The Union Budget presented by FM Arun Jaitely received mixed reactions across the spectrum. Its not something new, of course. Opposition can never support the Rulings. Lot of things attracted many attentions. The biggest, for me, was the rise of Service Tax to 14%. It surely is going to make huge holes in every pocket. Almost entire salaried class monthly budget will have impact of this rate increase. Alongwith this another cess namely Swach Bharat Cess is to be introduced on certain services. The other big thing was reduction of Corporate Tax from 30% to 25% in the next 4 years. Whereas no relief was given of any sorts in the Income Tax slabs. Abolishing Wealth Tax by adding a surcharge of 2% too the Super Rich is an appreciable move. GST yet to see daylight as FM promises its rollout next year. There was no mention at all of the Direct Tax Code implementation.
I am not any economist or expert to provide any guidelines or here to decode the budget. This is just a brief synopsis of the important aspects mentioned in the Budget Speech.
- FM began his speech by describing the changes in the economy since NDA took over the reigns in May 2014. Consumer Price Index, which is a tool used to measure inflation, came down to 5.1% from 11.2% in November 2012. Similarly the Current Account Deficit is also expected to be below 1.3% of GDP. Estimated GDP for the year 2014-15 is 7.4% according to the revised estimates while for the year 2015-16 is 8.4%.
- Financial Inclusion
Jan Dhan Yojana launched by PM Narendra Modi, as a necessary step to achieve financial inclusion, has been a huge success. In 100 days, over 12.5 crore bank accounts have been opened across the country.
Jan Dhan Yojana launched by PM Narendra Modi, as a necessary step to achieve financial inclusion, has been a huge success. In 100 days, over 12.5 crore bank accounts have been opened across the country.
- Monetary Framework with RBI
The understanding between RBI-Government is to keep the Inflation rayte below 6%. I am a bit sceptical about this understanding between the government and the our Central bank, RBI. Government involment in Monetary policy is not a good sign with reference to the indendence of RBI. Government intentions will always be motivated by political sentiments which is not good for our economy in the long term.
The understanding between RBI-Government is to keep the Inflation rayte below 6%. I am a bit sceptical about this understanding between the government and the our Central bank, RBI. Government involment in Monetary policy is not a good sign with reference to the indendence of RBI. Government intentions will always be motivated by political sentiments which is not good for our economy in the long term.
- Amrut Mahotsav
The vision of PM Modi led Team India for 2022, when our country will be celebrating 75 years of freedom:
>Roof for each family. To build 2 crore houses in Urban areas and crore houses in Rural areas.
>24 hours Water, Electricity. Toilets in every household & connected roads.
>At least one in the family will be employed.
The vision of PM Modi led Team India for 2022, when our country will be celebrating 75 years of freedom:
>Roof for each family. To build 2 crore houses in Urban areas and crore houses in Rural areas.
>24 hours Water, Electricity. Toilets in every household & connected roads.
>At least one in the family will be employed.
- Cooperative Federalism
In order to empower states with more resources the government has developed a 42% share of the divisible pool of taxes for the states which will result in transfer of Rs.5.24lakh crore in the year 2015-16. Whereas further Rs.3.04lakh crore will be transferred by way of grants and plan transfers taking the total share of states to 62% of the total tax receipts.
In order to empower states with more resources the government has developed a 42% share of the divisible pool of taxes for the states which will result in transfer of Rs.5.24lakh crore in the year 2015-16. Whereas further Rs.3.04lakh crore will be transferred by way of grants and plan transfers taking the total share of states to 62% of the total tax receipts.
- MUDRA
SC/ST/OBC entrepreneurs are owners of 62% of small business houses. They are deprived of finance and find it difficult to find access to the system of credit. Hence government has proposed the formation of MUDRA i.e. Micro Units Development Refinance Agency with a corpus of Rs.20000crore and credit guarantee corpus of Rs.3000crore. MUDRA will refinance the Micro Finance Institution through Pradhan Mantri Mudra Yojana where lending priority will be given SC/ST owned enterprises.
SC/ST/OBC entrepreneurs are owners of 62% of small business houses. They are deprived of finance and find it difficult to find access to the system of credit. Hence government has proposed the formation of MUDRA i.e. Micro Units Development Refinance Agency with a corpus of Rs.20000crore and credit guarantee corpus of Rs.3000crore. MUDRA will refinance the Micro Finance Institution through Pradhan Mantri Mudra Yojana where lending priority will be given SC/ST owned enterprises.
- NBFC
Non banking Financial Companies registered with RBI having asset size of Rs.500crore will be considered for notification as Financial Institutions in terms of SARFAESI Act, 2002 in order to bring parity between NBFC and Financial Institutions.
Non banking Financial Companies registered with RBI having asset size of Rs.500crore will be considered for notification as Financial Institutions in terms of SARFAESI Act, 2002 in order to bring parity between NBFC and Financial Institutions.
- Jan Suraksha
>Pradhan Mantri Suraksha Bima Yojana will cover accidental death up to Rs.2lakhs with a premium of Rs. 12 per year
>Atal Pension Yojana will provide a defined pension depending upon the contribution and its period.
>Pradhan Mantri Jyoti Bima Yojana will natural and accidental death within the age group 18-50 up to Rs.2lakhs with a premium of Rs.330 per year.
>Pradhan Mantri Suraksha Bima Yojana will cover accidental death up to Rs.2lakhs with a premium of Rs. 12 per year
>Atal Pension Yojana will provide a defined pension depending upon the contribution and its period.
>Pradhan Mantri Jyoti Bima Yojana will natural and accidental death within the age group 18-50 up to Rs.2lakhs with a premium of Rs.330 per year.
- Atal Innovation Mission(AIM)
AIM, under NITI, will provide an innovation promotion platform involving academics, entrepreneurs and draw upon national and international experience to foster culture of R&D and scientific research.
AIM, under NITI, will provide an innovation promotion platform involving academics, entrepreneurs and draw upon national and international experience to foster culture of R&D and scientific research.
- SETU
Self Employed & Talent Utilisation will be setup, under NITI, to support all aspects of start up businesses and other self employment activities in technology driven areas.
Self Employed & Talent Utilisation will be setup, under NITI, to support all aspects of start up businesses and other self employment activities in technology driven areas.
- Gold Monetisation
FM has proposed a scheme which will replace present Gold Deposits and Gold Metal Loan Schemes. This new scheme will allow the depositor of gold to earn interest in their metal account. Also an alternate financial asset or Soverign Gold bond will be developed for purchasing metal gold. Bond will carry fixed rate of interest and will be redeemable in cash.
FM has proposed a scheme which will replace present Gold Deposits and Gold Metal Loan Schemes. This new scheme will allow the depositor of gold to earn interest in their metal account. Also an alternate financial asset or Soverign Gold bond will be developed for purchasing metal gold. Bond will carry fixed rate of interest and will be redeemable in cash.
- Act East Policy
Government plans to cultivate extensive economic and strategic relations with South East Asian countries. Private sector, through SPV, will set up manufacturing hubs in the CMLV countries i.e. Cambodia, Myanmar, Laos & Vietnam.
Government plans to cultivate extensive economic and strategic relations with South East Asian countries. Private sector, through SPV, will set up manufacturing hubs in the CMLV countries i.e. Cambodia, Myanmar, Laos & Vietnam.
- AIIMS IIM IIT & Others
In the year 2015-16, government has proposed to establish AIIMS in J&K, Punjab, TamilNadu, Himachal Pradesh, Assam & Bihar. An IIT is proposed in Karnataka while the present Indian School of Mines in Dhanabad will be upgraded into IIT. Horticulture Research Institute will be built in Amritsar. Two IIMs are proposed in J&K and Andhra Pradesh. National Institute of Pharmaceutical Education is proposed in the states of Maharashtra & Rajasthan. Centre for Film Production, Animation & Gaming is proposed in the state of Arunachal Pradesh.
In the year 2015-16, government has proposed to establish AIIMS in J&K, Punjab, TamilNadu, Himachal Pradesh, Assam & Bihar. An IIT is proposed in Karnataka while the present Indian School of Mines in Dhanabad will be upgraded into IIT. Horticulture Research Institute will be built in Amritsar. Two IIMs are proposed in J&K and Andhra Pradesh. National Institute of Pharmaceutical Education is proposed in the states of Maharashtra & Rajasthan. Centre for Film Production, Animation & Gaming is proposed in the state of Arunachal Pradesh.
- Governance of PSBs
In order to improve the governance of public sector banks it is proposed to establish an autonomous Bank Board Bureau. It will help in developing differential strategies & capital raising plans through innovative financial method and instruments.
In order to improve the governance of public sector banks it is proposed to establish an autonomous Bank Board Bureau. It will help in developing differential strategies & capital raising plans through innovative financial method and instruments.
- Tax Proposals
>GST to be implemented from next year.
>Corporate Tax will be reduced to 25% in the next 4years. Exemption will also be reduced in phased manner.
>Service Tax will be charged at 12% in order to bring it closer to GST rate which is expected to be 16%.
>Comprehensive law is proposed to be established on black money to specifically deal with money stashed away abroad.
>Benami Transaction (Prohibition) Bill to be introduced to curb domestic black money.
>General Anti Avoidance Agreement implementation is deferred by 2years to resolve certain contentious issues.
> Wealth Tax to abolished and additional surcharge of 2% will be added on the super rich who have taxable income over Rs.1crore.
>Contribution made to the Swacch Bharat Kosh will be 100% exempt.
>Swacch Bharat cess of 2% or less on all or certain services to be introduced for financing and promoting Swacch Bharat Abhiyan.
>Health Insurance Premium deduction increased from Rs.15000-25000. For senior citizens the amount will be Rs.30000 and in case of super senior citizen not covered in Health Insurance, Rs.30000 will be allowed as deduction towards expenditure.
>Transport Allowance limit increased from Rs.800-1600 per month.
>Additional deduction of Rs.25000 proposed in Section 80DD and 80U.
>GST to be implemented from next year.
>Corporate Tax will be reduced to 25% in the next 4years. Exemption will also be reduced in phased manner.
>Service Tax will be charged at 12% in order to bring it closer to GST rate which is expected to be 16%.
>Comprehensive law is proposed to be established on black money to specifically deal with money stashed away abroad.
>Benami Transaction (Prohibition) Bill to be introduced to curb domestic black money.
>General Anti Avoidance Agreement implementation is deferred by 2years to resolve certain contentious issues.
> Wealth Tax to abolished and additional surcharge of 2% will be added on the super rich who have taxable income over Rs.1crore.
>Contribution made to the Swacch Bharat Kosh will be 100% exempt.
>Swacch Bharat cess of 2% or less on all or certain services to be introduced for financing and promoting Swacch Bharat Abhiyan.
>Health Insurance Premium deduction increased from Rs.15000-25000. For senior citizens the amount will be Rs.30000 and in case of super senior citizen not covered in Health Insurance, Rs.30000 will be allowed as deduction towards expenditure.
>Transport Allowance limit increased from Rs.800-1600 per month.
>Additional deduction of Rs.25000 proposed in Section 80DD and 80U.
- Among Others
>Defence budget for the year 2015-16 will be Rs.246727crore.
>Establishment of Public Debt Management Agency to bring external borrowings and domestic debt under one roof.
>Proposal to merge Forward Market Commission with SEBI to strengthen regulation of commodity forward market & reduce wild speculation.
>Soil Health Card Scheme to be launched to improve Soil fertility.
>Defence budget for the year 2015-16 will be Rs.246727crore.
>Establishment of Public Debt Management Agency to bring external borrowings and domestic debt under one roof.
>Proposal to merge Forward Market Commission with SEBI to strengthen regulation of commodity forward market & reduce wild speculation.
>Soil Health Card Scheme to be launched to improve Soil fertility.
-SR.
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