Union Budget 2016-17: Vikas Ka Budget

The much anticipated Union Budget 2016-17 aka “Vikas Ka Budget” was presented by Mr. Arun Jaitley, The Honorable Finance Minister of India today, the 29th day of February, 2016.

The budget has already received mixed response while some feel this budget to be Pro-poor & Pro-farmer budget, few other feel this budget is more optical than being practical. Nevertheless, the budget is interesting. Mr. Jaitley introduced the country to the nine pillars of Budget 2016-17, which are:

  • Agriculture and farmer welfare
  • Rural sector with a view to improve employment
  • Social sector, with focus on primary healthcare
  • Education sector with a focus on improving skills
  • Infrastructure Investment, with a view to improving quality of life
  • Financial sector reforms
  • Governance and ease of doing business
  • Fiscal discipline and delivering benefits to needy
  • Tax reforms for reducing compliance related burdens

Vikas Ka Budget summarized in the following 50 pointers:

  • The Union Budget 2016-17 for the first time introduced a 0.05% ‘Krishi Vikas Cess’ on all services to fund its ambitious programme of rural welfare. Eating out in restaurants, buying property and insurance, and making mobile phone calls will become more expensive
  • No change in Income Tax slabs
  • Penalty to be 50% of tax in income under-reporting cases, 200% in misreporting of facts
  • National Pension scheme – withdrawal of 40% of corpus at time of retirement tax exempt
  • Corporate Tax – New manufacturing companies registered on/post March 01, 2016 – option of tax 25% surcharge + cess
  • Lower Corporate tax for small companies at 29% surcharge + cess
  • Excise duty on Tobacco products (except beedi) increased by 10-15%
  • Start-ups to get 100% tax exemption for 3 years except MAT which will apply from April 2016-2019
  • Incentives for new manufacturing companies and smaller enterprise companies
  • To reduce multiplicity of taxes and cascading – 13 taxes with collection less than Rs 50 Cr a year abolished
  • Service tax exempted for housing construction of houses less than 60 sq metres
  • Service tax on single premium annuity to be reduced to 1.5% from 3.5%
  • Limited tax compliance window from Jun 1 – Sep 30 2016 for declaring undisclosed income at 45% including surcharge and penalties. There shall be no scrutiny or prosecution in this regard
  • Clean energy cess increased from Rs 200 per tonnne to Rs 400 per tonnne on coal, lignite and peat
  • Under the PM Awas Yojna, 100% deduction for profits of undertakings from housing projects in cities during June 2016 – March 2019
  • Service tax exempted for general insurance schemes under Niramayi Swasthya Bima Yojana
  • Accelerated depreciation to be limited to 40% wef from April 1, 2017
  • 1% Pollution Cess to be imposed on all Cars
  • Interest on Refund increased to 9% from 6% in case it is related to Delay in giving Appellate order by more than 90 days
  • Scheme of deferred payment of Custom Duty for exporters with Proven Track Records
  • Rationalization of TDS Provisions based on Eswar Committee Report
  • Proposes to Amend Cenvat Credit Rule 2004 to reduce litigation and for better compliance
  • Rule 8D to amend read with section 14A be amended to limit dis allowance to 1% per Month of Monthly Average Investment subject to Maximum of Actual Expenditure
  • Penalty Rate increased from 50% to 200% on Concealment with no discretion to AO
  • GAAR to be implemented from April 1, 2017
  • Service Tax Exemption under Din Dayal Scheme
  • Allocated Rs 38500 Crore for MANREGA
  • Deduction limit under Section 87A of the Income Tax Act has been raised from Rs 2000 to Rs 5000 per annum. This will help over 2 crore taxpayers save more
  • Taxpayers who live in rented houses and don’t get house rent allowance (HRA) can deduct Rs 60,000 per annum from their income from the current Rs 24000
  • An additional deduction of Rs 50000 on interest paid by first-time home buyers on home loans of up to Rs 35 lakh, provided the house value doesn’t exceed Rs 50 lakh, has been announced
  • Super-rich, or those with an income of over Rs 1 crore, will have to pay more taxes as surcharge has been raised from 12% to 15%
  • Individuals who receive dividends in excess of Rs 10 lakh per annum will now have to pay 10% tax on gross amount of dividend
  • Cars priced Rs 10 lakh and above will attract 1% tax
  • Purchase of goods and services in cash exceeding Rs 2 lakh will also attract 1% tax
  • An infrastructure cess of 1% on small petrol, LPG and CNG cars, 2.5% on diesel cars of certain capacity, and 4% on SUVs will make buying all cars costlier
  • Single-premium insurance premiums will get cheaper as service tax on policy premiums has been cut from 3.5% to 1.4%
  • Branded retail garments will become costlier as Budget 2016 has proposed a 6% excise on branded retail garments priced more than
    Rs 1000
  • Imitation jewellery is also set to cost more as basic customs duty has been increased from 10% to 15%
  • Excise duty of 2% (without CENVAT credit) or 12.5% (with CENVAT credit) is being levied on readymade garments and made up articles of textiles falling under Chapters 61, 62 and 63 (heading Nos. 6301 to 6308) of the Central Excise Tariff except those falling under 6309 and 6310 of retail sale price (RSP) of Rs 1000 and above when they bear or are sold under a brand name
  • Excisable goods which were produced on or before 29.02.2016 but lying in stock as on 29.02.2016 shall attract excise duty upon clearance
  • Tax arrears can be paid in lieu of interest liabilities in retrospective taxation cases
  • Excise duty @ 12% on Gold & Silver studded Jewellery with input tax credit
  • Hike in to limit from 1 to 2 crore on small business assess in MSME category
  • Govt will enact necessary amendments in the Motor Vehicles Act and open up the road transport sector in passenger segment
  • Public Money should reach the poor and deserving without any leakage
  • A bill on targeted delivery of financial services using Aadhar to be introduced
  • SEBI act to be amended to provide more benches on the security appellate tribunal
  • 100% FDI through FAPB route in marketing of food products produced and manufactured in India
  • 3,500 medical stores to be opened under Pradhan Mantri Jan Aushodi Yojana
  • AADHAR NO will not be a proof of citizenship or domicile

Press Contact:

Anirban Chakraborty
+91 888 55 18002
achakraborty@udyogsoftware.com

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