Narendra Modi government’s 3rd Union Budget
is disappointing for some people and good for some people. Finance
Minister have increased excised duty on certain tings and also reduced
on some goods too. For reduced cost of mobile, laptop, IT hardware they
has changed excised duty and customs of choice of material.
Finance Minister Arun Jaitley presented the Union Budget for 2016–17. Citing that the CPI inflation has come down to 5.4% from 9 plus, he said it is huge relief for the public.
Tax
Infrastructure and agriculture cess to be levied.
Excise duty raised from 10 to 15 per cent on tobacco products other than beedis
1 per cent service charge on purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh.
SUVs, Luxury cars to be more expensive. 4% high capacity tax for SUVs.
Companies with revenue less than Rs 5 crore to be taxed at 29% plus surcharge
Limited tax compliance window from Jun 1 — Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties
Excise 1 per cent imposed on articles of jewellery, excluding silver.
0.5 per cent Krishi Kalyan Cess to be levied on all services.
Pollution cess of 1 per cent on small petrol, LPG and CNG cars; 2.5 per cent on diesel cars of certain specifications; 4 per cent on higher-end models.
Dividend in excess of Rs. 10 lakh per annum to be taxed at additional 10 per cent.
Personal Finance
No changes have been made to existing income tax slabs
Rs 1,000 crore allocated for new EPF (Employees’ Provident Fund) scheme
Govt. will pay EPF contribution of 8.33% for all new employees for first three years
Deduction for rent paid will be raised from Rs 20,000 to Rs 60,000 to benefit those living in rented houses.
Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh.
Service tax exempted for housing construction of houses less than 60 sq. m
15 per cent surcharge on income above Rs. 1 crore
Social
Rs. 38,500 crore for Mahtma Gandhi MGNREGA for 2016–17
Swacch Bharat Abhiyan allocated Rs.9,500 crores.
Hub to support SC/ST entrpreneurs
Government is launching a new initiative to provide cooking gas to BPL families with state support.
LPG connections to be provided under the name of women members of family: Rs 2000 crore allocated for 5 years for BPL families.
2.87 lakh crore grants to gram panchayats and municipalities — a quantum jump of 228%.
300 urban clusters to be set up under Shyama Prasad Mukherji Rurban Mission
Four schemes for animal welfare.
Health
2.2 lakh renal patients added every year in India. Basic dialysis equipment gets some relief.
A new health protection scheme for health cover upto 1 lakh per family.
National Dialysis Service Prog with funds thru PPP mode to provide dialysis at all district hospitals.
Senior citizens will get additional healthcare cover of Rs 30,000 under the new scheme
PM Jan Aushadhi Yojana to be strengthened, 300 generic drug store to be opened
Education
Scheme to get Rs.500 cr for promoting entrepreneurship among SC/ST
10 public and 10 private educational institutions to be made world-class.
Digital repository for all school leaving certificates and diplomas. Rs. 1,000 crore for higher education financing.
Rs. 1,700 crore for 1500 multi-skill development centres.
62 new navodaya vidyalayas to provide quality education
Digital literacy scheme to be launched to cover 6 crore additional rural households
Entrepreneurship training to be provided across schools, colleges and massive online courses.
Objective to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojna-FM Jaitley
National Skill Development Mission has imparted training to 76 lakh youth. 1500 Multi-skill training institutes to be set up.
Energy
Rs. 3000 crore earmarked for nuclear power generation
Govt drawing comprehensive plan to be implemented in next 15–20 years for exploiting nuclear energy
Govt to provide incentive for deepwater gas exploration
Deepwater gas new disc to get calibrated market freedom, pre-determined ceiling price based on landed price of alternate fuels.
Investments and infrastructure
Rs. 27,000 crore to be spent on roadways
65 eligible habitats to be connected via 2.23 lakh kms of road. Current construction pace is 100 kms/day
Shops to be given option to remain open all seven days in a week across markets.
Rs. 55,000 crore for roads and highways. Total allocation for road construction, including PMGSY, — Rs 97,000 crore
India’s highest-ever production of motor vehicles was recorded in 2015
Total outlay for infrastructure in Budget 2016 now stands at Rs. 2,21,246 crore
New greenfield ports to be developed on east and west coasts
Revival of underserved airports. Centre to Partner with States to revive small airports for regional connectivity
100 per cent FDI in marketing of food products produced and marketed in India
Dept. of Disinvestment to be renamed as Dept. of Investment and Public Asset Management
Govt will amend Motor Vehicle Act in passenger vehicle segment to allow innovation.
MAT will be applicable for startups that qualify for 100 per cent tax exemption
Direct tax proposals result in revenue loss of Rs.1060 crore, indirect tax proposals result in gain of Rs.20,670 crore
Agriculture
Total allocation for agriculture and farmer welfare at Rs 35984 crores
28.5 lakh heactares of land wil be brought under irrigation.
5 lakh acres to be brought under organic farming over a three year period
Rs 60,000 crore for recharging of ground water recharging as there is urgent need to focus on drought hit areas cluster development for water conservation.
Dedicated irrigation fund in NABARD of Rs.20.000 cr
Nominal premium and highest ever compensation in case of crop loss under the PM Fasal Bima Yojna.
Banking
Banks get a big boost: Rs 25,000 crore towards recapitalization of public sector banks. Jaitley says: Banking Board Bureau will be operationalised, we stand solidly behind public sector banks.
Target of disbursement under MUDRA increased to 1,80,000 crore
Process of transfer of government stake in IDBI Bank below 50% started
General Insurance companies will be listed in the stock exchange
Govt to increase ATMs, micro-ATMs in post offices in next three years
1. Tourism industry wants status like exporter. 2. Tour operators should get discount in tax services 3. Multiple tax are disposed 4. 1st Tour operators get senavet credit 5. Service tax has been end
7 out of 10 diamond of Country is produced in Gujarat. Sources involved in the diamond industry
alleged that Diamond Industry Would earn Millions of rupees currency to
government but government Neglected every time in Budget.
Last Year Recession in Diamond industry has taken a big hit so Gujarat diamond industry expected that government announce some incentives and rules in 2016 Union Budget.
Diamond Industry is Demand 25 % relief in Electricity, Small business men Get easy loans,
diamond industry has been revealed as housing industry, SME Diamond
Industry are announced Easy noms, Jewel artists get housing and insurance cover.
Union Budget,
in the language of a financial analyst, is the estimated sources and
application of funds for a particular fiscal year. It is normally placed
before the House of Parliament in the last week of February. To
the common citizens, budget is all about rise or fall in the prices of
goods and services due to change in rate of taxes and duties. The
purpose of Union budget is, however, much broader. It is a plan of the
central Government for optimal allocation of the country’s resources so
as to achieve higher growth rates and make the economic development.
Two Broad Components
Two Broad Components of Union Budget
are Revenue Budget and Capital Budget. Former is an estimate of
short-term sources and applications of fund and the later is an estimate
of long-term sources and application of funds.
Revenue Budget:
Revenue
budget comprises of revenue receipts and revenue expenditure. Sources
of Revenue receipts are tax and non-tax revenues. Centre’s Net Tax
Revenue is gross tax revenue net of the amount transferred to the
National Calamity Contingency fund/ NDRF and State’s share. Gross tax
revenue are collected from corporation tax, income tax, other taxes and
duties, customs duties, union excise duties, service tax and taxes of
the union territories. Non-tax revenue are collected from interest
receipts, dividends and profits, external grants, other non-tax revenue
and receipts of union territories.
Capital Budget:
Capital
budget comprises of capital receipts and expenditure. Capital receipt
includes non-debt receipts and debt receipts. Non-debt part comprises of
recoveries of loans and advances and miscellaneous capital receipts and
the debt receipts include market loans, short-term borrowings, external
assistance, securities issued against small savings, state provident
funds (net) and other receipts (net). Like
revenue expenditure, capital expenditure is also of two types — plan
and non-plan. Plan capital expenditure refers to expenses on central
plan and central assistance for state and union territory. Non-plan part
includes defense services, other non-plan capital outlay, loans to
public enterprises, loans to state and union territory governments,
loans to foreign governments and other non-plan capital expenditures.
The
extent of the deficit and the means of financing it influence the money
supply and the interest rate in the economy. High interest rates mean
higher cost of capital for the industry, lower profits and hence lower
stock prices.
How to understand and interpret Union Budget
Union
budget can be analyzed in the same way as financial statement of a
company is analyzed. Revenue receipts are real income generated from
internal sources of the country during a particular year.
Revenue
expenditures are those which a government is required to meet during
the same year. In an ideal situation, there should be surplus of income
over expenditure. This surplus could then be utilized either for
increase in capital expenditure for long term development or for
reduction of debt burden of the government.
In
practice, it does hardly happen. What we see is ‘revenue deficit’
(revenue expenditure exceeds revenue receipts). To finance such a
deficit, government needs an increase in capital receipts over capital
expenditure by borrowings and from market loans. A revenue deficit thus
causes more debt burden of the government.
