* PM says budget pro-growth, pro-middle class
NEW DELHI,
Feb 28: Shunning populism, the Union Budget for 2015-16 today proposed a 5 per cent reduction in corporate tax over the next four years, replacing of wealth tax with an additional 2 per cent surcharge on super-rich and raised excise duty and service tax rates that will make a host of articles and services costly. In the first full-year Budget of the NDA Government, Union Finance Minister Arun Jaitley made no changes in personal and corporate income-tax rates for 2015-16 but extended benefits to middle-class by increasing the limit of deduction on health insurance premium from Rs 15,000 to Rs 25,000. For senior citizens, it will go up from Rs 20,000 to Rs 30,000 and for those above 80 years, not covered by health insurance, deduction of Rs 30,000 towards expenditure on medical treatment will be allowed. While the service tax plus education cess has been raised from 12.36 per cent to 14 per cent that will jack up bills, air travel, eating out and visits to beauty parlours, a new 2 per cent Swachh Bharat cess on taxable services is also being proposed from a future date. However, some items like leather footwear, locally made mobiles, computer tablets, microwave ovens, packaged fruits and ambulance services will become cheaper. Like his predecessors, Jaitley was also severe on smokers by coming down heavily by up to 25 per cent increase in duty on cigarettes, cigars and cheroots. Cement will also be costlier. In a Budget which Jaitley called a balancing act to promote growth and jobs through larger spendings, some social sector expenditure has also been cut in areas like child development programme. Under attack over unearthing blackmoney, Jaitley announced that a new comprehensive law will be brought to provide for a jail term upto 10 years for hiding foreign assets and a 300 per cent penalty on undislcosed income and asset abroad. The Minister also announced fresh incentives for individual tax payers that will take the overall deduction limit to Rs 4,44,200 a year. The Budet proposed raising the tax deduction limit by Rs 10,000 for payment towards health insurance premium. Also, exemption of transport allowance has been doubled to Rs 19,200 per year. To provide social safety net and the facility of pension to individuals, an additional deduction of Rs 50,000 is proposed to be provided for contribution to the New Pension Scheme under Section 80CCD, Jaitley said. Besides, the other deduction has been maintained namely –deduction under section 80C of Rs 1.5 lakh while deduction under section 80CCD Rs 50,000. At the same time tax deduction on account of interest on house property loan self occupied property has been unchanged at Rs 2 lakh. The 2 per cent additional surcharge on the ‘super-rich’ with income of more than Rs 1 crore is expected to rake in an extra Rs 9,000 crore as against a tax sacrifice of Rs 1,008 crore from abolition of wealth tax. Surcharges have also been proposed on domestic and foreign companies while the education cess has been continued on all tax payers. To attract investment and revive growth, implementation of the controversial GAAR has been deferred by two more years while a number of other changes have been made to promote manufacturing and Make-in-India. The Budget allowed cash-strapped railways, roadways and irrigation companies to raise funds through tax-free infrastructure bonds. Investment in infrastructure will be increased by Rs 70,000 crore. Also Rs 20,000 crore will be spend to establish a National Investment and Infrastructure Fund and five new ultra mega power projects with capacities of 4,000 megawatts each will be set up. However, the pace of cutting fiscal deficit has been slowed, pushing the target of reducing the deficit to 3 per cent by a year to 2017-18. The Budget also provided for increased funding of Rs 70,000 crore for infrastructure as also higher allocation for social sector schemes like MGNREGA. A part of excise duty on petrol and diesel has been converted into road cess to increase the corpus available for construction of highways. An additional Rs 40,000 crore would be made available as a result of this. In service tax, exemption is being extended to certain pre-cold storage services in relations to fruits and vegetables. The negative list in the service tax is being pruned and certain other exemptions are being withdrawn to widen the tax base. It decided to re-issue tax-free infra bonds and announced introduction of a sovereign gold bond as an alternative to purchasing metal gold. The bond will carry a fixed rate of interest and will be redeemable in cash on the face value of gold. The social sector spending for poor and disadvantaged have been kept at allocation of Rs 68,968 crore to education sector, Rs 33,152 crore for health, Rs 77,526 crore for rural development including MGNREGA, and Rs 22,407 crore for Housing and Urban Development. Defence expenditure has been pegged at Rs 2,46,727 crore for 2015-16, up from Rs 2,22,370 crore in the current fiscal. The Budget estimates for 2015-16 pegs the non-plan expenditure at Rs 13,12,200 crore and plan spending at Rs 4,65,277 crore. Total expenditure has been estimated at Rs 17,77,477 crore. Gross tax receipts are estimated to be Rs 14,49,490 crore. Devolution to states will be Rs 5,23,958 crore and states will get Rs 9,19,842 crore. Non tax revenues are estimated at Rs 2,21,733 crore. The fiscal deficit has been pegged at 3.9 per cent of the GDP in 2015-16 against 4.1 per cent in current fiscal while the revenue deficit has been put at 2.8 per cent of GDP. The Finance Minister announced plans to bring fiscal deficit down to 3 per cent over the next two years. In indirect taxes, the Budget reduced basic customs duty on raw materials, excise duty on leather footwear while excise duty on cigarettes is being increased by 25 per cent on cigarettes exceeding 65 mm length and by 15 per cent for cigarettes of other length. Excise duty on variety of electronics and hardware goods has been reduced. This includes wafers of manufacture of IC for smart cards, mobile phones and inputs for use of LED drivers and LED lights. 100 per cent deduction, other than CSR contributions, has been allowed for donations to Swachh Bharat and Clean Ganga Funds. While the direct tax proposals will involve a revenue outgo of Rs 8,315 crore, the indirect tax proposals are expected to yield Rs 23,383 crore. The net impact of all tax proposals would be a revenue gain of Rs 15,068 crore. Jaitley said the Indian Economy has turned around dramatically in the last nine months with the real GDP growth expected to accelerate to 7.4 per cent, making India the fastest growing large economy in the world. Growth next fiscal will be between 8 to 8.5 per cent and aiming for a double-digit rate seems feasible very soon. He said macro-economic stability has been restored and conditions created for sustainable poverty elimination, job creation and durable double-digit economic growth. India, he said, has now embarked on two game changing reforms — GST and the JAM Trinity – Jan Dhan, Aadhar and Mobile – to implement direct transfer of benefits. GST will put in place a state-of-the art indirect tax system by April 1, 2016 while the JAM Trinity will allow transfer benefits in a leakage-proof, well-targeted and cashless manner. Jaitley said a Monetary Policy Framework Agreement has been concluded with RBI to keep inflation below 6 per cent. The Finance Minister counted five major challenges faced by the Indian economy which are agricultural income under stress, weak private sector investment in infrastructure, decline in manufacturing, resource crunch in view of higher devolution in taxes to states and maintaining fiscal discipline. Assuring that the challenging fiscal deficit target of 4.1 per cent of GDP this fiscal will be met, he said the Government was firm to reach fiscal deficit target of 3 per cent of GDP, which will be achieved in three years rather than two years. Meanwhile, Prime Minister Narendra Modi today described the 2015-16 Budget as ‘Sabka Budget,’ which is “pro-growth, pro-middle class, pro-youth and paradigm-shifting” and would further reignite the growth engine, signalling the dawn of a prosperous future. Congratulating Finance Minister Arun Jaitley for presenting a Budget with a clear vision, the Prime Minister highlighted five Ps and said the Budget is “progressive, positive, practical, pragmatic and prudent.” “I congratulate the FM for doing an excellent job in respecting aspirations of States and at the same time, delivering on National priorities,” the Prime Minister said. He said the Budget has a distinct focus on farmers, youth, poor, neo-middle class and the Aam Nagrik and delivers on growth, equity and job creation. At the same time, the Budget is investment friendly, removes all doubts on tax issues and assures investors that the country has a stable, predictable and fair tax system. Details of the Black Money law being introduced, demonstrates the Government’s firm commitment to bring back “every Rupee of Black Money stashed abroad,” he said. From housing for all, jobs, health, education and total electrification, the Finance Minister had laid down goals to be achieved by 2022, India’s Amrut Mahotsav, Mr Modi added. The Prime Minister said the Budget indicated the Government’s commitment to ensure that development of Eastern and North-Eastern parts of India gets an impetus and drives future growth. Success of the Jan Dhan Yojana is “gladdening,” he said and added that building on that, key schemes were announced that would comprehensively transform lives of the poor. Suraksha Bima Yojana, Atal Pension Yojana, Jeevan Jyoti Bima Yojana and Vidya Lakshmi Karyakram mark a shift from ‘Jan Dhan’ to ‘Jan Kalyan,’ he added. The Atal Innovation Mission and SETU underline the Government’s commitment to enable innovation, entrepreneurship and start-ups to grow and shine in India, he added. (Agencies)
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