Mr. Arun Jaitley with a suitcase announced the budget on 1st February, 2017. Let us look at its key highlights.

 

What made it different?

As against the union budget which used to be announced in the end of the month of February and railway budget few days before the union budget; Budget 2017 has come up with a combined budget breaking the ritual followed for 92 long years in India.

union-budget-2017-nine-important-features-to-look-out-for Most important highlights of Budget 2017 that you shouldn't miss Most Read News offbeat

Highlights:

1. Railways

Good News

  • No service ‘charge’ on tickets booked by IRCTC. Earlier people railway booking tickets via IRCTC had to pay Rs.40 on AC class tickets and Rs.20 for sleeper class.
  • 25 new stations to be ‘developed’ by FY 2018
  • Railway related companies like IRCON and IRCTC to be lsited on stock exchange. Benefits? They would get capital for better management and may shift few benefits to the users.
  • By 2019, all coaches of Indian Railways with bio-toilets. Say bye to those stinky toilets maybe.
  • Railway lines of 3500 km commissioned.

Bad News

  • Arun Jaitley has ‘hinted’ that railway tickets might become expensive. The railways plans to price tickets after taking into consideration the actual cost of a journey. At the moment, railway fares are heavily subsidized by the government.

2. Personal Income Tax

Good News

  • Income Tax rate cut to 5% for ‘individuals’ having taxable income from 2,50,000-5,00,000. Earlier such individuals had to pay 10% tax.
  • The existing rebate under Section 87A (currently given to people with income up to Rs 5 lakh) is proposed to be reduced to Rs 2500 from the existing Rs 5000 for individuals earning between Rs 2.5 lakh to Rs 3.5 lakh. As a result of the combined effect of the new Section 87A rebate and the reduction in the lowest slab tax rate to 5% the tax burden for those with income upto Rs 3 lakh would be zero and tax burden those in the Rs 3 lakh to Rs 3.5 lakh bracket would be Rs 2500.
  • Those earning Rs 4.5 lakh can therefore reduce their tax liability to zero by fully utilising the tax break under Section 80C combined with these new proposals.
  • Those falling in the higher income tax slabs will also be eligible for this lower tax rate of 5% on income between Rs 2.5 lakh and Rs 5 lakh. Therefore, those in the higher tax slabs will pay lower tax by Rs 12500 per person

Bad News

  • Surcharge of 10% on individual income above Rs.50 lac and upto Rs. 1 Crore. This surcharge has been levied to make up for the loss that government would make for the above mentioned 5% rate cut. Currently there was no such surcharge. Only those having income of above Rs.1 crore had to pay a surcharge of 15% which continues.

3. Tourism Industry

5 special tourism zones would be set up in the next financial year. Tourism being one of the big employment generator.

4. Petroleum and Oil Industry

Government has ‘proposed’ to merge state oil companies to create a $100 billion large organisation.

Government has ‘proposed’ to build two more strategic petroleum reserves besides three being completed already.

5. Leather and Footwear Sector

A special scheme for creating employment for leather and footwear sector.

6. Scope of Doing Business

Domestic Transfer pricing restricted to only to only if one of the entities in related party transaction enjoys profit related deduction.

Limit to get books of accounts audited who ‘opt to composition scheme’ increased from 1 crore to 2 crores.

Maintenance of books of accounts limit for individual and HUF increased for turnover of Rs.10 lacs to turnover of Rs.25 lakhs or income of Rs. 1.2 lakh to Rs. 2.5 Lakh.

Time limit for scrutiny assessment decreased from 21 months to 18 months from A.Y. 2018-2019.

7. Real Estate Sector

‘Affordable Housing’ to be given the status of ‘infrastructure’ resulting into investment by private players, making the ‘housing to all’ till 2022 appear achievable.

Real estate developers to get tax relief on unsold stock, the liablility to pay capital gains will arise only on the year when the project is completed.

8. Agriculture and Farmers Welfare

Allocation of Rs.35,984 crores.

Farmers have been given a promise to double their income in five years.

9. Indexation for capital gains shifted from 01.04.1981 to 01.04.2001

10. No cash transactions above Rs.3 lacs.

11. Abolish the body of FIPB that clears proposal envisaging foreign investment upto Rs.5,000 crores.

12. Rs.1.84 lakh crores for children and women empowernment.

13. New AIIMS to Jharkhand and Gujarat.

14. For Startups and MSME

MSME (Micro Small and Medium Enterprises) Finance Minister has increased the period of profit-linked deductions available to the startups to seven years from the current five years. However, the tax breaks is still only available on the profits made by startups for three years. Notably, this tax sop is only available to those startups which are recognised by the DIPP (Department of Industrial Policy & Promotion). Minimum Alternate Tax can be carried forward for 15 years from their present period of 5 years.

Reduction of income tax for companies of turnover upto Rs.50 crore of 5% making it 25% as against earlier tax of 30%.

15. Cash donation capping

The Finance Minister proposed to cap cash donation for political parties at Rs 2,000 per individual and mulled electoral bonds and cheque payment for all other forms of political donations.

16. Basic Custom and Excise Duty

Basic custom and Excise duty on refrigerated goods reduced to 5% and 6%. Excise duty exemption on some food items (ice-cream, cheese, RTE, packaged juices, etc) may be lifted as a step moving towards GST. Currently, some food items enjoy 0-6% excise duty. Removing the exemption will push up the prices of these food items.

17. Digitalisation

125 lac people have adopted BHIM application.

AadharPay for aadhar enabled payments to be launched.

Let us wait and watch whether the budget would be implemented well. As Raamdeo Agarwal, Joint MD of MOFSL says that ‘the best budget is if you do not chnage anything, do not harm, implement well.


source: ET, Business Standard, cover, 1

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