Amidst global and domestic headwinds, Finance Minister Arun Jaitley presented a growth and development-oriented Budget that seeks to transform India for the benefit of farmers and the vulnerable.
Jaitley’s third Budget saw enhanced focus on agriculture and rural sectors while having some special measures to boost infrastructure in the country. The Budget did not deviate from the fiscal growth.
Agri push
Jaitley promised that he would look to double farm household income in the next five years. For MNREGA, higher allocation has been provided. Budget has also increased the farm loan credit to ₹9 lakh crore for 2016-17.
Tax
He also had some goodies on the tax front for foreign investors who had disputes with the Indian government on retrospective taxation. A new scheme of dispute resolution for such foreign investors were announced in the Budget, which could open the doors for companies like Vodafone to settle their long pending tax disputes. The Centre has now agreed to settle such cases so long as tax arrears are paid while agreeing to waive off interest and penalties on the retrospective cases.
For the domestic tax payers too, Jaitley announced a limited period compliance window that could run from June 1 to September 30 to enable them to correct their past transgressions and come clean before the tax department. However, this will come with a cost.
Other big changes on tax front will include deferral by one year the implementation of place of effective management (POEM) rules, allowing tax breaks for start-ups (tax exemption first three of the five years), increasing securities transactions act on options traded in stock exchanges, and also providing a tax exemption on 40 per cent of the money drawn under the national pension system.
Other reforms
Jaitley also said that the government will move a Bill to providing statutory backing to Aadhaar, which is going to be the main pillar in the government’s effort to ensure subsidies are directed to the beneficiaries concerned.
As part of the direct benefit transfer Jaitley announced that the government will soon embark on direct fertiliser subsidy transfer to the farmers concerned.
Another major measure announced is specific health insurance scheme. For the benefit of the Indian citizens with protection to the tune of ₹1 lakh. Also under anvil is listing of all general insurance company.
New manufacturing companies incorporate on or after March 1, 2015 will be subjected to tax of 25 per cent at the basic rate level and some surcharge is applicable. For small enterprises having income less than ₹5 crore Jaitley has announced a reduced tax rate of 29 per cent, plus surcharge, plus cess.
He also reiterated government’s commitment to implement GAAR from April 1, 2017.
Reactions
“This is the first such Budget in India that has really cared for the poor people, farmers, and those who live in the villages. A lot of money has been provided to the agriculture and rural development sector,” said Agriculture Minister Radha Mohan Singh.
Congress leader in Lok Sabha, Mallikarjun Kharge, said this is an income-tax Budget. “Jaitley has given out ways for turning black money in the country to white. He has no scheme for ensuring inclusiveness.”