Major Highlights & Features
The anticipation, hope and excitement is all settled with the current budget session in progress and almost all major financial announcements already made. There have been both small and big changes made by the Finance Ministry in the current financial set-up of the country. Honorable Finance Minister Mr. Arun Jaitley is confident that with the current financial moves, the economy is on the right track and as such there is nothing to fear with respect to the growth of the Indian economy. As a result of the announcements made in the budget, even the stock markets, both BSE and NSE saw a huge surge especially for PSU banks’ stocks.
Let us look into some of the most prominent highlights of budget 2016-17 and in what ways does it affect our lives directly or indirectly.
Budget 2016-17 Highlights pertaining to Personal Taxation:
As a result of the current budget, a lot has changed for the common taxpayer of the country. There have been moves that will affect taxpayers both positively as well as negatively. Here are some of the most significant changes announced with respect to the taxation changes announced by the Finance Minister.
- No modifications in the existing tax slabs. The slabs remain the same.
- New employees of the organized sector are set to benefit from a higher salary since the government will set aside Rs.1000 crore to pay the NPS contribution of these new employees for the first three years of employment. The move is set to boost employment generation in the organized sector and is hence supposed to help align the unorganized workforce with the organized workers.
- This is the first time that taxpayers will be required to pay tax on the EPF interest (interest on employee’s contribution as well as that on employer’s contribution) received at the time of withdrawal. EPF interest is set to be taxed at 40% while the remaining 60% will be tax-free.
- Home loan borrowers who have loans up to Rs.35 lakhs for properties that cost up to Rs.50 lakhs are eligible for an extra exemption of Rs.50000.
- Construction of houses which are less than 60 sq.mtrs. is exempt from service tax
- Taxpayers living in rented houses are set to benefit from the raised exemption limit of Rs.60,000 as against the previous limit of Rs.24,000.
- Purchase of luxury cars which cost more than Rs.10 lakh will now attract an additional service tax of 1 per cent while purchases made in cash for more than Rs.2 lakh will also attract the same 1 per cent service charge.
- Articles of jewelry except those of silver will now attract an excise duty of 1 per cent
- Except for beedi, your smokes will now become expensive since the excise duty on tobacco has been increased by 10-15%
- Taxpayers earning less than Rs.5 lakh per annum will not get an additional exemption of Rs.3000
- Cess of 0.5% added to all taxable services as part of Krishi Kalyan which will make services availed by the common man become a bit more expensive
Budget 2016-17 Highlights pertaining to the Finance Sector:
Finance sector is one of the most affected sectors when any new budget is rolled out. There are various sectors like agriculture, energy etc. that the budget talks about but almost all of these directly or indirectly connect to the finance sector. Listed below are some of the major highlights of this budget with respect to the financial sector of the nation.
- Government to set up a financial data management system
- Allocation of RS.25,000 crore towards recapitalization of public sector banks
- A comprehensive bankruptcy code to be introduced for banks for better tracking and control mechanism
- Plans to launch more ATMs and micro ATMs in post offices
- The amount sanctioned as part of the Pradhan Mantri Mudra Yojana to be increased to Rs.1,80,000 crore
- Government owned general insurance companies will now be listed on the stock exchange
- SEBI is set to develop new derivative products in the Commodity Derivatives market
- Financial firms will now see the introduction of a formal and comprehensive code on resolution as part of budget 2016-17
Budget 2016-17 Highlights pertaining to the Social Sector:
The social sector reforms are the ones which raise the status and standard of the nation as a whole.
Some of the key announcements made with respect to this section are listed below.
- Increased allocation of funds for the social welfare and education sector
- An amount of Rs.2000 crore set aside in order to provide subsidized LPG to families below poverty line
- New health protection scheme has been launched which offers an insurance cover of up to Rs.1 lakh to each family
- Jan Aushadhi Yojana launched by the finance ministry to open 3000 medical stores across the country
- In a bid to promote and offer support to entrepreneurs, Stand Up India Scheme will help facilitate two projects per bank which will aid entrepreneurs to raise funds
- 100 crore each set aside for celebrating the birth anniversaries of Guru Gobind Singh and Pandit Deen Dayal Upadhyay
Budget 2016-17 Highlights related to Infrastructure Development:
Infrastructure is one sector that requires the most attention and capital for the country to grow from a developing nation and move towards a developed state.
Here are a few points that were focused primarily on the infrastructure aspect of the country.
- Roads have taken a big chunk of investment with Rs.97000 crore being allocated for building and maintaining roads
- National Highway will keep busy this current fiscal with over 10,000 km of road laying that it is supposed to do as part of the budgetary allocation
- Additional Rs.15000 crore for laying of roads is to be raised by the National Highway Authority of India by means of bonds
- A whopping Rs.2,21,246 crore has been set aside purely for infrastructure development purposes
- Amendments to be made to update the Motor Vehicles Act
- Nuclear power generation to be acted upon more aggressively and with a detailed strategy over the next 10-15 years
- FDI policy to be reformed for insurance and pension, asset reconstruction firms and stock exchanges
Other Major Highlights of Budget 2016-17:
Apart from the sector wise points listed above, here are the few miscellaneous but significant points that were the key takeaways of the current budget session.
- Steps to be taken to move towards a pensioned society by promoting and facilitating pension plans
- Promotion of affordable housing is one of the key highlights of this budget
- Mobilization of resources for the agriculture sector, the rural economic sector and steps to foster a cleaner and better environment
- The current government aims at offering certainty in the taxation process and as such numerous steps towards to reform taxation have been launched. This includes reduced black money and a stable taxation regime. Simplification of taxes is another facet the budget looks at.
- Making use of technology to make governance as well as various government related projects more efficient and transparent
- Make in India, the pet project of the current government is all set to be implemented more strongly by a tight coupling with reduced taxes, excise duties to reduce cost and make it profitable to manufacture domestically. Ease of doing business and various offerings for start-ups also formed a key point of this budget.
- Special focus has been put on governance mechanisms and ease of doing business in the country. This is keeping in mind the foreign direct investments opened by the current government.
- Education, skills and job creations will be lent huge impetus in terms of finance. The budget aims at opening several Navodaya Vidyalaya and at setting up world class teaching institutes.
- 100 model centers to be opened for training people at career services
- 1804 crore has been set aside for skill development. Over 1500 multi skill training institutes to be set up
- A huge chunk of finance has been allocated towards development of the rural sector which aims also at reforming draught plagued and distressed rural areas
- The government has planned to electrify 100 per cent villages by 1st May, 2018.