Union Budget 2017-18: Uttam Budget

The Union Budget 2017-18 was already in discussion for few reasons. While Demonetisation was the most recent financial reformation introduced before this budget, there were few other interesting factors to that made this budget stand-out from its predecessors.

These include:

1. Goods and Services Tax (GST):

With the Government declaring the launch date of GST couple of weeks before the Union Budget, there were anticipations about important declarations related to the GST rate/ policies in the FM’s budget speech.

2. Railway budget being merged with General budget for the first time:

Since our independence, we have always seen two different budget speeches – one delivered by the Minister of Finance and the other one by the Minister of Railways. The Union Budget 2017-18 is the first such budget program that includes both General and Railway budgets, delivered by Mr. Arun Jaitley, the current Minister of Finance.

3. Budget in February 2017

We have always seen our Finance Ministers delivering the Budget speech in the month of March. This is for the first time in India that the Union Budget has been delivered much earlier than usual.

Shri Narendra Modi, the Prime Minister of India, coined this budget as “Uttam Budget”.

Undoubtedly, the budget is “Uttam” (=Excellent), since the Financial Market rated it as OK budget, Economists called it prudent and reformist, and the common man call it a 3G budget: Gaon, Ghar aur Gareeb

A number-driven view confirms this a practical and transparent budget. Please note:

  • 1. FRBM (Fiscal Responsibility and Budget Management) review panel has recommended debt-to-GDP of 60%
  • 2. Fiscal deficit for FY18 pegged at 3.2% of GDP
  • 3. Revenue deficit for FY18 at 1.9%

We tried capturing the highlights of the Union Budget 2017-2018 from the perspectives of reformations (introduction/ changes) in two most important scopes:

  • 1. Budget Allocation
  • 2. Tax Administration

Budget Allocation:

Mr. Arun Jaitley, in his third term of presenting the Union Budget 2017-18 announced few important budget allocations. Following are the budget allocated for few important initiatives:

  • INR 2,74,114 Crores for Defence expenditures
  • INR 1,87,223 Crores for Rural development
  • INR 1,31,000 Crores for development of Railways
  • INR 64,000 Crores for National Highways
  • INR 48,000 Crores for MGNREGA (The Mahatma Gandhi National Rural Employment Guarantee Act, 2005)
  • INR 23,000 Crores for PMAY (Pradhan Mantri Awas Yojana)
  • INR 19,000 Crores for PMGSY (Pradhan Mantri Gram Sadak Yojana)
  • INR 10,000 Crores for Bharat Net
  • Tax Administration:

    • 1. No cash transactions above INR 3,00,000

      – another important step to curb Black Money

    • 2. Maximum amount of cash donation that can be received by any charitable trust or political party in India is restricted up to INR 2,000

        – aimed at improving transparency in political funding

      • Charitable trusts or Political parties can receive donations by cheques or digitally
      • Amendment proposed to RBI Act to issue electoral bonds
      • Every political party must file returns within specified time
    • 3. Category I and II foreign portfolio investors (FPIs) to be exempted from taxation on indirect transfers

    • 4. 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

    • 5. Personal income tax rate reduced to 5% for income bracket of INR 2.5 Lacs to 5 Lacs per annum

    • Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income up to INR 5 Lacs other than business income
    • 6. All other categories to get uniform benefit of INR 12,500 per person

    • 7. Additional surcharge of 10% to be levied on income of people falling in the income bracket of INR 50 Lacs to INR 1 Crore per annum

    • 8. Services Tax withdrawn from booking railway tickets online in IRCTC

    • 9. Start-ups to pay tax on profits for three out of seven years

    • 10. MAT not to be abolished at present; to allow carry-forward for 15 years

    • 11. Corporate tax reduced to 25% for MSMEs with annual turnover less than INR 50crores reduced

    • 12. Basic Customs Duty has been reduced from 5% to 2.5% on all LNG terminals in India

    Content:

    Anirban Chakraborty

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