Union Budget 2017 Highlights
Macro Economic
- Forex Reserves at healthy 361 b $ representing 12 months of imports
- IMF GDP growth forecast at 7.2% in 2017 and 7.7% in 2018
- Demo and GST to have an affirmative impact in the long term
3 Changes for this Budget
- Budget date advanced to 1st Feb to enable approval of the Bill before 1st April
- Merger of the Railway Budget with the Union Budget: To bring railways in the centre stage of the fiscal policy
- Done away with the Plan and Non Plan expenditure: To give holistic view of expenditure
Theme for 2017-18: Transform, Energise and Clean India (TEC India)
Key Themes of this Budget
- Farmers
- Measures for easy availability of loans to Farmers
- Soil Health cards: Mini labs to be set-up in Krishi Vigyan Kendras
- Modern Law on Contract Farming to be proposed
- Rural Population
- 1 cr households and 50,000 Gram Panchayats to be brought out of poverty by 2019
- MNREGA to be reoriented
- 133 km road constructed per day
- 1 cr houses to be constructed by 2019 under Pradhan Mantri Aawas Yojna
- 100 % village electrification to be achieved by 1st May, 2018
- Promotion of skill development and livelihood opportunities
- Youth
- System of “Annual Learning Outcomes” in schools proposed
- Focus on innovation
- Reforms in UGC
- Good institutions to have autonomy
- Swayam Platform to be launched with 350 online courses linked with DTH channels
- 100 India International skill centres to be set-up
- 5 special tourism zones to be set-up: Incredible India campaign to be launched across the world
- Poor
- Affordable housing to get infrastructure status
- Targeted elimination of diseases like TB, IMR, MMR and many more in a time bound manner
- Focus on healthcare
- Structural transformation for medical practitioners
- 2 AIIMS to be set-up in Jharkhand and Bihar
- Drugs and Cosmetics Act to be amended for availability of cheap drugs and generics
- Labour Laws to be overhauled in the below 4 themes:
- Wages
- Industrial Relations
- Social Security
- Safety
- LIC to start pension scheme for Senior citizens with guaranteed 8 % returns
- Infrastructure (including Railways)
- Passenger safety fund to be created for passenger safety measures for railways
- 500 stations to be made differently enabled friendly
- Measures for Swachh Railways including measures on waste management
- Service charges for booking tickets through IRCTC to be withdrawn
- New metro rail policy to be announced; New Metro Rail Act has already been enacted
- 4 Lacs cr allocated for transport sector (air, sea and road)
- Telecom: OFC network to be expanded; Broadband to be available to 1.5 Lacs gram panchayats
- Solar: 2nd Phase of Solar Power Development for additional 20,000 mw capacity
- Electronics Manufacturing: India to be made a global hub for electronics manufacturing
- Trade Infrastructure Export Scheme to launched for promotion of exports
- Financial Sector
- More than 90 % FDI are through automatic route
- Foreign Investment Promotion Board (FIPB) to be abolished
- FDI to be further liberalised
- Multi State Cooperative Act to be amended to prevent abuse by unscrupulous people
- Computer Emergency Response Team (CERT) to be formed specifically for financial sector to focus on cyber security
- Shares of IRCTS, IRFC to be listed
- Shares of Central Public Sector Enterprises (CPSEs) to be listed
- Lending target of banks and financial institutions doubled
- Stand-up India scheme to be launched for Dalits and Women entrepreneurs
- Digital Economy
- India on the cusp of a solid digital revolution
- BHIM app adopted by 125 Lacs people for UPI interface
- Aadhar enabled payment system to be launched
- Banks to issue 10 Lacs POS terminals by Mar, 17
- Easy unsecured loans to be advanced on the basis of transaction history
- Comprehensive review of Payments and Settlements Act, 2007
- Payment Regulatory Board to be set-up for the Payments and Settlements Act, 2007
- Amendments to be proposed in Negotiable Instruments Act for efficient resolution of cheque bouncing disputes
- Public Service: Effective Governance
- Central Defence Travel System (for easy online booking of tickets by Defence personnel)
- Rationalise the number of Tribunals by merging them wherever required
- Introduction of legislative changes to confiscate the assets of loan defaulters who abscond the country
- Prudent Fiscal Management
- Total Expenditure: Rs. 21.47 Lacs cr
- Defence expenditure excluding Pension: 2.17 Lacs+ cr
- Expert Committee Report: Debt to GDP proposed at 60 % by 2023; 3 % fiscal deficit recommended for the next 3 years with a deviation of 0.5 %.
- Fiscal deficit for 2017-18 pegged at 3.2 % of the GDP and 3 % for next year
- Tax Administration
- of individuals filing returns is 1.74 cr against 4.2 cr individuals employed in organised sector
- of individuals filing returns is 1.81 cr against 5.6 cr individuals employed in unorganised sector (including proproietorships)
- Out of 13.94 Lacs Companies, only 5.97 Lacs returns filed for AY 2016-17
- 76 Lacs Companies show Nil Income / losses in AY 2016-17
- Only 7781 Companies have shown Profits before Tax of 10 cr+
- Out of 76 Lacs individual tax payers with income between 5 Lacs to 10 Lacs, 56 Lacs are salaried individuals
- Largely a tax non compliant society and large scale tax evasion is rampant as indicated by 1.2 cr cars bought and 2 cr abroad visits taken for tourism /business trips
- Growth in Advance Income Tax on Personal Income in 2016-17 of 34.8 % over last year
- Holding period for identifying long term capital asset in case of immovable property reduced to 2 years from 3 years
- Base year for indexation to be changed from 1.4.81 to 1.4.2001
- Basket of instruments through which Capital gains can be exempted to be extended
- Builders to be charged tax on notional rent on flats remaining unsold for more than 1 year from the date of completion certificate
- Income tax exemption for start-ups: Tax exempted for any 3 years out of 7 years (instead of the total window of 5 earlier)
- Carry forward of losses in case of Change in Management by more than 51 % limit allowed relaxed as long as the promoters remain same
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- MAT Carry forward to be allowed for 15 years instead of 10 years
- Corporate Tax for Companies up to Turnover of up to 50 cr to be reduced to 25 %
- Basic Customs duty reduced to 2.5 % from 5 %
- NPA to be increased from provisioning from 7.5 % to 8.5% for financial sector
- Presumptive taxation u/s 44AD for Business Income: Rate reduced to 6 % from 8 % for turnover realised in non cash transaction
- Cash expenditure limit to be reduced to Rs. 10,000 for revenue as well as capital expenditure
- Cash receipts by Charitable organisations reduced from 10,000 to 2,000
- No transaction above Rs. 3 Lacs to be permitted in cash
- Maximum cash that a political party can receive is Rs. 2,000 from anyone source; Any amount can be received by cheque or through digital payment.
- Electoral bonds to be issued by RBI for political party funding; Donors can fund political parties by purchasing these bonds and donating these bonds to the parties. Parties can get the bonds redeemed from RBI within the prescribed time frame.
- BCD, Excise duty, SAD, CVD on manufacture of equipment supporting digital transactions like card readers, scanners etc.
- Thresholds increased for maintaining books of accounts u/s44AA from Rs. 10 Lacs to 25 Lacs
- TDS exempt for income of Insurance agents upon their self declaration
- Time period of revising return reduced to 12 months from the closure of financial year (as opposed to 12 months from the close of AY earlier)
- Time period of scrutiny assessment reduced to 18 months from AY 18-19 and 12 months for AY 19-20
- No scrutiny for first time return filers unless in case of suspicious transactions
- Income tax rate slabs for Individuals
- Income 2.5 Lacs to 5 Lacs: 5 % (instead of 10 % earlier)
- Other slabs remain same
- Rebate u/s 87A reduced to Rs. 2,500 (from Rs. 5000) for assessees with taxable income up to 3.5 Lacs (from Rs. 5 Lacs earlier)
- New Surcharge of 10 % for Income from Rs. 50 Lacs to 1 cr
- Existing Surcharge for income above 1 cr continues @ 15 %
- Simple 1 page form for Individual with income up to 5 Lacs other than business income
- Maximisation of efforts for E-Assessments
- Data mining to be done extensively to track tax evasion cases
