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.
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