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Tuesday, March 1, 2016

UNION BUDGET 2016-17 : HIGHLIGHTS !!!

GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT at 7.60 % for FY15 - 16

AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2015 - 16 IS  Rs. 113,51,000 LAKHS CR AND AT 2011-12 PRICES ITS AT Rs. 105,52,000 LAKHS CR. 

FY16 FISCAL DEFICIT AT Rs. 5,32,281 CR.
FY16 TOTAL SUBSIDES AT Rs. 2,50,000 CR.
FY15 FERTILIZER SUBSIDIES AT  Rs. 72,968 CR.
FY16 FOOD SUBSIDIES AT  Rs. 1,35,000 CR.
FY16 OIL-PETROLUEM SUBSIDIES AT Rs. 26,900 CR.
FY16 NET MARKET LOANS OF Rs. 4,25,000 CR. 

THE CENTER'S EXPENDITURE 2015-16 IS PROJECTED AT Rs. 19,78,060 Cr.

INFLOWS (Rs. in Crs)                           
AMOUNT
CORPORATE TAX
4,93,923
INCOME TAX
3,53,174
CUSTOMS DUTY
2,30,000
EXCISE DUTY
3,18,670
SERVICE TAX
2,31,000
TAX OF UNION TERRITORY          
4,791
GROSS TAX REVENUES
16,30,888 

NON TAX RECEIPTS (Rs. in Crs)       
AMOUNT
INTEREST RECEIPTS
29,620
DIVIDENDS & PROFITS
1,23,780
EXTERNAL GRANTS
2,862
OTHER NON TAX RECEIPTS
1,65,320
RECEIPTS OF UNION TERRITORY
1,339
           TOTAL
3,22,921

DEBT RECEIPT (Rs. in Crs)
5,20,709 

NON DEBT CAPITAL RECEIPTS (Rs. in Crs) 
AMOUNT 
RECOVERY OF LOANS & ADVANCES
10,634
MISC. CAPITAL RECEIPTS
56,500
       TOTAL
67,134

* Out of the Tax Receipts the Center has to keep aside Rs. 25,000 cr for bank recapitalisation

OUT FLOW (Rs. in Cr)
AMOUNT
PLAN EXPENDITURE
5,50,010
NON PLAN EXPENDITURE
14,28,030 
DEFENCE
1,62,759
SUBSIDIES
2,50,433
GRANTS TO STATES & UTs
1,18,356 
INTEREST PAYMENTS
4,92,670
OTHER GENERAL SERVICES
35,003 
ECONOMIC SERVICES
34,266
Central Assistance to States & Union 
2,27,551
CENTRAL PLAN 
1,76,076 
LOANS TO STATE & UT GOVT
81 

SOME MORE POINTS FROM BUDGET  

® Govt. committed to achieve Fiscal deficit target of 3.9 % of GDP for FY16 followed by fiscal deficit of 3.5 % for 2017.

® Direct tax proposals results in Revenue loss of Rs. 1,060 Cr and the indirect tax proposal results in gain of Rs. 20,670 Cr.

® Proposes to imply additional 10 % tax on gross amount of dividend received by the recipients that is individuals, HUF’s, and firms receiving dividend in excess of Rs. 10 lakhs per annum. 

® Proposes a 15 % surcharge on income above Rs. 1 Cr and proposes to raise the ceiling of tax rebate under section 87A from Rs. 2,000 to Rs. 5,000 for individuals with income not more than Rs. 5 lakhs.

® Individuals who do not own any house and also do not get any Rent allowance from employer gets deduction of Rs. 24,000 per annum from their income, hence this limit increased u/s 80GG from Rs. 24,000 per annum to Rs. 60,000 per annum. For first home buyers, additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided the cost of house is not above Rs. 50 lakh.

® Proposes to levy infrastructure cess at the rate of 1 % on purchase of luxury cars exceeding value of Rs. 10 lakh and 1 % on purchase of goods and services in cash exceeding Rs. 2 lakh. Farmers and notified class of persons will have an option of giving a form by which TCS will not be charged. To levy 2.5 % on diesel cars of certain capacity and 4 % on other higher engine capacity vehicles and SUV’s.

® Proposes to give 100 % deduction for profits to an undertaking from a housing project for flats up to 30 sq. meters (322.917 sq.fts) in four metros cities and 60 sq. meters (645.835 sq.ft.) in other cities approved during June 2016 to March 2019 and is completed within 3 years of approval. Minimum Alternate Tax will apply to these undertaking. Service tax exemption to houses up to 60 square meters built under any scheme of the Central or State government including PPP schemes.     

® Presumptive taxation scheme u/s 44AD applicable to small & medium enterprises i.e. a non-corporate business with turnover or gross receipts not exceeding Rs. 1 Cr, at present these are free from maintain details books of accounts and getting audit done, hence are proposed to increase the turnover limit to Rs. 2 Cr, which would be paying 8 % tax on presumptive income. Presumptive taxation scheme on professionals with gross receipts up to Rs. 50 lakh with presumption of profit being 50 % of the gross receipts.

® MAT will be applicable for all the start ups that qualify for 100 % tax exemption. 100 % FDI in marketing of food products produced and marketed in India. Department of Disinvestment will be renamed as Department of Investment and Public Asset management. 

® The allocation of Rs. 1,000 Cr for new EPF scheme. Govt. will pay EPF contribution of 8.33 % for all new employees for first three years. Proposes to allocate Rs. 38,500 Cr for Mahtma Gandhi MGNREGA for 2016-17. Swacch Bharat Abhiyan to get allocation of Rs. 9,500 Cr. LPG connection to be provided under the name of the women members of the family and Rs. 2,000 Cr is allocated for 5 years for BPL families.

® Proposes to allocate Rs. 87,765 Cr to rural sector. And Rs. 2.87 lakh cr will be given as Grant in Aid to gram panchayats and Municipalities. A sum of Rs. 38,500 Cr allocated for MGNREGS. 100 % rural electrification by 1St may 2018. Pradhan Mantri Krishi Sinchai Yojana will bring 28.5 lakh hectares under irrigation. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs. 20,000 Cr. Proposes to allocate Rs. 35,984 Cr for agriculture and famers welfare.

® Proposes to allocate Rs. 5,500 Cr under Prime Minister Bima Yojana. Also proposes to reduce the loan burden on farmers a provision of Rs. 15,000 cr has been made in BE 206-17 towards interest subvention. And Rs. 850 cr allocated for 4 dairying projects. Proposes to allocate Rs. 19,000 cr under Pradhan Mantri Gram Sadak Yojana and will connect remaining 65,000 eligible habitations by 2019.

® Proposes to allocate Rs. 1,51,581 Cr for social sector including education & health care. Rs. 2,000 Cr allocated for initial cost of LPG connection to BPL families. New health protection scheme will provide health cover upto Rs. 1 lakh per family, for senior citizens an additional top up package up to Rs. 30,000 will be provided. Proposes to build digital repository for all school leaving certificates and diplomas and Rs. 1,000 Cr for higher education financing being allocated. Proposes to allocate Rs. 500 Cr for promoting entrepreneurship among ST/SC and Rs. 1,700 Cr for 1500 multi skill development centres.

® Proposes to allocate Rs. 3,000 Cr for nuclear power generation. Proposes to spend Rs. 27,000 Cr on roadways. Total allocation for road construction including PMGSY is Rs. 97,000 Cr and Rs. 55,000 Cr for roads & Highways development. Total outlay for infrastructure in budget 2016 now stands at Rs. 2,21,246 Cr.

® Proposes to impose Cess called Krishi Kalyan Cess @ 0.50 % 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 to force with effect from 1 june 2016. Input tax credit of this cess will be available for payment of this cess. Shops to be given option to remain open all seven days in week across markets.

® New derivative products will be developed by SEBI in commodity Derivate market. Rate of Securities transaction tax in case of Options is proposed to be increased from 0.017 % to 0.05 %. Proposed that a person making payment to NRI who does not permanent establishment exceeding in aggregate Rs. 1 lakh a yr as consideration for online advertisement will withhold tax at 6 % of gross amount paid as Equalization levy. The levy will only apply to B2B transaction.

® Proposes to change the excise duty on branded readymade garments and made up articles of textiles with retail sales price of Rs. 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.

®  Proposes 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 an some other precious stones) with higher exemption and eligibility limits of Rs. 6 Cr & 12 Cr respectively.

®    Proposes to rename the Clean Energy Cess levied on Coal, lignite and peat as Clean Environment Cess and simultaneously increase its rate from Rs. 200 per tonne to Rs. 400 per tonne. To reduce the consumption of tobacco products, excise duty on various tobacco products other than beedi by 10 % to 15 %.

®    NRI without PAN are currently subjected to 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.

® Investment limit for foreign entities in Indian stock exchanges will be enhanced from 5 & to 15 % on par with domestic institutions. This will enhance global competitiveness of Indian Stock exchanges and accelerate adoption of best in class technology and global market practices. Also the period for getting benefit of long term capital gain regime in case of Un-listed companies is proposed to be reduced from three years to two years. GAAR would be implemented from 1 April 2017. To promote use of refrigerated containers, it is proposed to reduce the basic custom duty to 5 % and excise duty to 6 %. Banks to be recapitalize with Rs. 25,000 Cr. General Insurance companies will be listed on Stock Exchanges.       

®    Proposes to provide complete pass through of income tax to securitization trusts including trusts of Asset Reconstruction Companies. The income will be taxed in the hands of the investors instead of trusts. However the trust will be liable to deduct tax at source.

®     Plan and Non-plan classification to be done away with from 2017-2018.  Will phase out the deduction under Income Tax, Accelerated depreciation wherever provided in IT Act will be limited to maximum 40 % from 1 April 2020. The weighted deduction under section 35CCD for skill development will continue up to 1 April 2020. Benefit of section 10 AA to new SEZ units will be available to those units which commence activity before 31 March 2020.

®    New manufacturing companies incorporated on or after 1 march 2016 to be given an option to be taxed at 25 % + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation. Lower corporate tax rate for next fiscal year for SME i.e Companies with turnover not exceeding Rs. 5 Cr in the financial year ending March 2015 to 29 % + surcharge and cess.

®    Proposes a 100 % deduction of profits for 3 out of 5 years for start-ups setup during April 2016 to March 2019. MAT will apply to such cases. A 10 % of tax on income from worldwide exploitation of patents developed and registered in India by a resident.


®    Non-banking financial companies shall be eligible for deduction to the extent of 5 % of its income in respect of provision for bad and doubtful debts. 

As I always say, I am a long term believer in markets & I do respect the markets and will keep a strict stop loss of 8 % on every purchase(Why Strict stop loss of 8 % ?) -  Click Here




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Disclaimer
This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.  
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12 comments:

  1. Very detailed post, got to learn a lot of new statistics.
    Thanks for sharing Bhavikk, have a great week ahead. :) Cheers!

    ReplyDelete
  2. complete whole information about budget 2016-17 has been posted by you thank you so much..

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  3. Thanks for making an informative blog that is based with great analysis!

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  4. I was waiting for this post from you :) I went through many analysis and this one too, I feel it was a completely neutral budget with addition of some more cess. good post as always :)

    ReplyDelete
    Replies
    1. Hii thanks for ur visit. .was busy so wrote as much as I can ..and yeah it is a neutral one and markets made 52 week low that day at 6825.80
      & all of the sudden from next day mkts started to run ...this is mkts and that's what I love about it :)
      Thanks for ur visit and pld do come again
      Have a wonderful evening :)

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  5. Really a great detail on Coal India....
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  6. Thanks a lot, Bhavikk. I couldn't make it to watch it live on TV, but you helped me out to get the highlights...
    Tc, keep smiling :-)

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  8. Thanks a lot Bhavik for providing such an Informational news of Union Budget,To summarize the Union Budget 2016, we can say that, government has done a great balancing act by maintaining its fiscal discipline thereby giving room to RBI for further rate cuts. Focus of the budget is on rural economy and farmers with social service sector developments. Share Market Tips

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