Union Budget of India 2017-18 - Prime Academy 2017-18-Analysis/Union Budget of In… · Current...

1 Highlights of Union Budget 2017-18

Union Budget of India 2017-18

Raju & Prasad Chartered Accountants

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Contents Contents ......................................................................................................................................... 2

Part-A- Economy ..................................................................................................................... 3

OVERVIEW OF THE ECONOMY ..................................................................................................... 3

LEGAL REFORMS ................................................................................................................................. 3

BUDGET ALLOCATIONS TO VARIOUS SECTORS ............................................................... 4 AGRICULTURE AND FARMERS WELFARE: ................................................................................................................. 4 RAILWAY ............................................................................................................................................................................................... 4 RURAL SECTOR ............................................................................................................................................................................... 5 SOCIAL SECTOR INCLUDING HEALTH CARE. ........................................................................................................ 5 DIGITAL PAYMENTS .................................................................................................................................................................... 6 EDUCATION ........................................................................................................................................................................................ 6 SKILL DEVELOPMENT ................................................................................................................................................................. 7 JOB CREATION ................................................................................................................................................................................ 7 Allocation to MGNREGA scheme at 48000 crore....................................................................................... 7 INFRASTRUCTURE AND INVESTMENT.......................................................................................................................... 7 FINANCIAL SECTOR REFORMS ........................................................................................................................................... 8 FISCAL MANAGEMENT ............................................................................................................................................................... 8

PART B — TAX PROPOSALS ............................................................................................ 9

TAX ESTIMATES ................................................................................................................................... 9

DIRECT TAXES ...................................................................................................................................... 9

INDIRECT TAXES.............................................................................................................................. 11 CUSTOMS DUTY AND EXCISE DUTY ............................................................................................................................ 11


Part-A- Economy

OVERVIEW OF THE ECONOMY

We are giving the gist of Budget proposals from the Union Budget of India, 2017-18

presented by Finance Minister, Mr Arun Jaitley in Parliament.

Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP

in the first half (H1) of 2016-17.

FDI grew 36% in H1 2016-17 over H1 2015-16.

Foreign exchange reserves have reached 361 billion US Dollars as on 20th

January, 2017.

Net borrowing limited to Rs 3.48 lakh crores.

Revenue Deficit of 2.3% in Budget Estimate 2016-17 stands reduced to 2.1% in the

Revised Estimates. The Revenue Deficit for next year is pegged at 1.9% , against

2% mandated by the FRBM Act

LEGAL REFORMS

Negotiable Instruments Act will be amended to protect payees of dishonoured

cheques.

Airport Authority of India Act to be amended to enable monetisation of land.


A new Metro Rail Act will be enacted by rationalising the existing laws.

Foreign Investment Promotion Board (FIPB) to be abolished in 2017-18 and further

liberalisation of FDI policy is under consideration.

Amendment to the Reserve Bank of India Act to enable the issuance of electoral

bonds in accordance with a scheme that the Government of India would frame

in this regard.

BUDGET ALLOCATIONS TO VARIOUS SECTORS

AGRICULTURE AND FARMERS WELFARE:

Target for agricultural credit has been fixed at Rs. 10 lakh crore for FY17-18.

Total allocation for Rural, Agricultural & Allied sectors for 2017-18 is a record Rs.

1,87,223 crore up by 24% from last year.

Fasal Beema Yojna will cover 40% area in 2017 and 9,000 crore will be allocated

for this scheme.

A dedicated fund to be set up by NABARD with corpus of Rs. 5,000 crore to assure

market prices to the farmers for their produce.

New mini labs in Krishi Vigyan Kendras (KVKs) and ensure 100% coverage of all 648

KVKs in the country for soil sample testing.

Coverage of National Agricultural Market (e-NAM) to be expanded from 250

markets to 585 APMCs. Assistance up to ̀ 75 lakhs will be provided to every e-NAM.

Dairy Processing and Infrastructure Development Fund to be set up in NABARD

with a corpus of Rs. 2000 crores and will be increased to Rs. 8000 crores over 3

years.

RAILWAY

‘Passenger Safety Sanraksha kosh’ will be created for safety of Railways

passengers with corpus of Rs. 1 lakh crores.

Railways to implement end-to-end solutions for some commodities.

Railway Throughput to be enhanced by 10%.

At least 25 stations re-development contracts will be awarded in 2017-18.

To commission 3,500 km of railway tracks in 2018.


500 stations will be made

disabled friendly.

Total capital & developmental

expenditure Rs1.31 lakh crore for

Railways in 2017-18 including Rs

55,000 crore to be provided by

government.

Service charges withdrawal on e-

Ticket to boost government’s digitisation endeavor.

RURAL SECTOR

Aim to bring one crore households out of poverty and to make 50,000 Gram

Panchayats poverty free by 2019, the 150th birth anniversary of Gandhiji.

Allocation for Prime Minister's Employment Generation Program and Credit

Support Schemes has been increased three fold.

It is proposed to provide safe drinking water to over 28,000 arsenic and fluoride

affected habitations in the next four years.

SOCIAL SECTOR INCLUDING HEALTH CARE.

Two new All India Medical Institutes (AIIMS) will be set up in States of Jharkhand

and Gujarat.

For welfare of women and children, allocation of RS 1.84 crore is proposed.

For senior citizens, adhaar based smart card containing their health details will be

introduced.

Rs. 500 crores allocated to set up Mahila Shakti Kendras.

The allocation for Scheduled Tribes has been increased to Rs. 31,920 crores and

for Minority Affairs to Rs. 4,195 crores.

Comprehensive web based pension distribution system will be established for

defense pensioners.

Defence expenditure excluding pension at Rs 2.74 lakh cr.

Government has prepared an action plan to eliminate Kala-Azar and Filariasis by

2017, Leprosy by 2018, Measles by 2020 and Tuberculosis by 2025 is also targeted.


Action plan has been prepared to reduce Infant Mortality Rate from 39 in 2014 to

28 by 2019 and Maternal Mortality Rate from 167 in 2011-13 to 100 by 2018-2020.

DIGITAL PAYMENTS

To promote digital economy, proposed two

new schemes to promote BHIM

application.

Aadhaar Pay will be launched shortly.

Targeting 2,500 crore digital transactions

across platforms like UPI.

A proposal to mandate all Government

receipts through digital means, beyond a prescribed limit, is under consideration.

Banks have targeted to introduce additional 10 lakh new POS terminals by

March 2017.

EDUCATION

Innovation Fund for Secondary Education proposed to encourage local

innovation for ensuring universal access, gender parity and quality improvement

to be introduced in 3479 educationally backward districts.

To introduce a system of measuring annual learning outcomes in our schools.

National Testing Agency to be set-up as

an autonomous and self-sustained

premier testing organisation to conduct

all entrance examinations for higher

education institutions.

SWAYAM platform, leveraging IT, to be

launched with at least 350 online

courses.


SKILL DEVELOPMENT

Pradhan Mantri Kaushal Kendras to be

extended to more than 600 districts

across the country. 100 India

International Skills Centres will be

established across the country.

In 2017-18, Skill Acquisition and

knowledge programs will be started at

cost of Rs. 4,000 crores

SANKALP Programme for Skill Development introduced for training of 1 crore

youth.

Government to set up 100 India-International skill centres

Government hiked allocation for women skill development to Rs 1.84 lakh cr in FY-

18

JOB CREATION

Allocation to MGNREGA scheme at 48000 crore.

New employment scheme introduced to boost employment in Leather and

Footwear Sector.

Another 5 lakh farm ponds will be taken up under MGNREGA during 2017-18.

INFRASTRUCTURE AND INVESTMENT

Allocated Rs 3.96 lakh crore, the highest among all other sectors, for infrastructure.

Transport sector allocated Rs 2.41 lakh cr.

Affordable housing will be given infrastructure status.

INR 19,000 crores proposed for PMGKY Scheme so as to construct 1 crore houses

for those living in kachha houses.

National highway allocation at Rs 64,000 cr

2000 km of coastal roads have been identified for development.

Selected airports in tier-2 cities to be operated under PPP model.

Set-up new crude oil reserves.


To take up second phase of solar power development for additional 20,000 mw.

By the end of 2017-18, high speed broadband connectivity on optical fibre will be

available in more than 1,50,000 gram panchayats, under Bharat Net.

For creating an eco-system to make India a global hub for electronics

manufacturing a provision of Rs. 745 crores in 2017-18 in incentive schemes like

Modified Special Incentive Package System and Environmental Defence Fund.

FINANCIAL SECTOR REFORMS

More than 90% of FDI are proposed under automatic route.

New FDI policy under consideration.

Re-financing of housing loans to give impetus to real estate sector.

IRCTC, IRCON & IRFC to be listed on stock exchanges.

Rs 10,000 crores allocated for recapitalisation of PSU banks.

Doubled the lending target by Rs. 2.44 lakhs crores under Pradhan Mantri Mudra

Yojana.

A Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be

established.

Propose to create an integrated public sector ‘oil major’ which will be able to

match the performance of international and domestic private sector oil and gas

companies.

FISCAL MANAGEMENT

Stepped up allocation for Capital expenditure by 25.4% over the previous year.

Fiscal Responsibility and Budget Management panel recommended fiscal deficit

at 3% for next 3 years

Peg fiscal deficit for 2017-18 at 3.2%, in-line with market expectations.

Total resources being transferred to the States and the Union Territories with

Legislatures is ` 4.11 lakh crores.


PART B — TAX PROPOSALS

TAX ESTIMATES

Net loss on direct tax proposals would be at Rs. 20,000 Crores.

DIRECT TAXES

No change in Exemption limits.

Reduced tax rate to 5% (from 10%) for income between 2.5 lac to 5 lacs for

Individuals and HUF.

Tax Rebate is decreased to Rs.2500/- from Rs.5000/- for individuals whose Net

Taxable Income upto Rs. 3,50,000/- (earlier limit of Rs.5,00,000/-)

The rate of tax on Presumptive Income (as per sec 44AD) is reduced to 6% from

8% on Non cash Turnover.

Under scheme for presumptive taxation for professionals with receipt upto 50 lakhs

p.a. advance tax can be paid in one instalment instead of four.

Threshold limit for payments of expenses in cash (as per 40A(3)), is reduced to

Rs.10,000/- from Rs.20,000/- (Cash transactions above 10,000 would be

disallowed.)

No Cash Transactions above Rs.3,00,000/- will be permitted.


Tax rate is reduced to 25% from 30% to MSME's companies whose turnover is less

than or equal to Rs.50 Crores.

Carry forwarding of MAT Credit is extended to 15 years from 10 years.

Surcharge to be leived at 10%, if the income is above Rs. 50 lakhs (for Individuals

and HUF).

Base year for Indexed cost of acquisition in Capital Gain computation is changed

from 1981 to 2001.

Period of holding to treat immovable property as Long Term Capital Gain has

reduced to 2 years from 3 years.

In case of Joint Development Agreements, tax liability arises only when project is

completed and not at the time of entering the agreement.

Capital Gain tax is exempted for the people in Andhra Pradesh, from whom the

land is pooled for the construction and development of State capital on or from

02-06-2014.

TDS need not be deducted for Insurance agents @5% subject to the condition that

the agents has no taxable income therein.

No Scrutiny, notices, or any non-compliances for the assesses who are filing for the

first time subject to the condition that no concealed information is with IT

department.

Time limit for conducting scrutiny is reduced to 18 months for AY 2018-19 and to 12

months for AY 2019-20 from 21 months.

Time period for revising a tax return is being reduced to 12 months from completion

of financial year, at par with the time period for filing of return.

Benefit of section 10AA (Profit linked deduction) extended to SEZ units is available

upto 5 years.

For Profit Linked Deduction Scheme for Housing projects, instead of built up area,

carpet area will be considered for counting 30 sq.mts and 60 sq.mts

Provision for NPA has increased from 7.5% to 8%. Income on NPA accounts will be

recognized on receipt basis instead of accrual basis for Banks.

Facility of concessional withholding rate on interest payable to foreign entities has

increased to 5 years.


Maximum amount of cash donations to be accepted by Trusts and Political party

is only Rs.2000/- from single source.

Amendment to the Reserve Bank of India Act to enable the issuance of electoral

bonds in accordance with a scheme that the Government of India would frame

in this regard.

One page ITR form to be introduced for tax payers with taxable income of upto

Rs.5,00,000/-.

Scope of domestic transfer pricing restricted to, only if one of the entities involved

in related party transaction enjoys specified profit-linked deduction.

Foreign Portfolio Investor (FPI) Category I & II exempted from indirect transfer

provision. Indirect transfer provision shall not apply in case of redemption of shares

or interests outside India as a result of or arising out of redemption or sale of

investment in India which is chargeable to tax in India.

INDIRECT TAXES

CUSTOMS DUTY AND EXCISE DUTY

No change in Indirect laws as GST is going to be replaced with all indirect laws.

Customs Duty on LNG is reduced to 2.5% from 5%.

Miniaturised POS card reader for m-POS (other than mobile phones or tablet

computers), micro ATM standards version 1.5.1, Finger Print Readers/ Scanners

and Iris Scanners and on their parts and components for manufacture of such

devices to be exempt from BCD, Excise/CV duty and SAD.

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