India Union Budget 2016-17 – Budget 2016 Highlights

Today finance minister Sh. Arun Jaitley unveiled their third union budget for the session 2016 – 17. While divulging the budget he said that global economy is in serious crisis and financial markets have been battered in the past one year. The financial year 2016 – 17 will face an additional burden due to implementation of the Seventh Pay Commission and OROP. He further added that CPI inflation was 9.4% in the past 3 years of previous government. The figure has come down to 5.5% now.

In union budget 2016 – 17, Jaitley restated the forecast that, India would grow by 7.6% in the closing fiscal year. He added that government extensively wanted to broaden the benefits of growth and development among 1.3 billion Indians, but they have to stick to the government’s existing fiscal deficit target for the coming year.

Here are the products highlights at a glance:

Below is the detailed distribution of union budget:

• Rs. 35984 crores allotted for agriculture sector
• Rs. 17000 crores for irrigation projects
• Rs.19000 crores for Gram Sadak Yojana
• Rs. 9 Lakh crores Agriculture Credit Target
• Rs.38500 crores for MANREGA, highest ever
• Rs 2.87 Lakh crores to be spent on villages in total
• Rs.9000 crores for Swach Bharat Mission
• Rs.97000 Crores for Roads
• Rs. 2.21 Lakh Crores on Infra Projects
• Rs. 25000 crores for Banks rehabilitation
• Rs. 2.18 Lakh Crores on Roads and railway
• Rs. 14.28 Lakh Crores for non planned expenditure
• 11 new benches for Income Tax Appellate tribunal
• No service tax for building houses upto 60 sq mtrs
• 10% dividend tax for recipient over Rs. 10 lakh per annum
• New manufacturing companies will pay tax @ 25%
• 100% tax deduction for companies building houses upto 30 sq. mtrs
• Two new organic farming schemes for 5 lakh acres
• NHAI to raise Rs. 15000 crores via NHAI Bonds
• More benches for SEBI Appellate tribunal
• Registration of Company in One Day for Start-ups
• 100% FDI for food processing
• Planned expenditure increased by 15.3%
• Relief Section 87A Rs. 2000 to Rs. 5000
• Relief Sec 80GG Rs. 24000 to Rs. 60000
• Section 44AD limits Rs. 1 crores to Rs. 2 crores. Rs. 50 Lakh for professional
• Accelerated depreciation limited to 40%
• LTCG on unlisted securities limited to 2 years
• Additional interest deduction for first house
• TCS on purchase of asset over Rs. 2 Lakh in case and luxury cars
• VDS Scheme @ 30% + surcharge, Ist June to 30th September 2016
• Dispute resolution for appeal pending before Commissioner (Appeals)
• Penalty for concealment of Income from 100-300% to 50-200%
• Rationalisation of TDS provisions
• No face to face scrutiny
• Proposed to extend E Assessment to 7 mega cities
• Rationalisation of TDS provisions to benefit the Individuals
• Government to pay interest of 9 per cent instead of 6 per cent in case there is a delay in appellate cases beyond
• 90 days. Officers to be held accountable
• Compliance cost for small taxpayers will be reduced.
• Monetary limit for cases to be decided by 1-member bench up from Rs 15 lakh to Rs 50 lakh.
• New Dispute Panel – Tax payer can settle by paying disputed tax and interest up to date of assessment.
• No penalty where disputed tax is INR 10 lakhs. Penalty on balance to be only 25% of penalty.
• Propose to abolish 13 different cesses levied by different ministries in which collection is less than Rs 50 crore a year.
• 1 year limit for tax payers seeking waivers and refund.
• Committee to see government’s assurance on retrospective tax.
• Limited period compliance window to declare undisclosed income – by paying total tax of 45% (no scrutiny).
• Declaration to have immunity from prosecution (01 June to 30th September 2016).
• Services provided by EPFO exempted from service tax.
• Dividend taxed at 10% in the hands of individual receiving income in excess of Rs 10 lakhs (in addition to DDT paid by the company).
• Collect at source of tax 1% – Luxury cars exceeding INR 1 crores, and Products worth Rs 200,000.
• STT on options increased to 0.05 per cent.
• Instead of 12 per cent, 15 per cent surcharge on income tax for those with incomes exceeding 1 crore per annum.
• Security transaction tax on options to be raised from 0.017 per cent to 0.05 per cent.
• Service tax exempted for housing construction of houses less than 60 sq. m.
• 100% deduction for profits of undertakings from housing projects in cities during Jun 2016 – Mar 2019.
• Proposed to withdrawal up to 40 per cent of corpus under National Pension scheme to be tax free. Annuity also to be tax free.
• Tax treatment should be uniform for defined benefits and contribution of pension scheme and plans.
• Accelerated Depreciation limited to maximum of 40%.
• Start Ups: Exemption for 3 out of 5 years. MAT applies. Capital Gains not taxed where investment made in notified funds or in startups where they hold majority.
• Proposed to extend presumptive income tax to all professional with income limit of Rs 50 lakhs.
• Lower corporate for next financial year for companies upto Rs 5 crore turnover to 29 per cent for 2015
• Proposed tax rebate under section 87A from Rs 2,000 to Rs 5,000.
• Salaried people up to Rs 5 lakh to get Rs 3,000 relief per year. 2 crore tax payers to benefit.
• Thrust of tax policy are in 9 categories: Relief to taxpayers likely.
• Fiscal target to have a range than fixed target to give government elbow to manage uncertainties.
• Non-plan expenditure at Rs 14.28 lakh crore in F.Y. 2017.
• Committee to be set up to review FRBM Act.
• Plan and non-plan expenditure classification to be done away with from 2017-2018.
• F.Y.2017 Fiscal deficit target at 3.5 per cent.
• Deduction will be available for all assess for who are covered under tax audit for 30% of expenditure for
• additional employments. The number of day’s conditions has been reduced from 300 to 240. Earlier this was for only manufacturing undertakings.
• Companies Act to be amended to facilitate ease of doing business, Start-ups to register in one day.
• Targeted deliveries of financial and other subsidies through Aadhar framework should be initiated.
• Public sector general insurance companies to be listed on stock exchanges.
• Government has option to reduce stake in IDBI below 50 per cent.
• Road for merger of public sector banks to be spelt out.
• Rs 25,000 crore for recapitalization of PSU banks.
• SARFAESI Act to be amended to give sponsors of Asset Reconstruction Company (ARC) 100 per cent stake.
• RBI Act to be amended to give statutory basis for monetary policy framework.
• Department of Disinvestment to be renamed Department of Investment and Public Asset Management.
• 100 % FDI through FIPB route to be allowed in food products produced and processed in India.
• FDI policy to be changed in insurance, pension, asset reconstruction companies and stock exchanges.
• Government to set up 1500 skill development institute, Rs 1,700 crores allocated.
• Rs 3,000 crore per annum to be allocated for nuclear power generation.
• Rs 800 crore for national waterways allocated Abolition of Permit Raj to be medium-term goal.
• Abolition of Permit Raj to be medium-term goal.
• Total outlay for infrastructure of 2016-17 stands at Rs 2, 21,246 crore.
• Rs 55,000 crore allocated or road and highways, taking total road investments including Gram Sadak Yojna to
• Rs 97,000 crore during 2016-2017
• Small and medium shops should be given a choice to open on all 7 days. A model shop and establishment bill to be circulated which is to be adopted on a voluntary basis.
• Government to give 8.33 per cent interest to all new persons in EPFO in a bid to bring in unemployed person.
• Propose to exempt part of dialysis equipments from customs duty.
• Government to spend Rs 850 crore in a few years on animal husbandry, cattle and livestock breeding.
• New health care scheme with Rs 1 lakh cover for each family to be initiated.
• PM has called for entrepreneurship amongst SC and ST. For this Cabinet has approved Rs 500 crore through
• ‘Stand Up India’ scheme to promote SC, ST and women entrepreneurs.
• 3,000 medicines stores under Prime Minister Jan Ausidhi Yojna to be started.
• 75 lakh middle income people have given up LPG subsidy through ‘Give it Up’ scheme.
• Rs 2000 crore to be allocated for LPG cylinders to women members of poor families.
• Rs 87,765 crore allocated for rural development in this Budget.
• Digital literacy mission scheme to include 6 crore more households in next 3 years.
• Proposed Rs 9,000 crore for Swachh Bharat Abhiyaan in F.Y.2017
• Need to think beyond food security to income security for agriculture and farmers.
• To achieve by May 1, 2018 100 per cent village electrification 100 kms road construction per day currently to be stepped up.
• Rs 500 crore allocated to pulses production.
• Rs 38,500 crore to be spent on MGNERGA, highest ever.
• Rs 2.8 lakh crore grant to gram panchayat and local bodies, a quantum jump of previous years.
• Rs 15,000 crore scheme to ease loan burden for farmers in 2016-2017.
• Identified 9 pillars for having a transforming impact on the economy and Life of people.
• Agriculture, Rural Sector, Social Sector (healthcare), Education, Infrastructure, Financial Sector, Governance and Ease of Business, Fiscal Discipline, Tax Reform.
• Long-term irrigation fund of Rs 20,000 crore to be created.
• Government to reorient intervention in farm and non-farm sector to double farmers’ income in 5 years.
• Tax reforms to be initiated to reduce compliance burden.
• Public sector insurance company may be listed.
• Government to continue with ongoing reform measures, including bankruptcy law.
• Focus to pass GST, bankruptcy code.
• 2016-2017 to be challenging, additional burden on account of 7th pay commission and OROP.
• Firewalls should be created against global risks, says Arun Jaitley.
• India’s GDP at 7.6 per cent despite slowdown in exports.
• Global economy in serious economic crisis, says Arun Jaitley.
• No Change in Personal Taxation Slab.
• Window for declaration of domestic black money by paying 30%tax and 15% surcharge.
• Relief u/s 87A increased from 2000 to 5000.
• Tax on dividends in excess of 10.00 lac for Individuals/HUF.
• High Income Individuals to pay enhanced surcharge of 15% in case income more than 1.00 crore.
• Deductions u/s 80GG for rent paid increased from 24000 to 60000.
• Limit for 44AD increased from 1.00 Crore to 2.00 Crore. (Consequently limit u/s 44AB also increased to 2.00 for business and 50.00 lac for professionals.
• Newly introduced Limit for 44AD (Professional) now applicable upto 50.00 lac with presumptive rate of income at 50%.
• Small Corporate Tax Payers to pay @ 29% with condition.
• No Service tax on Services provided under DeenDyal Upadhyay Kaushal Yozna.
• 100% Exemption from Profits earned from specified Housing Projects, subject to provisions of section 115JC.
• Scope of TCS expanded.
• Vehicle costing more than 10.00 lac to pay 1% additional tax.
• Infra Cess on Vehicles levied.
• Excise Duty of 1% on jewellary without input credit tax.
• Excise duty on tobacco products increased.
• Another Voluntary Disclosure scheme launched to reduce litigation.
• Pending litigation also being rationalized.
• Section 271(1)(c) modified to levy of graded penalty.
• Section 14A amended.
• Waiver of Interest and penalty petitions to be decided in one year.
• 11 New benches of Indirect Taxes Tribunals.
• TDS Provisions rationalized.
• NRI not be taxed at higher rate on production of specified documents.
• E-assessments in seven mega cities.
• e-Sahyog to be expanded.
• Enhanced interest on delayed refunds arising out of Appeal effect at 9%. AO to be made responsible for additional interest.

Finance Minister Arun Jaitley wind up Union Budget speech at 12.41 pm. At this Union Budget stock markets gave a “thumbs down” reaction with a fall of 500 points in Sensex by the end of the day.