Points To Remember for Budget 2015

Highlights of budget 2015

DEFICIT

• Fiscal deficit seen at 3.9 % of GDP in 2015/16
• Will meet the challenging fiscal target of 4.1 % of

GDP

• Remain committed to meeting medium term fiscal deficit
• target of 3 %  of GDP
• Current account deficit below 1.3 % of GDP
• Jaitley says have to keep fiscal discipline in mind
• despite need for higher investment

 GROWTH

• GDP growth seen at between 8 % and 8.5 % y/y
• Nominal economic growth seen between 11 and 12 %
• Aiming double digit growth rate, achievable soon

 INFLATION

• Expects consumer inflation to remain close to 5 % by
• March, opening room for more monetary policy easing
• Monetary policy framework agreement with the RBI clearly
• states objective of keeping inflation below 6 %
• "One of the achievements of my government has been to
• conquer inflation. This decline in my view represents a
• structural shift."

 REVENUES

• Revenue deficit seen at 2.8 % of GDP
• Non tax revenue seen at 2.21 trillion rupees
• Agricultural incomes are under stress
• Net receipts under market stabilisation scheme estimated
• at 200 billion rupees

DISINVESTMENT

• Government targets 410 billion rupees ($6.7 billion) from
• stake sales in companies in 2015/16
• Total stake sale in 2015/16 seen at 695 billion rupees
• Sets stake sale target for 2016/17 at 550 billion rupees
• Revises down stake sale target for 2014/15 to 313.5
• billion rupees

   
MARKET REFORMS

• Propose to merge commodities regulator with SEBI
• To bring a new bankruptcy code
• Jaitley says will move to amend the RBI act this year, and
• provide for a monetary policy committee
• To set up public debt management agency
• Proposes to introduce a public contract resolution of
• disputes bill
• To establish an autonomous bank board bureau to improve
• management of public sector banks

   
POLICY REFORMS

• To enact a comprehensive new law on black money
• Propose to create a universal social security system for
• all Indians
• To launch a national skills mission soon to enhance
• employability of rural youth
• To raise visa-on-arrival facility to 150 countries from 43
• Allocates 346.99 billion rupees for rural employment
• guarantee scheme
• Raises threshold for application of transfer pricing rules
• to 200 million rupees from current 50 million rupees

   
BORROWING

• Gross market borrowing seen at 6 trillion rupees
• Net market borrowing seen at 4.56 trillion rupees

   
    GENERAL ANTI-AVOIDANCE RULES (GAAR)

• Government defers rollout of anti-tax avoidance rules GAAR
• by two years
• GAAR to apply prospectively from April 1, 2017
• Retrospective tax provisions will be avoided

 

  TAXATION

• To abolish wealth tax
• Replaces wealth tax with additional 2 pct surcharge on super rich
• Proposes to cut to 25 % corporate tax over next four years
• Corporate tax of 30 % is uncompetitive
• Net gain from tax proposals seen at 150.68 billion rupees
• Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.
• Proposes to rationalise capital gains tax regime for real estate investment trusts
• Extends withholding tax concession on foreign debt purchases by two years
• Expects to implement goods and services tax by April 2016
• To reduce custom duty on 22 items
• Basic custom duty on commercial vehicle doubled to 20 %
• Proposes to increase service tax rate and education cess to 14 % from 12.36 %
• Plans to introduce direct tax regime that is internationally competitive on rates without exemptions
• Exemptions for individual tax payers to continue
• To enact tough penalties for tax evasion in new bill
• Tax dept to clarify indirect transfer of assets and dividend paid by foreign firms

   
PERSONAL INCOME TAX

• No revision of income tax brackets
• Limit of deduction of health insurance premium increased to 25,000 rupees from 15,000 rupees; limit increased to 30,000 rupees from 20,000 rupees for the elderly
• People aged above 80 and not covered by health insurance to be allowed deduction of 30,000 rupees for medical expenses
• Additional deduction of 25,000 rupees for the disabled
• Limit on deduction for contributions to pension fund and new pension scheme increased to 150,000 rupees from 100,000 rupees
• Additional deduction of 50,000 rupees for contribution to new pension scheme under section 80CCD
• Monthly transport allowance exemption doubled to 1,600 rupees

IMPORT TAX

• Import tax on iron and steel increased to 15 % from 10 %
• Import tax on metallurgical coke increased to 5 % from 2.5 %

   
INFRASTRUCTURE

• Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year
• Plans to set up national investment infrastructure fund
• Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects
• Proposes 5 "ultra mega" power projects for 4,000 MW each
• Second unit of Kudankulam nuclear power station to be commissioned
• Will need to build additional 100,000 km of road
• Ports in public sector will be encouraged to corporatize under Companies Act

   
EXPENDITURE

• Plan expenditure estimated at about 4.65 trillion rupees
• Non-plan expenditure seen at about 13.12 trillion rupees
• Allocates 2.46 trillion rupees for defence spending
• Allocates 331.5 billion rupees for health sector
• If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion rupees

   
INVESTMENT

• Government to provide 79.4 billion rupees capital infusion to state-run banks
• Propose to do away with different types of foreign investment caps and replace them with composite caps
• To allow foreign investment in alternative investment funds
• Public investment needed to catalyse investment

   
GOLD

• To launch gold deposit accounts and sovereign bond
• Import duty stays at 10 %; disappoints jewellers
• To work on Indian-made gold coin to cut imports

   
CIGARETTES

• Raises excise duty on cigarettes by 25 % for cigarettes of length not exceeding 65 mm
• Raises excise duty by 15 % for cigarettes of other lengths

SUBSIDIES

• Food subsidy seen at 1.24 trillion rupees
• Fertiliser subsidy seen at 729.69 billion rupees
• Fuel subsidy seen at 300 billion rupees
• Major subsidies estimated at 2.27 trillion rupees
• We are committed to subsidy rationalisation based on cutting leakages

FINANCE MINISTER'S COMMENTS

• "We inherited a sentiment of doom and gloom. The investment community had almost written us off. We have come a long way since then."
• "We have turned around the economy, dramatically restoring macroeconomic stability and creating the conditions for sustainable poverty elimination, job creation, and durable double digit economic growth."
• "While being mindful of the challenges ... this gives us reason to feel optimistic."
• "Domestic and international investors are seeing us with renewed interest and hope." 

refer highlight from bankersadda