New Delhi, 1 March 2015: Hello entrepreneurs, businessman, businesswoman, housewife and many more. We are back once again with our intellectual guy to pen down the great Indian budget of 2015-2016 by Ministry of Finance presented by Arun Jaitley. Below are the highlights of the budget which matters to you and you should know.
1. Incorporating Self Employment and Talent Utilisation (SETU)
Government has announced the setting up of a Self- Employment and Talent Utilisation (SETU) mechanism. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Union Finance Minister Arun Jaitley stated that SETU will be a Techno-Financial, Incubation and Facilitation Programme to support all aspects of start up businesses, and other self-employment activities, particularly in technology-driven areas. An amount of Rs.1000 crore is being set up initially in NITI Aayog for SETU.
2. Incorporating ATAL Innovation Mission (AIM)
The Union Finance Minister Arun Jaitley has stated his intentions to establish the ATAL Innovation Mission(AIM) in NITI. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Finance Minister stated that AIM will be an Innovation Promotion Platform involving academics, entrepreneurs and researchers and draw upon national and international experiences to foster a culture of innovation, R&D and scientific research in India.
Jaitley said that the platform will also promote a network of world-class innovation hubs and Grand Challenges for India. Initially a sum of Rs.150 crore wail be earmarked for this purpose.
3. Corporate tax cut down
The Finance Minister Arun Jaitley has said that the Corporate Tax Rate is proposed to be reduced from the current 30% to 25% over the next 4 years. In his Budget Speech in the Lok Sabha here today, Jaitley said this is expected to lead to higher level of investment, higher growth and more jobs. The Minister however said that the reduction has to be accompanied by rationalization and removal of various kinds of exemptions and incentives which is leading to a large number of tax disputes. He pointed out that the effective collection of Corporate Tax today is about 23%.
4. Incorporating National Investment and Infrastructure Fund
The Union Finance Minister Arun Jaitley has announced the setting up of a National Investment and Infrastructure Fund (NIIF). Presenting the General Budget 2015-16 in the Lok Sabha here today, the Finance Minister stated that an annual flow of Rs.20,000 crore will be ensured for the NIIF. This will enable the Trust to raise debt, and in turn, invest as equity, in infrastructure finance companies such as IRFC and NHB. The infrastructure finance companies can then leverage this extra equity, manifold.
5. Incorporating 5 new Ultra Mega Power Projects
The Government proposes to set-up 5 new Ultra Mega Power Projects, each of 4000 MWs in the plug-and-play mode. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Union Finance Minister Arun Jaitley stated that all clearances and linkages will be in place before the project is awarded by a transparent auction system. This shall unlock investments to the extent of Rs. 1 lakh crore. Jaitley said the Government would also consider similar plug-and-play projects in other infrastructure projects such as roads, ports, rail lines , airports etc. The Finance Minister announced that the second unit of Kudankulam Nuclear Power Station will be commissioned in 2015-2016.
6. Restoration at cultural world heritage sites
The Union Finance Minister Arun Jaitley has said that the facilities at India’s 25 Cultural World Heritage Sites are still deficient and require restoration. Jaitley proposed to extend the Visas on arrival facility to 150 countries, in stages, after the success of the same issued to travelers of 43 countries.
7. Environment-friendly development
The Union Finance Minister Arun Jaitley has said that the Government is committed to make development process as green as possible. While presenting the General Budget 2015-16 in Parliament today, the Finance Minister Jaitley stated that our de-facto ‘Carbon Tax’ on most petroleum products compares favourably with international norms. He said, with regard to coal, there is a need to find a balance between taxing pollution, and the price of power. Jaitley also said that the government is launching a scheme for Faster Adoption and Manufacturing of Electric Vehicles. He proposed an initial outlay of Rs. 75 crore for the scheme in 2015-16. The Ministry of New and Renewable Energy has revised its target of renewable energy capacity to 1,75,000 MW till 2022, comprising 1,00,000 MW Solar, 60,000 MW Wind, 10,000 MW Biomass and 5,000 MW Small Hydro, he added.
8. Rs. 68,968 crore for eduction, Rs. 79,526 crore rural development & Rs. 1,000 crore for women security
The Finance Minister, Arun Jaitley has said that adequate provision has been made for the schemes for the poor and disadvantaged in the Budget of 2015-16. Delivering his Budget Speech in the Parliament today, the Finance Minister said that an amount of Rs. 68,968 crore has been allocated to the Education Sector including Mid Day Meals, Rs. 33,152 crore to the Health Sector and Rs. 79,526 crore for Rural Development Activities including MGNREGA in the Budget for 2015-16. An amount of Rs. 22,407 crore has been provided for Housing and Urban Development, Rs. 10,351 crore for Women and Child Development and Rs. 4,173 crore for Water Resources and Namami Gange. In order to support programmes for Women Security, Advocacy and Awareness, another Rs. 1000 crore have been allocated to the Nirbhaya Fund in the year 2015-16.
9. Incorporation of agency that will address complaints against financial service providers
The Union Finance Minister Arun Jaitley has proposed to create a task force to establish a sector neutral financial redressal agency that will address grievances against all financial service providers. Presenting the General Budget 2015-16 in the Lok Sabha here today, Jaitley stated that a properly functioning capital market requires proper consumer protection.
10. Incorporation of Public Debt Management Agency (PDMA)
A Public Debt Management Agency (PDMA) will be set-up which will bring both India’s external borrowings and domestic debt under one roof. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Union Finance Minister Arun Jaitley stated that deepening of the Indian Bond market is one vital factor in promoting investment in India. The process of bringing the Indian Bond Market at the same level as India’s world class equity market is proposed to be initiated by setting-up PDMA.
11. Introducing National Skills Mission in select states
The Government will soon launch a National Skills Mission through the Skill Development and Entrepreneurship Ministry. The Finance Minister, Arun Jaitley, in his Budget Speech 2015-16 today, said that the Mission will consolidate skill initiatives spread across several Ministries. It will allow the Government to standardize procedures and outcomes across 31 Sector Skill Councils, he added. Arun Jaitely said “India is one of the youngest nations in the world with more than 54% of the total population below 25 years of age. Yet today less than 5% of our potential workforce gets formal skill training to be employable and stay employable”.
12. Combining Forwards Markets Commission with SEBI
The Union Finance Minister Arun Jaitley has proposed to merge the Forwards Markets Commission with SEBI (Securities and Exchange Board of India) to strengthen regulation of commodity forward markets and reduce wild speculation. Enabling legislation, amending the Government Securities Act and the RBI Act is proposed in the Finance Bill, 2015.
13. No change in the rate of personal Income-tax
The Union Finance Minister Arun Jaitley in his Budget Speech in Lok Sabha today proposed no change in the rate of personal Income-tax. He announced the tax proposals with no change in the rate of tax for companies in respect of the income earned in the financial year 2015-16, assessable in the assessment year 2016-17. However, Finance Minister Arun Jaitley proposed to levy a surcharge at the rate of 12% on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding Rs 1 crore. Surcharge in the case of domestic companies having income exceeding Rs 1 crore and upto Rs 10 crore is proposed to be levied @ 7% and surcharge @ 12% is proposed to be levied on domestic companies having income exceeding Rs 10 crore.
14. Implementing electronic Trade Receivables Discounting System (TReDS)
The Finance Minister, Arun Jaitely presenting the Union Budget 2015-16, here today said that a significant part of the working capital requirement of a MSME arises due to long receivables realization cycles and we are in the process of establishing an electronic Trade Receivables Discounting System (TReDS) financing of trade receivables of MSMEs, from corporate and other buyers, through multiple financiers. This should improve the liquidity in the MSME sector significantly.
15. Get interest or loan from gold
The Union Finance Minister Arun Jaitley has announced several steps for monetizing gold. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Union Finance Minister Arun Jaitley stated that stocks of gold in India are estimated to be over 20,000 tonne but mostly this gold is neither traded, nor monetized. Jaitley proposed to introduce Gold Monetisation Scheme, which will replace both the present Gold Deposit and Gold metal Loan Schemes. The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account. Banks/ other dealers would also be able to monetize this gold.
16. Make use of Postal Network
The Finance Minister, Arun Jaitely presenting the Union Budget 2015-16, here today, said that the government is committed to increasing access of the people to the formal financial system. In this context, Government proposes to utilize the vast Postal network with nearly 1,54,000 points of presence spread across the villages of the country. The Minister hoped that the Postal Department will make its proposed Payments Bank venture successful so that it contributes further to the Pradhan Mantri Jan Dhan Yojana.
17. Insurance for everyone, hence, Prahan Mantri Jeevan Jyoti Bima Yojana
The Union Finance Minister, Arun Jaitely presenting the Union Budget 2015-16, here today said that a large proportion of India’s population is without insurance of any kind – health, accidental or life worryingly, as our young population ages, it is also going to be pension-less. Encouraged by the success of the Pradhan Mantri Jan Dhan Yojana, the Finance Minister proposed to work towards creating a universal social security system for all Indians, specially the poor and the under-privileged. Jaitley said that soon Pradhan Mantri Suraksha Bima Yojana will be launched to cover accidental death risk of Rs. 2 lakh for a premium of just Rs. 12 per year. Similarly, we will also launch the Atal Pension Yojana, which will provide a defined pension, depending on the contribution, and its period. To encourage people to join this scheme, the Government will contribute 50% of the beneficiaries’ premium limited to Rs. 1,000 each year, for five years, in the new accounts opened before 31st December, 2015.
20. Privelige in Employees Provident Fund (EPF)
The Union Finance Minister Arun Jaitley has announced that with respect to Employees Provident Fund (EPF), the employee needs to be provided two options. Firstly, the employee may opt for EPF or the New Pension Scheme (NPS). Secondly, for employees below a certain threshold of monthly income, contribution to EPF should be optional, without affecting or reducing the employer’s contribution. He said, with respect to ESI, the employee should have the option of choosing either ESI or a Health Insurance product, recognized by the Insurance Regulatory Development Authority (IRDA).
21. Ease in tax procedures
The Union Finance Minister Arun Jaitley in his Budget Speech in Lok Sabha today announced measures to improve the ease of doing business so as to achieve ‘Minimum Government and Maximum Governance’. He sought to bring about simplification of tax procedures in the Financial Bill 2015. Monetary limits for a case to be heard by a single member bench of ITAT is proposed to be increased from Rs 5 lakh to Rs 15 lakh.
22. Rs. 34,699 crore to MGNREGA
The Finance Minister, Arun Jaitely presenting the Union Budget 2015-16, here today, said that government is committed to supporting employment through MGNREGA (Mahatma Gandhi National Rural Employment Gurantee Act) and ensure that no one who is poor is left without employment. Jaitley said that the focus is on improving the quality and effectiveness of activities under MGNREGA. Jaitley proposed an initial allocation of Rs. 34,699 crore for the programme in the Budget.
23. Benefits in tax exemptions
The Union Minister of Finance Arun Jaitley in his Budget Speech in Lok Sabha today proposed rationalization of various tax exemptions and incentives to reduce tax disputes and improve tax administration. He said, with a view to encourage savings and to promote health care among individual tax payers, it is proposed to increase the limit of reduction of health insurance premium from Rs 15,000 to Rs 25,000 and for senior citizen this limit is increase from Rs 20,000 to Rs 30,000.
For senior citizen above the age of 80 years, not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure. Deduction limit of Rs 60,000 on expenditure on account of specified diseases is enhanced to Rs 80,000 in the case of senior citizens. Additional deduction of Rs 25,000 is allowed for differently-abled persons, increasing the limit from Rs 50,000 to Rs 75,000. It is also proposed to increase the limit of deduction from Rs 1 lakh to Rs 1.25 lakh in case of severe disability.
The Finance Minister Jaitley also proposed to provide that investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income-tax and any payment from the scheme shall not be liable to tax.
Limit on deduction on account of contribution to a pension fund and the new pension scheme is proposed to be increased from Rs 1 lakh to Rs 1.5 lakh. Additional deduction of Rs 50,000 will be allowed for contribution to the new pension scheme u/s 80 CCD increasing from Rs 1 lakh to Rs 1.5 lakh.
24. Establish manufacturing hubs in CMLV countries
The Union Finance Minister Arun Jaitley today announced setting-up of manufacturing hubs in CMLV countries, namely, Combodia, Myanmar, Laos and Vietnam. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Finance Minister stated that the ‘Act East’ policy of the Government endeavours to cultivate extensive economic and strategic relations in South-East Asia. In order to catalyse investments from the Indian private sector in this region, a project development company will set-up the manufacturing hubs in CMLV countries through separate Special Purpose Vehicles (SPVs).
25. Establish Micro Units Development Refinance Agency (MUDRA) Bank
The Union Finance Minister, Arun Jaitely presenting the Union Budget 2015-16, here today, said that our government firmly believes that development has to generate inclusive growth. While large corporate and business entities have role to play, this has to be complemented by informal sector enterprises which generate maximum employment the Minister added. There are some 5.77 crore small business units, mostly individual proprietorship, which run small manufacturing, trading or service businesses. 62% of these are owned by SC/ST/OBC.
Jaitley further said that these bottom-of-the-pyramid, hard-working entrepreneurs find it difficult, if not impossible, to access formal systems of credit. Jaitley therefore, proposed to create a Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs. 20,000 crore, and credit guarantee corpus of Rs. 3,000 crore. MUDRA Bank will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana. In lending, priority will be given to SC/ST enterprises. These measures will greatly increase the confidence of young, educated or skilled workers who would now be able to aspire to become first generation entrepreneurs; existing small businesses, too, will be able to expand their activities. The Finance Minister further said that just as we are banking the un-banked, we are also funding the un-funded.
26. Foreign investment made easy
The Union Finance Minister Arun Jaitley has proposed to do away with the distinction between different types of foreign investments, especially between foreign portfolio investments and foreign direct investments, and replace them with composite caps. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Union Finance Minister Arun Jaitley stated that this was being done to further simplify the procedures for Indian companies to attract foreign investments. The sectors which are already on a 100 percent automatic route would not be affected.
27. Rs. 5,300 crore for Pradhanmantri Gram Sinchai Yojana
The Finance Minister, Arun Jaitely presenting the Union Budget 2015-16, here today, said that “Our commitment to farmers runs deep. We have already taken major steps to address the two major factors critical to agricultural production: soil and water”. In order to improve soil health, Union Minister propose to support Agriculture Ministry’s organic farming scheme – “Paramparagat Krishi Vikas Yojana”. The Budget provides for alllocation of Rs. 5,300 crore to support micro-irrigation, watershed development and the Pradhan Mantri Krishi Sinchai Yojana.The Minister urged the States to chip in substantially in this vital sector.
28. 2% Swachh Bharat cess
The Central Government will impose a Swachh Bharat Cess on all or certain taxable services at a rate of 2% from a date to be notified. The Finance Minister Arun Jaitley announced in his Budget Speech that the proceeds from this Cess would be utilized for Swachh Bharat initiatives. In a related development, the Scheduled rate of Clean Energy Cess levied on coal lignite and peat is being increased form Rs. 100 per tonne to Rs. 300 per tonne. The effective rate of Clean Energy Cess is being increased from Rs. 100 per tonne to Rs. 200 per tonne. Similarly, Excise duty on sacks and bags of polymers of ethylene other than for industrial use is being increased from 12% to 15%.
29. No advance from Rs. 20,000 crore or more in real estate
The Finance Minister, Arun Jaitley signaled the government’s intent to curb generation of black money in real estate in the Budget 2015-16. Presenting the Budget in the Lok Sabha today he proposed amendments in the Income Tax Act prohibiting acceptance or repayment of advance in cash of Rs. 20,000 or more for any transaction in immovable property. Penalties of equal amount will be imposed in case of contraventions.
30. Rs. 8.5 Lakh Crore of Agricultural Credit
The Finance Minister, Arun Jaitley presenting the Union Budget 2015-16 here today, supported the agriculture sector with the help of effective and hassle-free agriculture credit, with a special focus on small and marginal farmers, Jaitley proposed the Budget allocation of Rs. 25,000 crore in 2015-16 to the corpus of Rural Infrastructure Development Fund (RIDF) set up in NABARD; Rs. 15,000 crore for Long Term Rural Credit Fund; Rs. 45,000 crore for Short Term Cooperative Rural Credit Refinance Fund; and Rs. 15,000 crore for Short Term RRB Refinance Fund. Jaitley said that “Farm credit underpins the efforts of our hard-working farmers, therefore an ambitious target of Rs. 8.5 lakh crore of credit during the year 2015-16 is set up, which the Minister was sure that the banks would surpass.
31. Cuts in Customs and Excise duties
To promote domestic manufacturing and ‘Make in India’ for creation of more jobs, the Union Finance Minister Arun Jaitley announced a series of cuts in Customs and Excise duties in the Union Budget 2015-16 presented in Parliament.
Customs duties on certain inputs like Metal parts, insulated wires and cables, Refrigerators compressor parts, compounds used in catalytic converters, Sulphuric Acid for use in manufacture of fertilizers and compounds of Video Cameras have been reduced. Similarly Basic Customs Duty is being reduced on certain raw materials used in lathe machines from 7.5%, to 2.5%, medical video endoscopes from 5% to 2.5 %, telecommunication grade optical fiber cables from7.5% to Nil and LCD/LED TV panels from 10% to Nil.CVD and SAD are being fully exempted on specified raw materials for use in the manufacture of pacemakers.
32. Rs. 70,000 crore investment imagination in infrastructure
The Union Finance Minister Arun Jaitley has proposed an increase in investment in infrastructure by Rs. 70,000 crore in the year 2015-16 over the year 2014-15 from the Centre’s funds and resources of CPSEs. Presenting the General Budget 2015-16 in the Lok Sabha here today, the Finance Minister stated that the present state of infrastructure does not match the growth ambitions. Hence he has increased outlay on both the roads and the gross budgetary support to the Railways by Rs. 14,031 crore and Rs. 10,050 crores. The CAPEX of the public sector units is expected to be Rs.3,17,889 crores, an increase of approx. Rs. 80,844 crores over RE 2014-15.
33. 10 years jail for hiding foreign assets
The Union Finance Minister Arun Jaitley has said that a Bill to enact a new law to deal with black money is to be introduced in the current session of the Parliament. In his Budget Speech in the Lok Sabha here today, giving details of proposed key features of the law, the Finance Minister said this is the first and foremost pillar of his tax proposals. Jaitley said there will be a provision for rigorous imprisonment upto 10 years for concealment of income and assets and evasion of tax in relation to foreign assets. Such offence will be made non-compoundable. A penalty for such concealment of income and assets at a rate of 300% of tax is also proposed. Non-filing of return/filing of return with inadequate disclosures is to attract a punishment of rigorous imprisonment upto 7 years. Entities, banks, financial institutions including individuals are liable for prosecution and penalty. Any date of opening of foreign account would be mandatorily required to be specified by the assessee in the return of income. The Foreign Exchange Management Act, 1999 (FEMA) and prevention of Money-laundering Act, 2002 (PMLA) are also to be amended.
34. 100 % deduction if you donate to Swachh Bharat Kosh or Clean Ganga Fund
The Finance Minister, Arun Jaitley presenting the Budget for 2015-16 in Lok Sabha today, proposed that donations (other than CSR contributions under the Companies Act 2013) to the Swachh Bharat Kosh (by residents and non residents) and Clean Ganga Fund (by residents) will be 100 % deductible under section 80G of the Income-tax Act.
35. Service Tax rate increase to 12% plus & Education Cesses to 14%
The Finance Minister Arun Jaitley while presenting the Budget announced in the Lok Sabha steps to broaden the Tax Base that will maximize benefits to the economy.
The Service Tax rate is being increased from 12% plus Education Cesses to 14%. The new service tax rate shall subsume the ‘Education Cess’ and ‘Secondary and Higher Education Cess’. Additionally the Service Tax Negative List has been reviewed to include Service Tax to be levied on the service provided by way of access to amusement. Service Tax to be levied on service by way of carrying out any processes as job work for production or manufacture of alcoholic liquor for human consumption. All service provided by the Government to business entities, unless specifically exempt, shall become taxable. An Excise duty of 2% without CENVAT credit or 6% with CENVAT credit is being levied on condensed milk put up in unit containers. Excise duty of 2% without CENVAT credit of 6% with CENVAT credit is being levied on peanut butter.