The excitement, anticipation, and hope are all settled with the current union budget session, and almost all the main financial announcements are already made. In union budget 2016-17, both small and significant changes are made by the Finance Ministry, India. Honorable Finance Minister Mr. Arun Jaitley is positive with the current financial moves. That the economy is on the right track, and there is nothing to fear from the growth of the Indian economy. As per the statements made in the Union budget, even the stock markets, both BSE and NSE saw a huge surge, especially in PSU banks’ stocks.
Union Budget 2016-17 Highlights – Key Features
- The growth of Economy increased to 7.6% in 2015-16.
- Steady growth achieved regardless of unfavorable global conditions and two consecutive years shortfall in monsoon by 13%.
- Foreign exchange reserves touched the highest ever level of about 350 billion US dollars.
- Despite increased devolution to States by 55% as a result of the 14th Finance Commission award, plan expenditure grew at RE stage in 2015-16 – in contrast to earlier years.
Challenges In 2016-17
- Additional financial burden due to 7th Central Pay Commission recommendations and OROP.
- Risks of further global slowdown and turbulence.
Budget 2016-17 Highlights regarding Personal Taxation
In current union budget 2016-17, a lot of changes have been made which affects the ordinary taxpayers. These changes will affect assesses positively as well as negatively. Let us take a look at some of the key highlights of Union Budget 2016-17 and its impact on taxpayer directly or indirectly.
- Tax Rates and Slabs remain the same. No alterations in the existing tax slabs.
- Two new Cess have been introduced, Agriculture Cess and Infrastructure Cess to be levied.
- Excise duty on tobacco products increased from 10% to 15% ( other than beedis).
- 1% service charge on the purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods & services over Rs. 2 lakh.
- 4% high capacity tax for Sport Utility Vehicle (SUVs). The Luxury cars to be more expensive.
- Companies with turnover less than Rs. 5 crores to be taxed at 29% and surcharge.
- Limited tax compliance window from June 1st, 2016 to September 30, 2016, for declaring undisclosed (unrevealed) income at 45% including surcharge and penalties.
- Excise duty of 1% imposed on articles of jewelry, excluding silver.
- Krishi Kalyan Cess at the rate of 0.5% to be levied on all services.
- Pollution cess collected as follows.
- On small petrol, LPG cars and CNG cars- 1 %.
- On diesel cars of certain specifications – 2.5%.
- On higher-end model Cars – 4%.
- Dividend in above of Rs. 10 lakhs per annum to be taxed at additional 10 %.
- New EPF (Employees’ Provident Fund) scheme allocated for Rs 1,000 crores.
- Deduction for rent paid will be increased from Rs. 20,000/- to Rs. 60,000/- to benefit those living in rented houses.
- The government of India will pay the Employees’ Provident Fund contribution of 8.33% of all new employees for first three years.
- An additional exemption of Rs. 50,000/- for housing loans up to Rs. 35 lakhs is provided if the cost of the house is not exceeded Rs. 50 lakhs.
- Service tax exempted for housing construction of houses less than 60 square meters.
- 15 % of surcharge on income exceeds Rs. 1 crore.
Budget 2016-17 Highlights regarding Social Sector
The social sector improvements are the ones who upgrade the status and standard of the nation as a whole. Let us take a look at some of the key statements made in Social Sector listed below.
- Four new schemes for animal welfare are introduced.
- The allocation funds for social welfare, and education sector is increased.
- The Government of India is launching a new initiative to provide cooking gas to families below the poverty line with state support.
- Rs. 38,500 crores for Mahatma Gandhi MGNREGA for the financial year 2016-17.
- Swacch Bharat Abhiyan allocated Rs. 9,500 crores.
- A Hub to support SC and ST entrepreneurs.
- An amount of Rs. 2000 crores are allocated for five years to provide subsidized LPG to families below poverty line. LPG connections to be provided in the name of women members of the family.
- An Amount of Rs. 2.87 lakh crores grants to Gram panchayats and municipalities a quantum jump of 228%.
- Under Shyama Prasad Mukherji Rurban Mission, 300 urban clusters are to be set up.
Budget 2016-17 Highlights regarding Health
Let us take a look at the salient statements made in Health Sector listed below.
- A new health protection scheme for health cover up to Rs. 1 lakh per family.
- National Dialysis Service Program with funds through PPP mode to offer dialysis at all district hospitals.
- A new scheme for Senior citizens, additional healthcare cover of Rs. 30,000/-.
- 3000 generic drug store to be opened under PM Jan Aushadhi Yojana.
Budget 2016-17 Highlights regarding Education
- 62 New Navodaya Vidyalayas will be opened to expanding focus on the quality of education.
- Sarva Shiksha Abhiyan to enlarging concentrate on the quality of education.
- Regulatory architecture to be given to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions.
- Higher Education Financing Agency to be set up with an initial capital base of 1000 Crores.
- Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets to be set-up.
- An amount of Rs. 1804 crores were allocated for skill development.
- National Board for Skill Development Certification is to be set up in partnership with the industry & academia.
- 1500 Multi Skill Training Institutes are to be set up.
- Entrepreneurship Education and Training through Massive Open Online Courses.
Budget 2016-17 Highlights regarding Energy
- Rs. 3000 crores are reserved for nuclear power generation.
- The government is drawing the comprehensive plan to be implemented in next 15-20 years for exploiting nuclear energy.
- Government to provide encouragement for deepwater gas exploration.
- Deepwater gas new disc to get calibrated market freedom, pre-determined ceiling price based on the landed cost of alternate fuels.
Budget 2016-17 Highlights regarding Investments and infrastructure
- An amount of Rs. 27,000 crores to be spent on roadways.
- 65 suitable habitats to be attached via Rs 2.23 lakh km of road. Current construction pace is 100 km/day.
- Total expenditure for infrastructure in Budget 2016 now stands at Rs. 2,21,246 crores.
- An amount of Rs. 55,000 crores for roads and highways. The Total allocation for road construction, including PMGSY Rs. 97,000 crores.
- New greenfield ports to be developed on east and west coasts.
- The revival of underserved airports. Centre to Partner with States to revive small airports for regional connectivity.
- 100% FDI in the marketing of food products produced and marketed in India.
- Dept. of Disinvestment to be renamed as Dept. of Investment and Public Asset Management.
- Govt will amend Motor Vehicle Act in passenger vehicle segment to allow innovation.
- MAT will be applicable for startups that qualify for 100% tax exemption.
- Direct tax proposals result in revenue loss of Rs.1060 crore; indirect tax proposals lead to the gain of Rs.20,670 crore.
Budget 2016-17 Highlights regarding Agriculture
- The total allocation for agriculture & farmer welfare at Rs. 35984 crores.
- 28.5 lakh hectares of land will be brought under irrigation.
- 5 lakh acres to be brought under organic farming over a three year period.
- Rs 60,000 crore for recharging of ground water recharging as there is urgent need to focus on drought-hit areas cluster development for water conservation.
- Dedicated irrigation fund in NABARD of Rs.20.000 crores.
- Nominal premium and highest ever compensation in case of crop loss under the PM Fasal Bima Yojna.
Budget 2016-17 Highlights regarding Banking
- Banks get a big boost: Rs 25,000 crore towards recapitalisation of public sector banks. Banking Board Bureau will be operationalised; we stand solidly behind public sector banks.
- The target of disbursement under MUDRA increased to 1,80,000 crore.
- The process of transfer of government stake in IDBI Bank below 50% started.
- General Insurance companies listed on the stock exchange.
- Govt to increase ATMs, micro-ATMs in post offices in next three years.
Download Union Budget 2016-17 PDF
For more details regarding, you can refer the Union Budget 2016-17 PDF.