a sunset date and
outcome review. A redeeming feature of this years Budget is that we
have improved upon the Revenue Deficit target from 2.8% to 2.5% of GDP
in RE 2015-16.
111. The FRBM Act has been under implementation for more than a
decade. Both Central and State Governments have made significant gains
from the implementation of this Act. There is now a school of thought
which believes that instead of fixed numbers as fiscal deficit targets, it may
be better to have a fiscal deficit range as the target, which would give
necessary policy space to the Government to deal with dynamic situations.
There is also a suggestion that fiscal expansion or contraction should be
aligned with credit contraction or expansion respectively, in the economy.
22
Tax Reforms
23
PART B
Madam Speaker,
116.
24
At present about 33 lakh small business people avail of this benefit, which
frees them from the burden of maintaining detailed books of account and
getting audit done. I propose to increase the turnover limit under this scheme
to Rupees two crores which will bring big relief to a large number of
assesses in the MSME category.
121. I also propose to extend the presumptive taxation scheme to
professionals with gross receipts up to `50 lakh with the presumption of
profit being 50% of the gross receipts.
Measures to boost growth and employment generation
122. I had, in my last budget speech mooted the proposal to reduce the rate
of Corporate Tax from 30% to 25% over a period, accompanied by
rationalization and removal of various tax exemptions and incentives. In any
case the effective rate of tax paid by companies comes to an average of 24.67
% because of various exemptions which they are availing of. A phasing out
plan of removing these exemptions and tax incentives was placed in public
domain and we have received a large number of constructive suggestions.
The final plan of phasing out exemptions is given in Annexure. The
highlights are as follows:(a)
(b)
(c)
(d)
(b)
I also propose to lower the corporate income tax rate for the
next financial year of relatively small enterprises i.e companies
with turnover not exceeding `5 crore (in the financial year
ending March 2015), to 29% plus surcharge and cess.
25
26
133. I propose to exempt service tax on general insurance services
provided under Niramaya Health Insurance Scheme launched by National
Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disability.
134. To promote use of refrigerated containers, I propose to reduce the
basic custom and excise duty on them to 5% and 6% respectively.
135. A number of assistive devices, rehabilitation aids and other goods for
differently abled (Divyang) persons attract Nil basic customs duty. I propose
to extend this exemption to Braille paper.
Incentivising domestic value addition to help Make in India.
136. Customs and excise duty structure plays an important role in
incentivizing domestic value addition towards Make in India campaign of
our Government. In line with that, I propose to make suitable changes in
customs and excise duty rates on certain inputs, raw materials, intermediaries
and components and certain other goods and simplify procedures, so as to
reduce costs and improve competitiveness of domestic industry in sectors
like Information technology hardware, capital goods, defence production,
textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper,
paperboard & newsprint, Maintenance repair and overhauling [MRO] of
aircrafts and ship repair etc. Details of such changes are given in the
Annexure to Budget Speech.
Measures for moving towards a pensioned society
137. Pension schemes offer financial protection to senior citizens. I
believe that the tax treatment should be uniform for defined benefit and
defined contribution pension plans. I propose to make withdrawal up to 40%
of the corpus at the time of retirement tax exempt in the case of National
Pension Scheme.
138. In case of superannuation funds and recognized provident funds,
including EPF, the same norm of 40% of corpus to be tax free will apply in
respect of corpus created out of contributions made after 1.4.2016.
139. Further, the annuity fund which goes to the legal heir after the death
of pensioner will not be taxable in all three cases. Also, we are proposing a
monetary limit for contribution of employer in recognized Provident and
Superannuation Fund of `1.5 lakh per annum for taking tax benefit.
140. I propose to exempt from service tax the Annuity services provided
by the National Pension System (NPS) and Services provided by EPFO to
employees.
27
141. I also propose to reduce service tax on Single premium Annuity
(Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.
Measures for promoting affordable housing
142. Pradhan Mantri Awas Yojna embodies the assurance of the
Government to address the housing needs of all and more specifically the
poor, in a time bound manner. Construction of houses creates considerable
employment opportunities as well. In order to fuel activity in the housing
sector, I propose to give 100% deduction for profits to an undertaking from a
housing project for flats upto 30 sq. metres in four metro cities and 60 sq.
metres in other cities, approved during June 2016 to March 2019, and is
completed within three years of the approval. Minimum Alternate Tax will,
however, apply to these undertakings.
143. For the first home buyers, I propose to give deduction for
additional interest of `50,000 per annum for loans up to `35 lakh sanctioned
during the next financial year, provided the value of the house does not
exceed `50 lakh.
144. Another proposal to stimulate housing activity is to facilitate
investments in Real Estate Investment Trusts. I propose that any distribution
made out of income of SPV to the REITs and INVITs having specified
shareholding will not be subjected to Dividend Distribution Tax.
145. It is proposed to exempt service tax on construction of affordable
houses up to 60 square metres under any scheme of the Central or State
Government including PPP Schemes.
146. I also propose to extend excise duty exemption, presently available to
Concrete Mix manufactured at site for use in construction work at such site
to Ready Mix Concrete.
Additional resource mobilization for agriculture, rural economy and
clean environment
147. Dividend Distribution Tax (DDT) uniformly applies to all investors
irrespective of their income slabs. This is perceived to distort the fairness and
progressive nature of taxes. Persons with relatively higher income can bear a
higher tax cost. I, therefore, propose that in addition to DDT paid by the
companies, tax at the rate of 10% of gross amount of dividend will be
payable by the recipients, that is, individuals, HUFs and firms receiving
dividend in excess of `10 lakh per annum.
28
148. I also propose to raise the surcharge from 12% to 15% on persons,
other than companies, firms and cooperative societies having income above
`1 crore.
149. I also propose to collect tax at source at the rate of 1% on purchase of
luxury cars exceeding value of Rs.ten lakh and purchase of goods and
services in cash exceeding Rs.two lakh. For compliant tax payers with
resources, this levy not only advances collection of tax when the expenditure
is incurred, but it provides data to the tax authorities to identify the persons
who incur such expenditure, but may be missing from the tax base. Farmers
and notified class of persons will have an option of giving a form by which
TCS will not be charged.
150. Rate of Securities Transaction tax in case of Options is proposed to
be increased from .017% to .05%.
151. In order to tap tax on income accruing to foreign e-commerce
companies from India, it is proposed that a person making payment to a nonresident, who does not have a permanent establishment, exceeding in
aggregate `1 lakh in a year, as consideration for online advertisement, will
withhold tax at 6% of gross amount paid, as Equalization levy. The levy will
only apply to B2B transactions.
152. I propose to impose a Cess, called the Krishi Kalyan Cess, @ 0.5%
on all taxable services, proceeds of which would be exclusively used for
financing initiatives relating to improvement of agriculture and welfare of
farmers. The Cess will come into force with effect from 1st June 2016. Input
Tax credit of this cess will be available for payment of this cess.
153. The pollution and traffic situation in Indian cities is a matter of
concern. I propose to levy an infrastructure cess, of 1% on small petrol,
LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other
higher engine capacity vehicles and SUVs.
154. I also propose to impose an excise duty of 1% without input tax
credit or 12.5% with input tax credit on articles of jewellery [excluding
silver jewellery, other than studded with diamonds and some other precious
stones], with a higher exemption and eligibility limits of ` 6 crores and ` 12
crores respectively. Necessary steps will also be taken to enable the new
taxpayers to comply with this levy without any difficulty.
155. I propose to change the excise duty on branded readymade garments
and made up articles of textiles with a retail sale price of `1,000 and above
from Nil without input tax credit or 6%/12.5% with input tax credit to 2%
without input tax credit or 12.5% with input tax credit.
29
156. I propose to rename the Clean Energy Cess levied on coal, lignite
and peat as Clean Environment Cess and simultaneously increase its rate
from `200 per tonne to `400 per tonne.
157. To discourage consumption of tobacco and tobacco products, I
propose to increase the excise duties on various tobacco products other than
beedi by about 10 to 15%.
158. I propose to amend the Finance Act, 1994 so as to declare assignment
by the Government of the right to use the radio-frequency spectrum and its
subsequent transfers a service, to make it clear that assignment of right to use
the spectrum is a service leviable to service tax and not sale of intangible
goods.
Reducing litigation and providing certainty in taxation
159. We are moving towards a lower tax regime with non-litigious
approach. Thus, while compliant taxpayers can expect a supportive interface
with the department, tax evasion will be countered strongly. Capability of
the tax department to detect tax evasion has improved because of enhanced
access to information and availability of technology driven analytical tools
to process such information. I want to give an opportunity to the earlier noncompliant to move to the category of compliant.
160. I propose a limited period Compliance Window for domestic
taxpayers to declare undisclosed income or income represented in the form
of any asset and clear up their past tax transgressions by paying tax at 30%,
and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the
undisclosed income. There will be no scrutiny or enquiry regarding income
declared in these declarations under the Income Tax Act or the Wealth Tax
Act and the declarants will have immunity from prosecution. Immunity from
Benami Transaction (Prohibition) Act, 1988 is also proposed subject to
certain conditions. The surcharge levied at 7.5% of undisclosed income will
be called Krishi Kalyan surcharge to be used for agriculture and rural
economy. We plan to open the window under this Income Disclosure
Scheme from 1st June to 30th September, 2016 with an option to pay amount
due within two months of declaration.
161. Our Government is fully committed to remove black money from the
economy. Having given one opportunity for evaded income to be declared
once, we would then like to focus all our resources for bringing people with
black money to books.
162. Litigation is a scourge for a tax friendly regime and creates an
environment of distrust in addition to increasing the compliance cost of the
tax payers and administrative cost for the Government. There are about 3
lakh tax cases pending with the 1st Appellate Authority with disputed amount
30
being 5.5 lakh crores. In order to reduce this number, I propose a new
Dispute Resolution Scheme (DRS).
163. A taxpayer who has an appeal pending as of today before the
Commissioner (Appeals) can settle his case by paying the disputed tax and
interest up to the date of assessment. No penalty in respect of Income-tax
cases with disputed tax up to ` 10 lakh will be levied. Cases with disputed
tax exceeding ` 10 lakh will be subjected to only 25% of the minimum of the
imposable penalty for both direct and indirect taxes. Any pending appeal
against a penalty order can also be settled by paying 25% of the minimum of
the imposable penalty. Certain categories of persons including those who are
charged with criminal offences under specific Acts are proposed to be barred
from availing this scheme.
164. I had in my Budget speech of July, 2014 assured that this
Government would not retrospectively create a fresh tax liability. I had also
hoped then that the cases pending in various courts and other legal fora
relating to certain retrospective amendments undertaken to the Income-tax
Act, 1961, through the Finance Act, 2012 will soon reach their logical
conclusion. I would like to reiterate that we are committed to provide a
stable and predictable taxation regime. We will not resort to such
amendments in future. I had also announced constitution of a High Level
Committee which would oversee any fresh case where the assessing officer
proposes to assess or reassess the income in respect of indirect transfers by
applying the retrospective amendment. In order to allay any fears of tax
adventurism, this Committee will now be chaired by the Revenue Secretary
and consist of Chairman, CBDT and an expert from outside. This
Committee will effectively oversee the implementation of the assurances.
165. In order to give an opportunity to the past cases which are ongoing
under the retrospective amendment, I propose a one-time scheme of Dispute
Resolution for them, in which, subject to their agreeing to withdraw any
pending case lying in any Court or Tribunal or any proceeding for
arbitration, mediation etc. under BIPA, they can settle the case by paying
only the tax arrears in which case liability of the interest and penalty shall be
waived.
166. Levy of heavy penalty for concealment of income has over the years
resulted in large number of disputes despite a number of decisions of the
Apex court on interpretation of statutory provisions and principles guiding
imposition of penalty. At present the Income-tax Officer has discretion to
levy penalty at the rate of 100% to 300% of tax sought to be evaded. I
propose to modify the entire scheme of penalty by providing different
categories of misdemeanor with graded penalty and thereby substantially
reducing the discretionary power of the tax officers. The penalty rates will
now be 50% of tax in case of underreporting of income and 200% of tax
31
where there is misreporting of facts. Remission of penalty is also proposed
in certain circumstances where taxes are paid and appeal is not filed.
167. Another issue which has led to considerable number of disputes is
quantification of disallowance of expenditure relatable to exempt income in
terms of Section 14A of the Income Tax Act. I propose to rationalize the
formula in Rule 8D governing such quantification. The said Rule is being
amended to provide that disallowance will be limited to 1% of the average
monthly value of investments yielding exempt income, but not exceeding the
actual expenditure claimed.
168. As another tax payer friendly measure, I propose to provide a time
limit of one year for disposing petitions of the tax payers seeking waiver of
interest and penalty.
169. The Income-tax Department is also issuing instruction making it
mandatory for the assessing officer to grant stay of demand once the assesse
pays 15% of the disputed demand, while the appeal is pending before
Commissioner of Income-tax (Appeals). In case of deviation, assessing
officer has to get orders of his superiors. The tax payer also has an option to
go to superior officer in case he does not agree with conditions of stay order
passed by the subordinate officer.
170. In order to remove backlog of cases we are creating 11 new benches
of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
171. The monetary limit for deciding an appeal by a single member Bench
of ITAT is proposed to be enhanced from `15 lakhs to `50 lakhs.
172. I also propose to amend the CENVAT Credit Rules, 2004, so as to
improve credit flow, reduce the compliance burden and associated litigation,
particularly those relating to apportionment of credit between exempted and
non exempted final products/services. The amendments in these rules will
also enable manufacturers with multiple manufacturing units to maintain a
common warehouse for inputs and distribute inputs with credits to the
individual manufacturing units.
Simplification and rationalization of taxation
173. The Government has already accepted many recommendations of
Tax Administration Reform Committee and I propose to accept a number of
recommendations of Justice Easwar Committee in this Budget.
174. To reduce multiplicity of taxes, associated cascading and to reduce
cost of collection, I propose to abolish 13 cesses, levied by various Ministries
in which revenue collection is less than `50 crore in a year.
32
175. To improve the cash flow position of small tax payers who get their
funds blocked due to current TDS provision, I propose to rationalize TDS
provisions for Income Tax as per Annexure.
176. Non-residents without PAN are currently subjected to a higher rate of
TDS. It is proposed to amend the relevant provision to provide that on
furnishing of alternative documents, the higher rate will not apply.
177. The facility for revision of return, hitherto available to a service tax
assessee only, is being extended to Central Excise assessees also.
178. I propose to provide additional options to banking companies and
financial institutions, including non-banking financial companies, for
reversal of input tax credits with respect to non-taxable services provided by
them by way of extending deposits, loans and advances.
179. Our Government has taken a number of steps to reduce the cargo
release time and the transaction costs of EXIM trade. I propose to amend the
Customs Act to provide for deferred payment of customs duties for importers
and exporters with proven track record.
180. In 2014-15 Budget, I had announced the intent to implement Indian
Customs Single Window Project. We have made significant progress in this
and it would be implemented at major ports and airports starting from
beginning of next financial year.
181. The customs Baggage Rules for international passengers are being
simplified so as to increase the free baggage allowance. The filing of
baggage declaration will be required only for those passengers who carry
dutiable goods.
Use of Technology for creating accountability
182. Technology is a boon for mankind. We plan to use technology in
taxation Department in a big way to make life simpler for a law abiding
citizen, and also for data mining to track tax evaders.
183. A pilot was run in 2015-16 for e-assessment to obviate the
requirement for tax payers to visit the Income-tax offices. I propose to
expand the scope of e-assessments to all assessees in 7 mega cities in the
coming years. The cases selected for scrutiny will be scrutinized in
e-environment whereby unless the assessee himself wants to be heard, or for
special reasons to be recorded, the assessing officer wants to hear the party,
there will be no face to face contact of IT Department with assessee.
184. Income-tax Department (ITD) will fully expand the pilot initiative of
e-Sahyog with a view to reduce compliance cost, especially for small
33
taxpayers. The objective of the e-Sahyog pilot project is to provide an
online mechanism to resolve mismatches in Income-tax returns without
requiring taxpayers to attend the Income-tax office.
185. I propose that in matters pertaining to Income-tax Act, Government
will pay interest at the rate of 9% p.a against normal rate of 6% p.a in case
there is delay in giving effect to Appellate order beyond ninety days. The
officers who delay it, will be accountable for this loss to Government.
186. I also propose to change the procedure to provide for a shift from
physical control to record based control for customs bonded warehouses,
supported by sophisticated IT systems.
187. Madam Speaker, my direct tax proposals would result in revenue loss
of ` 1,060 crore and my indirect proposals are expected to yield `20,670
crores. Thus the net impact of all tax proposals would be revenue gain of
`19,610 crores.
CONCLUSION
Madam Speaker,
188. This Budget is being presented amidst global and domestic
headwinds. There are several challenges. We see them as opportunities. I
have outlined the agenda of our Government to Transform India for the
benefit of the farmers, the poor and the vulnerable.
189. Madam Speaker, it is said that Champions are made from something
they have deep inside of them - a desire, a dream, a vision. We have a
desire to provide socio-economic security to every Indian, especially the
farmers, the poor and the vulnerable; we have a dream to see a more
prosperous India; and a vision to Transform India.
190. With these words, Madam Speaker, I commend the Budget to the
House.
34
Annex No. I to Part A
35
Annex No. II to Part A
(a)
(b)
(d)
(e)
(f)
36
Annex No. III-A to Part A
ALLOCATIONS OF IMPORTANT MINISTRIES, SECTORS and
VULNERABLE SECTIONS
Rs in crore
Actual
14-15
25917
12091
10907
14010
32154
34957
39533
2728
1961
5411
68875
67586
72394
2767
3021
3465
3089
3736
3827
515
262
5036
33048
47107
57976
69817
79279
87765
1038
1804
5784
6580
7350
13254
18340
24523
5480
7032
6201
18539
17352
17408
SECTOR TOTALS
MINISTRY/DEPARTMENT
RE 15-16
BE 16-17
22958
44485
Actual
2014-15
RE
2015-16
BE
2016-17
IEBR
Total for
2016-17
31497
25988
47912
6300
54212.33
136431
139619
151581
81908
90185
101775
185139
180610
221246
25000
246246.39
RE 2015-16
81249
64635
65758
SC sub Plan
19921
20963
24005
ST SubPlan
30035
34675
38833
BE 2016-17
90625
37
Annex No. III-B to Part A
ALLOCATIONS OF IMPORTANT SCHEMES
Rs. In crore
BE 2016-17
1
38500
9500
24005
4
5
6
38833
33097
1245
1125
120
12980
7580
5400
White Revolution
1273
Blue Revolution
575
10
5717
500
1377
1500
2340
11
19000
12
5000
13
11300
14
20037
15
1500
16
National Education Mission (NEM)
of
NEM : Sarva Shiksha Abhiyan
which
28010
22500
38
17
18
19
9700
16120
20075
1448
25
795
26
4000
28
1100
29
1155
30
2000
32
Sagarmala
450
33
1771
34
Metro Projects
10000
35
2250
36
397
20
21
22
23
24
27
31
37
7296
1804
2059
900
2400
8500
Khelo India
216
38
Recapitilization of Public Sector Banks
25000
This Annex provides total allocations (Plan and Non-Plan) under 38
important Schemes. Rationalization of Schemes was undertaken to avoid
too thin spread of resources. The allocation for BE 2016-17 only is provided
as it is not immediately feasible to draw a one-to-one correspondence
between the newly rationlised schemes with the earlier subsumed
component schemes.
Source : Expenditure Budget 2016-17 Volume1 & 2
39
Annex No. III-C to Part A
Actual
2014-15
337808
77198
77125
RE
2015-16
506193
108312
108233
BE
2016-17
570337
118437
118356
73
79
81
State Governments
76286
105353
115655
UT
Central Assistance to State
Plan/UT Plan
Grants
912
270829
2959
216108
2782
241900
258890
203608
229400
Loans
11939
12500
12500
State Governments
UT
264725
6104
208587
7521
234366
7534
348027
324420
360337
Grants
Loans
336015
12012
311841
12579
347756
12581
Total Assistance
State Governments
UT
Less - Recovery of Loans &
Advances
State Governments
685835
678819
7016
10658
830613
820133
10480
9093
930674
920358
10316
9473
10582
8649
9028
UT
Net Resources transferred to State
& UT Governments (1+4-5)
76
675177
444
821520
445
921201
State Governments
668237
811484
911330
6940
10036
146343
9871
99681
246024
S.No.
1
2
UT
Increase in RE 15-16 over
Actual 14-15
Increase in BE16-17 over RE 15-16
Increase in BE 16-17 over
Actual 14-15
40
ANNEXURE TO PART-B OF THE BUDGET SPEECH
DIRECT TAX
1.
1.1
1.2
1.3
1.4
1.5
1.6
1.7
41
1.8
1.9
1.10
1.11
2.
2.1
42
A monetary limit of `1.5 lakh is proposed to be provided for
annual contribution by an employer to a recognised provident
fund.
Any amount received by the nominee, on the death of the
employee at the time of closure of account under National
Pension System referred to in section 80CCD of the Income-tax
Act is proposed to be exempt.
Exemption is proposed to be provided for one-time portability
from a recognised provident fund or superannuation fund to
National Pension System.
It is proposed that 40% of the pension wealth received by an
employee from the National Pension System Trust shall be
exempt.
It is also proposed that the exemption under the recognised
provident fund and superannuation fund will be limited to 40%
of the accumulated amount arising out of contributions made in
such funds on or after 01.04.2016. However, this restriction shall
not be applicable to an employee participating in a recognised
provident fund and whose monthly salary does not exceed
`15,000/-.
3.
3.1
3.2
3.3
4.
4.1
43
(i)
(ii)
Depreciation.
It is proposed to amend Rule 5 of Income-tax Rules, 1962 to restrict
the highest rate of depreciation under the Income-tax Act to 40% for
all the assets (whether old or new) falling in the relevant block of
assets with effect from 01.4.2017
(iii)
(iv)
(v)
(vi)
44
(vii)
(viii)
(ix)
(x)
5.
Present Heads
Section
192A
194BB
194C
Existing
Threshold
Limit (`)
Payment of accumulated 30,000
balance due to an employee
in EPF
Winnings from Horse
5,000
Race
Payments to Contractors
Aggregate
annual limit
of 75,000
Proposed
Threshold
Limit (`)
50,000
10,000
Aggregate
annual limit
of 1,00,000
45
194LA
2,50,000
194D
Insurance commission
15,000
194G
194H
Present Heads
Section
194DA
194EE
194D
194G
194H
194K
194L
20,000
Existing
Rate of
TDS (%)
Payment in respect of Life 2%
Insurance
Policy
Payments in respect of NSS 20%
Deposits
Insurance commission
10%
Commission on sale of lottery 10%
tickets
Commission or brokerage
10%
Income in respect of Units
To be
omitted w.e.f
01.06.2016
Payment of Compensation on To be
acquisition of Capital Asset
omitted w.e.f
01.06.2016
15,000
15,000
Proposed
Rate of
TDS (%)
1%
10%
5%
5%
5%
5.2
5.3
5.4
46
5.5
6.
6.1
6.2
6.3
6.4
6.5
6.6
6.7
7.
7.1
47
7.2
7.3
7.4
7.5
8.
8.1
It is proposed to amend the provision of section 44AB of the Incometax Act to enhance the threshold limit for audit of accounts from ` 25
lakh to ` 50 lakh for persons having income from profession.
8.2
8.3
48
a person, who has not furnished a return for any previous year
by the due date, may furnish the same before the end of the
relevant assessment year or before the completion of the
assessment, whichever is earlier. He may also revise such
return before the expiry of one year from the end of the
relevant assessment year or before the completion of the
assessment, whichever is earlier.
a return furnished in response to a notice issued under section
142 (1) of the Income-tax Act cannot be revised.
a return which is otherwise valid would not be treated
defective merely because self-assessment tax and interest
payable in accordance with the provisions of section 140A,
has not been paid on or before the date of furnishing of the
return.
8.4
It is proposed to amend the provisions of section 211 of the Incometax Act to provide that the number of instalments and due dates for
payment of advance tax in the case of individuals, HUFs, firms, etc.
shall be the same as is applicable to companies. It is also proposed
that the taxpayer eligible for presumptive taxation scheme under
section 44AD of the Income-tax Act shall pay whole amount of
advance tax in one instalment on or before the 15th March of the
financial year.
8.5
8.6
8.7
8.8
8.9
49
8.10
Changes
Existing
Proposed
1.
0.5%
2.
14%
Nil
3.
12.5%
6%
4.
10%
5%
5.
10%
5%
6.
12.5%
6%
50
7.
12.5%
6%
8.
1%
(without
ITC or
6% (with
ITC)
Nil
Existing Proposed
II
1.
Nil
14%
3.
4.
5.6%
14%
5.6%
51
proposed to be levied on service
transportation of passengers by
conditioned stage carriage, at
abatement of 60% without input
credit, with effect from 01.06.2016.
5.
III
of
air
the
tax
1.
2.
IV
1.
5.6%
5.6%
Proposed
Nil
3.5%
Nil
52
Development Authority (PFRDA) being
exempted, with effect from 01.04.2016.
2.
3.
4.
14%
Nil
Composition rate of
premium annuity
being reduced from
premium charged,
01.04.2016.
3.5%
1.4%
14%
Nil
Existing
1.
2.
14%
14%
Proposed
14%
NIL
3.
4.
14%
Nil
53
VI
Proposed
10%
20%
2.
10%
15%
3.
BCD on
increased.
Metals
5%
7.5%
7.5%
10%
5%
7.5%
7.5%
10%
Nil
5%
12.5%
Nil
7.5%
10%
7.5%
7.5%
7.5%
10%
` 4500
20% ad
valorem
1.
Balloons
Imitation
jewellery
being
Renewable Energy
(i)
(ii)
(iii)
5.
6.
(i)
Capital Goods
Tariff rate of BCD being increased on
goods falling under 211 specified tariff
lines in Chapter 84, 85 and 90. Out of
which:
(i) The effective rate of BCD on goods
falling under 115 specified tariff lines in
being maintained at 7.5%.
(ii) The effective rate of BCD on goods
falling under remaining 96 tariff lines is
being increased to 10%.
Mineral fuels and Mineral oils
Rate of Oil Industries Development Cess,
on domestically produced crude oil
[OIDB Cess under the Oil Industry
(Development) Act, 1974], being reduced.
PMT
54
(ii)
2.5% /
10%
2.5%
10%
2.5%
10%
2.5%
5% /
10%
5%
10%
5%
10%
5%
2.5% / 5
%/ 10%
2.5%
5% /
10%
5%
7.
(i)
5% /
2.5%
2.5%
(ii)
5%
2.5%
(iii)
4%
2%
55
(iv)
8.
(i)
(ii)
9.
(i)
(ii)
10.
2.5%
Nil
5%
Nil
Nil
10%
5%
2.5%
Applicab
le rate
Nil
7.5%
Nil
Nil
7.5%
(i)
(ii)
(iii)
(iv)
(v)
(vi)
5%
Nil
Nil BCD
Nil SAD
Nil BCD
Nil SAD
56
(vii)
(viii)
(ix)
(x)
(xi)
Nil
Applicab
le BCD
Nil
10%
57
(xii)
Nil
10%
Applicabl
e rate
Nil
Applicabl
e rate
2.5%
Nil
4%
Nil
2%
Nil
2%
[without
ITC]
or 12.5%
[with ITC]
Nil
12.5% /
Nil
12.5%
4%
[without
ITC]
or 12.5%
[with ITC]
58
(xx)
11.
12.5%
Nil
(i)
5%
2.5%
(ii)
5%
2.5%
(iii)
12.
Automobiles
(i)
(ii)
(iii)
(iv)
(v)
13.
(i)
10%
Nil
60%
12.5%
59
14.
(i)
(ii)
15.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Defence Production
Customs duties exemption on direct BCD- Nil BCD 5%
imports of specified goods for defence CVD
to 10%
purposes by Government of India or State
Nil
CVD
Governments being withdrawn, with
SAD
12.5%
effect from 01.04.2016.
Nil
SAD 4%
BCD exemption on specified goods
imported by contractors of Government of
Nil
7.5% to
India PSUs or sub-contractors of such
10%
PSUs for defence purposes being
withdrawn, with effect from 01.04.2016.
Maintenance, repair and overhaul [MRO] of aircrafts
Tools and tool kits being exempted from Applicable Nil BCD
Basic Customs duty, CVD and SAD when
BCD,
Nil CVD
imported by MROs for maintenance, CVD and Nil SAD
repair, and overhauling [MRO] of aircraft
SAD
subject to certification by the Directorate
General of Civil Aviation.
Exemption from excise duty being Applicable
Nil
extended to tools and tool kits when
excise
procured by MROs for maintenance,
duty
repair, and overhauling [MRO] of aircraft
subject to a certification by the
Directorate General of Civil Aviation
Procedure for availment of exemption
from customs duties on parts, testing
equipment, tools and tool-kits for
maintenance, repair and overhaul of
aircraft being simplified based on records
and subject to actual user condition.
The restriction of one year for utilization
of duty free parts for maintenance, repair
and overhaul of aircraft being removed.
The existing conditions of stay [60 days]
being further relaxed, so as to provide for
stay up to 6 months of the foreign aircraft
for maintenance, repair or overhauling,
with further extension of such period by
DGCAs as deemed fit.
The procedure for availment of exemption
from excise duty on parts, testing
equipment, tools and tool-kits for
maintenance, repair and overhaul of
aircraft being simplified based on records.
60
16.
(i)
(ii)
17.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Nil
61
18.
Ores, concentrates
Export duty reduced on:
a) Iron ore fines with Fe content below
58%
b) Iron ore lumps with Fe content below
58%
c) Chromium ores and concentrates, all
sorts
d) Bauxite
19.
(i)
Textiles
Excise duty on branded readymade
garments and made up articles of textiles
of retail sale price of `1000 or more being
changed.
(ii)
(iii)
20.
Renewable Energy
(i)
(ii)
10%
Nil
30%
Nil
30%
Nil
20%
15%
Nil
2%
(without (without
ITC)
ITC) or
or
12.5%
6%/12.5% (with
(with ITC) ITC)
30% of
60% of
retail sale
retail
price
sale price
2%
(without
ITC)
or
6%
(with ITC)
2%
(without
ITC)
or
12.5%
(with
ITC)
12.5%
6%
Nil
6%
62
(iii)
21.
22.
(i)
(ii)
23.
(i)
(ii)
1%
(without
ITC)
or
12.5%
(ITC)
6%
30%
Input tax
credit
allowed
14%
Nil
63
(iii)
(iv)
14%
NIL
14%
NIL
(v)
(vi)
(vii)
VI
1.
2.
64
3.
4.
5.
6.
7.
8.
9.
10.
65
11.
12.
13.
14.
VII
1.
`10,000
`20,000
Existing
Proposed
` 200
` 400
PMT
PMT
4.2%
With
input
service
credit
5.6%
With
input
service
credit
4.2%
With
input
service
credit
4.2%
With
input
service
credit
2.
4.2%
Without
credit
3.
4.2%
Without
credit
4.
4.2%
Without
credit
5.
4.2%
Without
credit
66
6.
7.
VIII
12.5% or
15%
15%
1.
2.
3.
4.
5.
5.6% of
total
amount
Nil
Nil
67
6.
7.
8.
9.
10.
11.
12.
13.
14.
68
15.
16.
IX
1.
2.
Nil
Nil
14%
14%
Existing
Proposed
3.5%/
4.2%
4.2%
CVD
8%
CVD
8.75%
Excise
duty 9%
Excise
duty
9.5%
CVD
7%
Excise
duty 8%
CVD
7.75%
Excise
duty
8.5%
3.
4.
5.
69
6.
7.
3.5%/
5.6% of
amount
charged
14% of
amount
4.2% of
amount
charged
9.8% of
amount
8.
9.
14%
Nil
Existing
Proposed
1.
Nil
5%
2.
18%
21%
3.
8%
14%
4.
1%
2.5%
70
c) Other higher engine capacity and
SUVs and bigger sedans.
4%
Existing
Proposed
Miscellaneous
Tobacco and Tobacco Products
1.
2.
12.5% or
12.5% or
`3755 per
thousand,
whichever
is higher
12.5% or
thousand, thousand,
whichever whichever
is higher is higher
3.
4.
5.
`3755
per
thousand
12.5% or
`3755
per
thousand,
whicheve
r is
higher
12.5% or
`3755 per
thousand,
whichever
is higher
71
6.
70%
81%
7.
55%
64%
8.
9.
Tariff rate
`30 per
thousand.
Effective
rate
`21 per
thousand
Additional Duty of Excise on cigarettes
` Per
being increased
thousand
Tariff rate
`80 per
thousand
Effective
rate `21
per
thousand
` Per
thousand
(i)
70
215
(ii)
110
370
(iii)
70
215
(iv)
70
260
(v)
110
370
(vi)
Other
180
560
10.
Other products
(i)
BCD 10%
BCD Nil
(ii)
XII
72
Section 25 of the Customs Act, 1962 being amended 80 also omit
the requirement of publishing and offering for sale on the date of
its issue, by the Directorate of Publicity and Public Relations of
CBEC, of notification issued for publication in the official gazette.
Sections 28, 47, 51 and 156 of the Customs Act, 1962 being
amended so as provide for deferred payment of customs duties to
certain class of importers and exporters and to increase the
limitation period from one year to two year in cases not involving
fraud, suppression of facts, wilful mis-statement, etc.
New section 58A being inserted to provide for a new class of
warehouses which require continued physical control and will be
licensed for storing revenue sensitive goods.
New section 58B being inserted so as to regulate the process of
cancellation of licences which is a necessary concomitant of
licencing.
Section 65 being amended to delete the payment of fees to
Customs for supervision of manufacturing facilities under Bond;
and empower Principal Commissioner or Commissioner of
Customs to licence such facilities.
THE CUSTOMS TARIFF ACT, 1975
The First Schedule to the Customs Tariff Act, 1975 being
amended so as to include editorial changes in the Harmonized
System of Nomenclature (HSN) in certain chapters to be effective
from 01.01.2017.
The First Schedule to the Customs Tariff Act, 1975 being
amended so as to:
a) prescribe separate tariff lines for laboratory created or
laboratory grown or manmade or cultured or synthetic
diamonds;
b) substitute Tariff line 5801 39 10 with description Warp pile
fabrics, uncut in place of tariff line 5801 37 11 [with
description Warp pile fabrics epingle uncut velvet] and 5801
37 19 [with description Warp pile fabrics epingle uncut
other];
c) delete Tariff line 8525 50 50, relating to Wireless microphone;
d) to amend supplementary notes (e) and (f) of Chapter 27 so as
to change the reference: from IS:1460:2000 to IS:1460:2005
for high speed diesel (HSD) and from IS:1460 to IS:
15770:2008 for light diesel oil (LDO)
73
THE CENTRAL EXCISE ACT, 1944
Section 5A being amended, so as to omit the requirement of
publishing and offering for sale on the date of issue, by the
Directorate of Publicity and Public Relations of CBEC, of
notifications issued for publication in the Official Gazette.
Section 11A of the Central Excise Act, 1944 being amended so as
to increase the limitation period from one to two years in cases not
involving fraud, suppression, etc.
Section 37B of the Central Excise Act, 1944 being amended so as
to empower the Board for implementation of any other provision
of the said Act in addition to the power to issue orders,
instructions and directions.
The Third Schedule to the Central Excise Act, 1944 being
amended so as to include therein:
1)
All goods falling under heading 3401 and 3402;
2)
Aluminium foils of a thickness not exceeding 0.2 mm;
3)
Wrist wearable devices (commonly known as smart
watches); and
4)
Accessories of motor vehicle and certain other
specified goods.
THE CENTRAL EXCISE TARIFF ACT, 1985
The First and Second Schedules to the Central Excise Tariff Act,
1985 being amended so as to include editorial changes in the
Harmonized System of Nomenclature (HSN) in certain chapters to
be effective from 01.01.2017.
the First Schedule to the Central Excise Tariff Act, 1985 being
amended so as:
a) to prescribe separate tariff lines for laboratory created or
laboratory grown or manmade or cultured or synthetic
diamonds;
b) to substitute Tariff line 5801 39 10 with description Warp
pile fabrics, uncut in place of tariff line 5801 37 11 [with
description Warp pile fabrics epingle uncut velvet] and
5801 37 19 [with description Warp pile fabrics epingle
uncut other];
c) to delete Tariff line 8525 50 50, relating to Wireless
microphone;
d) to amend supplementary notes (e) and (f) of Chapter 27 so
as to change the reference from IS:1460:2000 to
IS:1460:2005 for high speed diesel (HSD) and from
IS:1460 to IS: 15770:2008 for light diesel oil (LDO).
74
THE FINANCE ACT, 1994 [SERVICE TAX]
Section 73, being amended so as to increase the limitation period
from 18 months to 30 months for short levy/non levy/short
payment/non-payment/erroneous refund of service tax, with effect
from date of enforcement of Finance Bill, 2016.
THE CENTRAL SALES ACT, 1956
Section 3 of the Central Sales Tax Act, 1956 being amended so as
to insert an explanation:
Explanation.- Where the gas sold or purchased and transported
through a common carrier pipeline or any other common transport
distribution systems becomes co-mingled and fungible with other
gas in the pipeline or system and such gas is introduced into the
pipeline or system in one State and is taken out from the pipeline
in another State, such sale or purchase of gas shall be deemed to
be a movement of goods from one state to another.
THE CENTRAL ROAD FUND ACT, 2000
Section 10 of the Central Road Fund Act, 2000, being amended so
as to substitute clause (viii) of subsection (1) to provide a formula
for redistribution of the cess for different purposes.
THE PREVENTION OF MONEY LAUNDERING ACT,
2002, THE SMUGGLERS AND FOREIGN EXCHANGE
MANIPULATORS (FORFEITURE OF PROPERTY ACT,
1976 and NARCOTICS DRUGS AND PSYCHOTROPIC
SUBSTANCES ACT, 1985
The three Tribunals established under these Acts being merged
and being provided that Appellate Tribunal established under the
Smugglers and Foreign Exchange Manipulators (Forfeiture of
Property) Act, 1976 shall be the appellate Tribunal for hearing the
appeals against the orders made under all these three Acts.
THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999
Section 14A in the Foreign Exchange Management Act [FEMA],
1999 being inserted to incorporate provisions contained under the
Second Schedule appended to the Income-tax Act, 1961, so as to
empower an officer not below the rank of Assistant Director to
recover arrears of penalty under the FEMA 1999 by exercising the
powers conferred under the Income-tax Act, 1961.
MISCELLANEOUS
Various notifications pertaining to Advance Licence and Duty
Free Import Authorization Schemes being amended to
retrospectively correct the reference to section 8 of the Customs
Tariff Act, 1975 in such notifications to section 8B so as to
75
clearly provide that exemption from safeguard duty under section
8B is available under these notifications on imports under
Advance Licence and Duty Free Import Authorization Schemes.
RULES & NOTIFICATIONS UNDER THE CUSTOMS ACT,
1962
Existing Baggage Rules, 1998 being substituted with Baggage
Rules, 2016 so as to simplify and rationalize multiple slabs of duty
free allowance available to various categories of passengers.
Customs (Import of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 1996 being simplified.
REGULATIONS MADE UNDER THE CUSTOMS ACT,
1962
The Customs Baggage Declaration Regulations, 2013 being
amended to provide that baggage declaration will have to be filed
only by passengers who carry dutiable or prohibited goods.