KEY IMPORTANT FEATURES OF INDIA BUDGET 2016-17

Key Features of India Budget for Year 2016-2017

• Growth of Economy accelerated to 7.6% in 2015-16. Fiscal deficit in RE 2015-16 and BE 2016-17 retained at 3.9% and 3.5%. Revenue Deficit target from 2.8% to 2.5% in RE 2015-16.
• Total expenditure projected at Rs. 19.78 lakh crore. Plan expenditure pegged at Rs. 5.50 lakh crore under Plan, increase of 15.3%. Non-Plan expenditure kept at Rs.14.28 lakh crores
• Foreign exchange reserves touched highest ever level of about 350 billion US dollars.
• Allocation for Agriculture and Farmers’ welfare is Rs. 35,984 crore
• ‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission mode. 28.5 lakh hectares will be brought under irrigation.
• A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs 20,000 crore.
• Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’ and ‘Organic Value Chain Development in North East Region’.
• Allocation under Pradhan Mantri Gram Sadak Yojana increased to Rs. 19,000 crore. Will connect remaining 65,000 eligible habitations by 2019.
• To reduce the burden of loan repayment on farmers, a provision of Rs.15,000 crore has been made in the BE 2016-17 towards interest subvention
• Allocation under Prime Minister Fasal Bima Yojana Rs.5,500 crore.
• Rs. 850 crore for four dairying projects – ‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic Centre for indigenous breeds.
• A sum of Rs. 38,500 crore allocated for MGNREGS (Mahatma Gandhi National Rural Employment Gurantee Act for Details About NREGA Scheme www.nrega.nic.in)
• 3,000 Stores under Prime Minister’s Jan Aushadhi Yojana will be opened during 2016-17.
• “Stand Up India Scheme” to facilitate at least two projects per bank branch. This will benefit at least Rs.2.5 lakh entrepreneurs.
• Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets to be set-up.
• GoI will pay contribution of 8.33% for of all new employees enrolling in EPFO for the first three years of their employment. Budget provision of Rs. 1000 crore for this scheme.
• Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act.
• Total investment in the road sector, including PMGSY allocation, would be Rs. 97,000 crore during 2016-17.
• India’s highest ever kilometres of new highways were awarded in 2015. To approve nearly 10,000 kms of National Highways in 2016-17.Allocation of Rs. 55,000 crore in the Budget for Roads. Additional Rs. 15,000 crore to be raised by NHAI through bonds.Total outlay for infrastructure – Rs. 2,21,246 crore.
• Mobilisation of additional finances to the extent of Rs. 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by raising Bonds.
• Amendments in the SARFAESI Act 2002 to enable the sponsor of an ARC to hold up to 100% stake in the ARC and permit non institutional investors to invest in Securitization Receipts.
• Allocation of Rs. 25,000 crore towards recapitalisation of Public Sector Banks.Target of amount sanctioned under Pradhan Mantri Mudra Yojana increased to Rs. 1,80,000 crore.General Insurance Companies owned by the Government to be listed in the stock exchanges.
• Raise the ceiling of tax rebate under section 87A from Rs.2000 to Rs.5000 to lessen tax burden on individuals with income upto Rs. 5 laks. Increase the limit of deduction of rent paid under section 80GG from Rs.24000 per annum to Rs.60000, to provide relief to those who live in rented houses.Deduction for additional interest of Rs.50,000 per annum for loans up to Rs.35 lakh sanctioned in 2016-17 for first time home buyers, where house cost does not exceed Rs. 50 lakh.
• Increase the turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act to Rs.2 crores to bring big relief to a large number of assessees in the MSME category.
• Extend the presumptive taxation scheme with profit deemed to be 50%, to professionals with gross receipts up to Rs.50 lakh
• Phasing out deduction under Income Tax: Accelerated depreciation wherever provided in IT Act will be limited to maximum 40% from 1.4.2017. Benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020. Benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020. The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020.
• Additional tax at the rate of 10% of gross amount of dividend will be payable by the recipients receiving dividend in excess of Rs.10 lakh per annum.
• New manufacturing companies incorporated on or after 1.3.2016 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 the corporate tax rate for the next financial year for relatively small enterprises i.e companies with turnover not exceeding Rs.5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.
• 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019. MAT will apply in such cases.
• 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.
• Complete pass through of income-tax to securitization trusts including trusts of ARCs. Securitisation trusts required to deduct tax at source.
• Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.
• 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.
• Determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year.
• Commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017.
• Exemption of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship.
• Exemption of Service tax on general insurance services provided under ‘Niramaya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability.
• Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.
• Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs. 1 crore.
• Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding value of Rs.ten lakh and purchase of goods and services in cash exceeding Rs.two lakh.
• Securities Transaction tax in case of ‘Options’ is proposed to be increased from .017% to .05%.
• Equalization levy of 6% of gross amount for payment made to non- residents exceeding ` 1 lakh a year in case of B2B transactions.
• Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016. Proceeds would be exclusively used for financing initiatives for improvement of agriculture and welfare of farmers. Input tax credit of this cess will be available for payment of this cess.
• Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles 13 and SUVs. No credit of this cess will be available nor credit of any other tax or duty be utilized for paying this cess.
• 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 and some other precious stones], with a higher exemption and eligibility limits of Rs.6 crores and Rs.12 crores respectively.
• Excise on readymade garments with retail price of Rs.1000 or more raised to 2% without input tax credit or 12.5% with input tax credit.
• ‘Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean Environment Cess’ and rate increased from Rs.200 per tonne to Rs.400 per tonne.
• Excise duties on various tobacco products other than beedi raised by about 10 to 15%.
• Domestic taxpayers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have immunity from prosecution.
• Surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan surcharge to be used for agriculture and rural economy.
• New Dispute Resolution Scheme to be introduced. No penalty in respect of cases with disputed tax up to Rs.10 lakh. Cases with disputed tax exceeding Rs.10 lakh to be subjected to 25% of the minimum of the imposable penalty.
• Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty and tax interest on quantum addition.
• High Level Committee chaired by Revenue Secretary to oversee fresh cases where assessing officer applies the retrospective amendment.
• One-time scheme of Dispute Resolution for ongoing cases under retrospective amendment.
• Penalty rates to be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts.
• Disallowance will be limited to 1% of the average monthly value of investments yielding exempt income, but not exceeding the actual expenditure claimed under rule 8D of Section 14A of Income Tax Act.
• Time limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty.
• Mandatory for the assessing officer to grant stay of demand once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of Income-tax (Appeals).
• Monetary limit for deciding an appeal by a single member Bench of ITAT enhanced from Rs. 15 lakhs to Rs.50 lakhs.
• 11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).