a synoptic guide to budget india - xactitude.in · all other categories to get uniform benefit of...
TRANSCRIPT
ASynopticGuide
To
UnionBudgetofIndia2017
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Foreword
ThisisthefourthbudgetandthirdfullyearbudgetbytheNDAGovernment.Itwaspresentedamidstveryhighexpectationsofannouncementofbigbangreformsinthemultiplesectorsbyagovernment,whichisnotonlyconsideredasGovernmentofReformsbutalsowhichenjoysunprecedentedmajorityinthelowerhouseofparliament.ThisunionbudgetwasmuchawaitedbytheindustryandthewholeofIndiaincludingtheoverseasstakeholdersinthelightofkeyeconomicdevelopmentsofthecurrentyear like Model GST law and demonetization. The Finance Minister delivered a balanced budget,howeveritwasnotimpressive.TheGDPgrowthof6.75%‐7.5%andfiscaldeficitof3.2%looksabitofambitious.Thedirecttaxandindirecttaxreformsarejustaverage.Theindustryandthekeysectorsareyettounderstandandarriveatconclusivedecisionabouttheimpactofbudget.Weleaveittothereaderstojudgeandanalyzethebudgetfromtheirviewpoint.Wehaveendeavoredtofairlybringalltheaspectsofthebudgetinthiswriteupwhichwillhelpyoutoanalyzetheproposalsofthegovernment.
The agenda of the budget was based on 10 pillars: Farmer, Rural Population, Youth, Poor andUnprivileged,Infrastructure,FinancialSector,DigitalEconomy,PublicServices,FiscalManagementandTaxAdministration.
Highlights
S.N.
Themes KeyPoints
1.Farmers
FarmercreditfixedatrecordlevelofRs. 1,000crore;willensureadequateflowtounderservedareas.
Soilhealthcards:Govt.tosetupmini‐labsinKrishiVigyanKendras. Long‐termirrigationfundinNABARD—corpusatRs.40,000crore. Modellawoncontractfarmingtobecirculated. DairyprocessinginfrafundwithcorpusofRs.8,000crore. Dedicatedmicro‐irrigationfundwithRs.5,000crorecorpus.
2.RuralPopulation
MissionAntyodayatobring1crorehouseholdsforpoor. MGNREGA:Rs.48,000crorehasbeenallocated;participationofwomennow
at55%;usingspacetechnologyinabigway PrimeMinister Gram Sadak Yojana: Rs. 19,000 crore allocated; alongwith
states,Rs.27,000crorewillbespentinFY18 PradhanMantriAwasYojana:Rs.23,000croreallocated 100%villageelectrificationbyMay2018 Rurallivelihoodmission:Rs.4,500croreallocated Masontrainingtobeprovidedfor5lakhpeople PanchayatRaj:Humanresourcereformprogrammetobelaunched Rs.187,223croreallocatedforruralprogrammes
3.Youth Education: System of measuring annual learning outcomes, emphasis on
science Innovationfundforsecondaryeducation ReformsinUGC:Collegestobeidentifiedbasedonrankingandgivenmore
autonomy
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S.N.
Themes KeyPoints
ProposetoleverageinformationtechnologywithlaunchofSWAYAMplatformforvirtuallearning
National testingagencytobeestablished forallentranceexams, freeingupCBSE,AICTEandotherbodies
100Indianinternationalskillcentrestobeestablishedwithcoursesinforeignlanguages
Rs.4,000croreallocatedtolaunchskillacquisitionandknowledgeawareness Specialschemeforcreatingemploymentinleather/footwearsector Tourism:Fivespecialzonestobesetup
4.Poor andUn‐privileged
Women:MahilaShaktiKendraswithRs.500crorecorpus SteppedupallocationtoRs.184croresforvariousschemesforwomenand
children Affordablehousingtobegiveninfrastructurestatus Actionplan toeliminate leprosyby2018,TBby2025, reduce IMRto29 in
2019 TocreateadditionalPGmedicalseatsperannum TwonewAIIMSinJharkhandandGujarat Newrulestobeintroducedformedicaldevices Labourrights:Legislativereformstosimplifyandamalgamateexistinglabour
laws Allocation toSCs increased toRs.52,393crore;STsgivenRs.31,920crore,
minorityaffairsallocatedRs.4,195crore Seniorcitizens:Aadhaar‐basedsmartcardswithhealthdetailstobeprovided
5.Infrastructure
TotalcapexanddevelopmentexpenditureofrailwayspeggedatRs.131crore Railways: Passenger safety—Safety fund corpus set up; unmanned level
crossingstobeeliminatedby2020 Railwaylinesof3,500kmtobecommissioned Tolaunchdedicatedtourism/pilgrimagetrains 500stationstobemadedifferently‐abledfriendly Cleanlinessinrailways:TointroduceCoachMitrafacility;By2019,bio‐toilets
forallcoaches Railways to offer competitive ticket‐booking facility; service charge
withdrawnforticketsbookedonIRCTC Newmetrorailpolicytobeannounced Roadssector:AllocationfornationalhighwaysatRs.64,000crore AirportsAuthorityofIndiaActtobeamendedtoenablemonetizationofland
resources TotalallocationtotransportsectoratRs.200crore Telecomsector:AllocationtoBharatNetprogrammeatRs.10,000crore Digi‐Gaoninitiativetobelaunched TomakeIndiaglobalhubforelectronicsmanufacturers Exportinfra:Newrestructuredcentralschemetobelaunched Totalallocationforinfrastructure:Rs.396crore
6.FinancialSector
ForeignInvestmentPromotionBoard(FIPB)tobeabolished
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S.N.
Themes KeyPoints
Commoditiesmarket:paneltostudylegalframeworkforspotandderivativemarkets
Resolutionmechanismforfinancialfirms Cyber‐security:Computeremergencyresponseteamtobesetup ListingofPSEswillfosterpublicaccountability;revisedmechanismfortime‐
boundlisting To create integratedpublic sector oilmajor (bymerging various oil sector
entities) NewETFtobelaunched PradhanMantriMudraYojana:LendingtargetatRs.244crore Stand‐upIndiascheme:over16,000newenterpriseshavebeensetup
7.DigitalEconomy
Indiaatcuspofmassivedigitalrevolution Govtto launchtwonewschemestopromoteBHIMapp, includingcashback
schemeformerchants AadhaarPaytobelaunchedforpeoplewhodon’thavemobilephones Focusonruralandsemi‐urbanareas Tostrengthenfinancialinclusionfund Panelondigitalpaymentshasrecommendedstructuralreforms TocreatepaymentregulatoryboardatRBI
8.PublicServices
Touseheadpost‐officeforpassportservices Defence:centralizeddefencetravelsystemdeveloped Defence:Centralizedpensiondistributionsystemtobeestablished Govtrecruitment:Tointroducetwo‐tierexamsystem Govtlookstointroducelawstoconfiscateassetsofeconomicdefaulters High‐level panel chaired by PM to commemorateMahatmaGandhi’s 150th
birthanniversary
9.FiscalManagement
Totalbudgetexpenditure:Rs.210 crore Rs.3,000croretoimplementvariousbudgetannouncements Defenceexpenditureexcludingpensions:Rs.274crore Consolidatedoutcomebudgetforallministriesbeingcreated FiscaldeficitforFY18peggedat3.2%ofGDP RevenuedeficitforFY18at1.9%
10.
TaxAdministration
Directtaxcollectionnotcommensuratewithincome/expenditurepatternofIndia.
Wearelargelyataxnon‐compliantsociety,predominanceofcashinsocietyenablestaxevasion
Afterdemonetization,datareceivedwillincreasetaxnet Blackmoney:NocashtransactionsaboveRs.3lakh. Transparency in political funding: Parties continue to receive anonymous
donations;proposesystemofcleaningup Politicalfunding:Maximumamountofcashdonationthatcanbereceivedis
Rs 2,000; political parties can receive donations by cheques or digitally;amendmentproposedtoRBIActtoissueelectoralbonds;everypartyhastofilereturnswithinspecifiedtime
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S.N.
Themes KeyPoints
Personalincometax:Ratereducedto5%forincomebracketofRs.2.5‐5lakh;AllothercategoriestogetuniformbenefitofRs.12,500perperson;to levysurchargeonincomebracketRs.50lakh–Rs.1crore
Personalincometax:Tohavesimpleone‐pageformfortaxableincomeuptoRs5lakh
GST:preparednessofITsystemonschedule NotmanychangestoexcisedutiessinceGSTwillbeimplementedsoon FPIcategory1and2investorsexemptedfromindirecttransferprovisions Timeperiodofrevisingtaxreturnsreducedto12months Realestate:tomakechangesincapitalgainstax Concessional withholding rate will be extended to 30 June 2020, rupee‐
denominatedmasalabondstobeincluded MATnottobeabolishedatpresent;toallowcarry‐forwardfor15years Corporate tax rate: MSMEs’ rate (annual turnover less than Rs. 50crore)
reducedto25% LNG:Reducecustomsdutyto2.5% LimitofcashdonationforcharitabletrustscuttoRs.2,000.
Commonmanexpectationsvsactual
Expectationsweretopresentastandoutbudgetthatwouldnotjustintroduceanumberofreforms,butalso provide a lot of income tax exemptions to give relief to the wider public in the wake of theinconveniencecausedbyCentre’sde‐monetizationdrive.
ExpectationswerealsorifethattherewouldbeamajorannouncementonindirecttaxestoototakealotofweightoffthebeleagueredcorporateIndia’sshouldersandbringinmeasurestoeasetheconductofbusinessinIndia.
Letusseetheactualsagainsttheexpectations.AmeretaxreliefofRs.12,500acrosstheboard.TheFinanceMinisterwouldhavewontheheartsandmindsofthemiddleclasshadhecompletelysparedfromincometaxthosewhoseincomeisnotmorethanRs.5lakh.Indeed,apersonearninguptoRs.40,000permonthdeserves to be left untouchedby income tax.We hope the FinanceMinisterwillconsiderthisinhisnextbudget.
TheebullientteamofExactitudeshallbepleasedtoassistyouinidentifyingandanalyzingtheimpactof Union Budget 2017 on your business. Please do not hesitate to contact us for any clarification/detailedimpactanalysisascustomizedtoyou.
Sincerely;
TeamExactitude
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Contents
1. EconomicIndicators................................................................................................................................6
1.1. GDPgrowth.............................................................................................................................................................6
1.2. WPIandCPIgrowth..........................................................................................................................................13
1.3 IIPgrowth..............................................................................................................................................................14
2. SectoralPerformance..........................................................................................................................17
2.1. Agriculture............................................................................................................................................................17
2.2. BankingandNBFCs...........................................................................................................................................18
2.3. Education...............................................................................................................................................................19
2.4. DigitalEconomy..................................................................................................................................................20
2.5. Infrastructure......................................................................................................................................................21
3. TaxProposals..........................................................................................................................................22
3.1. DirectTaxProposals.........................................................................................................................................22
3.2. IndirectTaxProposals.....................................................................................................................................27
AnnexureI:ChangesinIndirectTaxes....................................................................................................................29
AboutExactitudeAdvisors:..........................................................................................................................................37
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1. ECONOMICINDICATORS
Theeconomyperformedwellasexpectedandremainedemergingduringthefiscalyear.Thesummaryonperformanceofthevariouseconomicindicatorsfollows:
1.1. GDPGROWTH
TheGDPgrowthratewasprojectedtoremain inbetween7.0‐7.75percent intheEconomicSurvey2015‐16.However,therealGDPgrowthratewas7.2percentinthefirsthalfandbelow7.6inthesecondhalf.Thus,theprojectedtargetwasachievedduetothefollowingmainreasons:
1. Themodestpick‐upinagriculturalgrowthonthebackofimprovedmonsoon.
2. The long‐awaited start of an export recovery due to acceleration in demand in some advancedcountries.
3. Moderationinindustrialandnon‐governmentservicesectors.
4. The economy was buoyed by government consumption, as the 7th Pay Commission salaryrecommendationswereimplemented.
5. Downtrendintheinflationcharacterizedbytwodistinctindices‐ConsumerPriceIndex(CPI)andWholesale Price Index (WPI). The inflation has narrowed considerably and hovered around 4.5percentto5percentfortheyear.Theoutlookintheyeartocomewillcontinuetobebelow5%i.e.RBI’stargetwhichwilllikelybesupportedbydemonetizationmovebytheGovernment.
TheGlobal economy remaining sluggishduring the last year facing considerableuncertainty, in theaftermath of major economic and political developments. The International Monetary Fund (IMF)estimatesthatworldGDPwillgrowby3.1%in2016and3.4%in2017.Theadvancedeconomiesareexpectedtoincreasetheirgrowthfrom1.6%to1.9%andtheemergingeconomiesfrom4.1%to4.5%.Anumberofemergingeconomiesaroundtheglobeisexpectedtorecoverin2017ascomparedto2016.Inthisracearoundtheworld,Indiaseemstobeplacedbetterandoneofthefastestgrowingeconomy.TheFinanceMinistryhasobservedIndianEconomytobeabrightspotintheWorldEconomy.
SectoralgrowthsinGDPinIndia
TheaveragesectorialGVAbysectoris:
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a. AgricultureAgriculture comprises of crops including fruits and vegetables and allied sectors consisting oflivestockproducts,forestryandfisheries.Thegrowthofagriculture&alliedsectorsimprovedsignificantlyin2016‐17,followingthenormalmonsooninthecurrentyearwhichwasprecededbysub‐parmonsoonrainfallin2014‐15and2015‐16.Highergrowthinagriculturesectorin2016‐17isattestedbythefirstadvanceestimatesofthekharifcropproductionfortheyear.
Exactitudeannotations:
AgriculturehasalwaysbeenanimportantsectorinthecontextofIndianeconomyasmajorofthepopulationaredependentonthissector.Thissectorhasbeensluggishovertheyearsbecauseofthehighdependencyonthetraditionalmethodsandnaturalmonsoons.
Adequate measures like the improvement in the farming methods, related development ofawarenessinthefarmers,irrigationfacilitiesetc.shouldbetakenbytheGovernmenttoincreasethe produce. The increase in population is not being counterbalanced by the increase in theagriculturalproducewhichisaserioussignoffooddeficit.
Insuchasituation,theGovernmentshouldannouncecertainpoliciesonthissectorinthebudgetlike:
1. Incentivestothefarmerslikeloansatconcessionalrates
2. Awarenessprogramsforthemodernfarmingtechniques
3. Incentives to the corporate houses who want to invest in allied services related to theagriculturelikesettingupirrigationfacilities,storageoftheproduce,transportationoftheproduceetc.
Average Sectoral outputto total output
Agriculture and allied
Industry*
Services
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These are nominal measures that the Government of India should take in order to save theeconomy.
Let’sanalysehowtheFinanceMinisterhasaddressedthissectorinhisbudget2017.
“Farmers”wasthefirstagendainthebudgetspeechbyHon’bleFinanceMinister.Heremindedthatthegovernmentwasstrivedtodoubletheincomeofthefarmersin5years.Thebudget2017isthebudgetofruraldevelopmentincludingagriculture.
Thekeyproposalsinthebudgetrelatingtoagricultureare:
Thetargetforagriculturalcreditin2017‐18hasbeenfixedatarecordlevelofRs.10lakhcrore.
Benefitfrom60days’interestwaiverannouncedbyHon’blePrimeMinisterinrespectoftheirloansfromthecooperativecreditstructure.
SupporttoNABARDforcomputerizationandintegrationofall63,000functionalPrimaryAgriculture Credit Societies (PACS) with the Core Banking System of District CentralCooperativeBanks.Thiswillbedonein3yearsatanestimatedcostofRs.1,900crore,with financialparticipation fromStateGovernments.Thiswillensureseamless flowofcredittosmallandmarginalfarmers.
The Fasal Bima Yojana launched by the Government is a major step towards theinsuranceofcrops.Thecoverageofthisschemewillbeincreasedfrom30%ofcroppedarea in2016‐17 to40% in2017‐18and50% in2018‐19.TheBudgetprovisionofRs.5,500croresforthisYojanain2016‐17wasincreasedtoRs.13,240croresin2016‐17tosettlethearrearclaims.For2017‐18,asumofRs.9,000croreshasbeenprovided.ThesuminsuredunderthisYojanahasmorethandoubledfromRs.69,000croresinKharif2015toRs.141,625croresinKharif2016.
ALongTermIrrigationFundalreadysetupinNABARDhasbeendoubledbyadditionof20,000croresbyHonorablePrimeMinistermakingthetotalcorpusofRs.40,000crores.
AdedicatedMicroIrrigationFundwillbesetupinNABARDtoachievethegoal‘perdropmorecrop’.TheFundwillhaveaninitialcorpusofRs.5,000crores.
Forthepost‐harvestphase,stepswillbetakentoenablefarmerstogetbetterpricesfortheirproduceinthemarkets.ThecoverageofNationalAgriculturalMarket(e‐NAM)willbeexpandedfromthecurrent250marketsto585APMCs.AssistanceuptoaceilingofRs.75lakhswillbeprovidedtoeverye‐NAMmarketforestablishmentofcleaning,gradingandpackagingfacilities.Thiswillleadtovalueadditionoffarmers’produce.
ADairyProcessingand InfrastructureDevelopmentFundwouldbesetup inNABARDwithacorpusofRs.8,000croreover3yearswhichwillprovideadditionalincomeforthefarmers.Initially,theFundwillstartwithacorpusofRs.2,000crores.
The above proposals shows the intention of the Government as farmer‐friendly andtowardssustainingthefoodsurplus.Theindustriesintotheirrigation,foodprocessing,microfinance,fruits,fertilizersetc.arelikelytogetadvantagesoftheseproposals.
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b. ServicesServiceSectorcomprisesofmorethanhalfoftheIndianEconomyandcontinuestoexpanditsshareintheeconomy.ThemajorgrowthinIndianeconomyascomparedtolastyearwascontributedbythissector.Asinthepreviousyears,theservicesectorcontinuedtobethedominantcontributortotheoverallgrowth of the economy, led by a significant pick‐up in public administration, defense & otherservicesthatwereboostedbythepayoutsoftheSeventhPayCommission.Consequently,thegrowthinservicesin2016‐17isestimatedtobeclosetowhatitwasin2015‐16.
Exactitudeannotations:
Service sector remains the back bone of the Indian Economy and ever increasing. The unionbudgetidentifiesthissectoraskeyforgrowthdriver.
Let’sanalysehowtheFinanceMinisterhasaddressedthissectorinhisbudget2017.
Thekeyproposalsinthebudgetrelatingtoserviceare:
Water:
Safedrinkingwatertoover28,000arsenicandfluorideaffectedhabitationsinthenextfouryears.ThiswillbeasubmissionoftheNationalRuralDrinkingWaterProgramme(NRDWP).
Educationandskills
Forimpartingnewskillstothepeopleintheruralareas,masontrainingwillbeprovidedto5lakhpersonsby2022,withanimmediatetargetoftrainingatleast20,000personsby2017‐18.
AnInnovationFundforSecondaryEducationwillbecreatedtoencouragelocalinnovationforensuringuniversalaccess,genderparityandqualityimprovement.ThiswillincludeICTenabledlearningtransformation.Thefocuswillbeon3479educationallybackwardblocks.
Reforms in the UGC. Good quality institutions would be enabled to have greateradministrativeandacademicautonomy.Collegeswillbeidentifiedbasedonaccreditationandranking,andgivenautonomousstatus.
LeverageinformationtechnologyandlaunchSWAYAMplatformwithatleast350onlinecourses.Thiswouldenable students tovirtually attend the courses taughtby thebestfaculty;accesshighqualityreadingresources;participateindiscussionforums;taketestsandearnacademicgrades.AccesstoSWAYAMwouldbewidenedbylinkagewithDTHchannels,dedicatedtoeducation.
EstablishaNationalTestingAgencyasanautonomousandself‐sustainedpremiertestingorganizationtoconductallentranceexaminationsforhighereducationinstitutions.Thiswould free CBSE, AICTE and other premier institutions from these administrativeresponsibilitiessothattheycanfocusmoreonacademics.
Housing
Affordablehousingwillnowbegiveninfrastructurestatus
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TheNationalHousingBankwill refinance individualhousing loansof aboutRs.20,000crorein2017‐18.Thankstothesurplusliquiditycreatedbyde‐monetization,theBankshavealreadystartedreducingtheirlendingrates,includingthoseforhousing.Inaddition,interestsubventionforhousingloanshasalsobeenannouncedbytheHonorablePrimeMinister.
Healthandsanitation
AnactionplantoeliminateKala‐AzarandFilariasisby2017,Leprosyby2018andMeaslesby2020.Eliminationoftuberculosisby2025isalsotargeted.
ActionplanhasbeenpreparedtoreduceIMRfrom39in2014to28by2019andMMRfrom167in2011‐13to100by2018‐2020.
1.5lakhHealthSubCenterswillbetransformedintoHealthandWellnessCenters.
Stepstocreateadditional5,000PostGraduateseatsperannum.Inaddition,stepswillbetakentorolloutDNBcoursesinbigDistrictHospitals;strengthenPGteachinginselectESI andMunicipal Corporation Hospitals; and encourage reputed Private Hospitals tostartDNBcourses.
Necessary steps for structural transformationof theRegulatory frameworkofMedicalEducationandPracticeinIndia.
TwonewAllIndiaInstitutesofMedicalScienceswillbesetupintheStatesofJharkhandandGujarat.
AmendmentintheDrugsandCosmeticsRulestoensureavailabilityofdrugsatreasonablepricesandpromoteuseofgenericmedicines.Newrulesforregulatingmedicaldeviceswill also be formulated. These rules will be internationally harmonised and attractinvestmentintothissector.Thiswillreducethecostofsuchdevices.
For senior citizens, Aadhar based Smart Cards containing their health details will beintroduced.Abeginningwillbemadethroughapilotin15districtsduring2017‐18.TheLIC will implement a scheme for senior citizens to provide assured pension, with aguaranteedreturnof8%perannumfor10years.
Tourism
Tourismisabigemploymentgeneratorandhasamultiplierimpactontheeconomy.FiveSpecialTourismZones,anchoredonSPVs,willbesetupinpartnershipwiththeStates.IncredibleIndia2.0Campaignwillbelaunchedacrosstheworld.
c. Industry
IndustrycomprisesofManufacturingandotherthreesegmentsi.e.(1)electricity,gas,watersupplyandrelatedutilities(2)Miningandquarryingand(3)Constructionactivities.After achievinga real growthof7.4per cent in termsofvalueadded in2015‐16, thegrowth inindustrialsector,comprisingmining&quarrying,manufacturing,electricity,gas&watersupply,and construction sectors moderated in 2016‐17. This is in tandem with the moderation in
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manufacturing,mostlyonaccountofasteepcontractionincapitalgoods,andconsumernon‐durablesegmentsofIndexofIndustrialProduction(IIP).Thecontractioninminingandquarryinglargelyreflectsslowdownintheproductionofcrudeoilandnaturalgas.However,theperformanceofindustrialsectorintermsofvalueaddedcontinuedtobeatvariancewithitsachievementsbasedonIIP.Theongoingmanufacturingrecovery inthecurrentyear isaidedbyrobustgrowthinpetroleumrefining, automobiles,wearingapparels, chemicals, electricalmachineryandwoodproductsandfurniture.Apartfrommanufacturing,theotherthreesegmentsoftheindustrysector,i.e.electricity,gas,watersupply and related utilities, mining and quarrying and construction activities, are witnessing adecelerationingrowth.Exactitudeannotations:
Industry remains a critical force in both developing and advanced economies. This sectorpromotesinnovation,productivityandemployment.
Thissectormustbefurtherpromotedbythepolicymakerinamorecomprehensivemannerwiththe understanding of the diverse industry segments in a national or regional economy. Thechangingtrendsgiverisetoinnovationandultimatelyproduction.
Let’sanalysehowtheFinanceMinisterhasaddressedthisinhisbudget2017.
Railwaybudget
Forthefirsttime,therailwaybudgethasbeenclubbedwiththefiscalbudget.Thetotaloutlay on the railwaydevelopment and capexhas beenpegged atRs. 131,000 crores.Thesewillbeusedtobuildthenecessaryinfrastructureandensurethefollowing:
(i) PassengerSafety(ii)Capitalanddevelopmentworks
(iii)Cleanlinesand(iv)Financeandaccountingreforms.
Forpassengersafety,aRashtriyaRailSanrakshaKoshwillbecreatedwithacorpusofRs.1 lakhcroresover aperiodof5 years.Besides seedcapital from theGovernment, theRailwayswillarrangethebalanceresourcesfromtheirownrevenuesandothersources.Governmentwill laydown clear cut guidelines and timeline for implementing varioussafetyworkstobefundedfromthisKosh.UnmannedlevelcrossingsonBroadGaugelineswillbeeliminatedby2020.Expertinternationalassistancewillbeharnessedtoimprovesafetypreparednessandmaintenancepractices.
Railway linesof3,500kmswill be commissioned in2017‐18, as against2,800kms in2016‐17.Stepswillbetakentolaunchdedicatedtrainsfortourismandpilgrimage.
Abeginninghasbeenmadewithregardtostationredevelopment.Atleast25stationsareexpectedtobeawardedduring2017‐18forstationredevelopment.500stationswillbemadedifferentlyabledfriendlybyprovidingliftsandescalators.
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It is proposed to feed about 7,000 stations with solar power in the medium term. Abeginninghasalreadybeenmadein300stations.Workswillbetakenupfor2,000railwaystationsaspartof1000MWsolarmission.
Thefocusisonswachhrail.SMSbasedCleanMyCoachServicehasbeenstarted.Itisnowproposed to introduce ‘CoachMitra’ facility, a singlewindow interface, to register allcoachrelatedcomplaintsandrequirements.By2019,allcoachesofIndianRailwayswillbefittedwithbiotoilets.PilotplantsforenvironmentfriendlydisposalofsolidwasteandconversionofbiodegradablewastetoenergyarebeingsetupatNewDelhiandJaipurrailwaystations.Fivemoresuchsolidwastemanagementplantsarenowbeingtakenup.
Railwayswilloffercompetitiveticketbookingfacilitytothepublicatlarge.Servicechargeone‐ticketsbookedthroughIRCTChasbeenwithdrawn.Cashlessreservationshavegoneupfrom58%to68%.
Aspartofaccountingreforms,accrualbased financial statementswillbe rolledoutbyMarch2019.
Transportation
Forthissectorasawhole,includingrail,roads,shipping,theGovernmenthasprovidedRs.241,387croresin2017‐18.
Thisisahugeinvestmentthatwillspurahugeamountofeconomicactivityacrossthecountryandcreatemorejobopportunities.
Telecomandcommunications
Therecentspectrumauctionshaveremovedspectrumscarcityinthecountry.ThishasgivenamajorfilliptomobilebroadbandandDigitalIndiaforthebenefitofpeoplelivingin rural and remote areas. This has been a considerable achievement of the currentgovernment.
Under theBharatNetProject,Optical Fibrehasbeen laidon155,000kms.ThebudgetallocationforBharatNetProjecthasbeenextendedtoRs.10,000croresin2017‐18.Bytheendof2017‐18,highspeedbroadbandconnectivityonopticalfibrewillbeavailableinmorethan150,000grampanchayats,withwifihotspotsandaccesstodigitalservicesatlowtariffs.ADigi‐Gaoninitiativewillbelaunchedtoprovidetele‐medicine,educationandskillsthroughdigitaltechnology.
Energy
GovernmenthasdecidedtosetupStrategicCrudeOilReserves.Inthefirstphase,3suchReserves facilitieshavebeensetup.Nowin thesecondphase, it isproposedtosetupcavernsat2morelocations,namely,ChandikholeinOdishaandBikanerinRajasthan.Thiswilltakeourstrategicreservecapacityto15.33MMT.
ThefinanceministerhasproposedtotakeupthesecondphaseofSolarParkdevelopmentforadditional20,000MWcapacity.
Manufacturing
The government is committed to create an eco‐system tomake India a global hub forelectronicsmanufacturing.
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Over250investmentproposalsforelectronicsmanufacturinghavebeenreceivedinthelast2years,totalinganinvestmentofRs.1.26lakhcrores.
AnumberofgloballeadersandmobilemanufacturershavesetupproductionfacilitiesinIndia.IhavethereforeexponentiallyincreasedtheallocationforincentiveschemeslikeM‐SIPSandEDFtoRs.745croresin2017‐18.
1.2. WPIANDCPIGROWTH
TheinflationwasundercontrolasmeasuredbytheConsumerPriceIndex(CPI)andwholesalePriceIndex.TheaverageCPIinflationdeclinedto4.9percentin2015‐16from5.9percentin2014‐15.Itwas4.8per cent during April‐ December 2016. Inflation hardened during the first fewmonths of 2016‐17,mainlyduetoupwardpressureonthepricesofpulsesandvegetables.Itdippedtotwo‐yearlowof3.4percentinDecember2016asaresultoflowerprices,especiallyoffooditems.Theaverageinflationbasedonthewholesalepriceindex(WPI)declinedto(‐)2.5percentin2015‐16from2.0percentin2014‐15.Thedownwardtrend,howeverreversedduringthecurrentfinancialyearpartlydueto impactofrise inglobalcommoditypricesandpartlyowingtoadversebaseeffect.Theglobalcommodityandenergypriceshaveincreasedby18percentand23percentrespectivelyinthefirstelevenmonthsof2016asperIMFpriceindices.TheWPIinflationstoodat3.4percentinDecember2016andtheaverageinflationwas2.9percentduringApril‐December2016.ThemovementinCPIandWPIbasedinflationcanbeshowninthefollowingdiagram:
(Source:EconomicSurveypublishedbyMinistryofFinance)
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FoodInflationTheinflationinIndiacontinuestobedrivenbynarrowgroupoffooditems.a. Pulsescontinuedtobethemajorcontributoroffoodinflation.Thepricesofpulses,inparticularTur
andUrad,remainedhighduetoshortfallindomesticandglobalsupply.PostJuly2016,pulsespricesexceptGramDalpriceshavebeendecliningowingtonearnormalmonsoon,increaseintheRabipulsessowingandbufferbuildupbytheGovernment.
b. Sugar prices also firmed up on account of lower production and hardening of price in the
internationalmarket.
c. Vegetableprices,whichflaredduringtheleansummerseason,havealsodeclinedsharplyassupplypickedupduringthepostmonsoonandwinterseason.
TheCPIfoodinflation(CFPI)has,asaresult,dippedtoatwo‐yearlowof1.4percentinDecember2016.Theinflationforpulses&productsdippedtonegative1.6percentinDecember2016,andthevegetablesinflationremainednegativesinceSeptember2016.Thus, the food inflation controlled in the later of the year contributed a lot in checking the overallinflationrate.CPIbasedCoreInflationTheCPIbasedcoreinflationexclusiveoffoodandfuelgrouphasremainedstickyduringthisfiscalyearandremainedatanaverageof5%.Inflation for Pan, tobacco & intoxicants, Clothing & footwear, Housing and Education groupscontinuedtobeabove5percentandthemajorcontributorsofthecoreinflation.Inflationforthe‘Transport&communication’grouphasbeenrisinginrecentmonthspartlyreflectingriseinglobalcrudeoilpricesanditspass‐throughtodomesticpetrolanddieselprices.Priceofcrudeoil(Indianbasket)hasincreasedfrom$39.9inApril2016to$52.7inDecember2016.Likewise, comparatively higher Gold price in the international market this financial year hascontributedtowardsstickycoreinflation.
Alltheseproductsandproductgroupscombinedtogethermaintainedtheinflation.
1.3 IIPGROWTH
TheIndexofIndustrialProduction(IIP)providesquickestimatesoftheperformanceofkeyindustrialsectors.Thisindicatorsuggeststhattheperformanceofkeyindustrialsectorhasshownbelowaverageperformancewithsomesectorperformingwellandsomesectorperformingnegative.Let’shavealookatthebelowdiagramcomprisingoftheindexandbreak‐upofindexaccordingtothesectoranduse.
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2014‐15 2015‐16 April‐Nov.
2015‐16April‐Nov.2016‐17
Generalindex 2.8 2.4 3.8 0.4Sectorbasedclassification Mining 1.5 2.2 2.1 0.3Manufacturing 2.3 2 3.9 ‐0.3Electricity 8.4 5.7 4.6 5Use‐basedclassification Basicgoods 7 3.6 3.9 4.1CapitalGoods 6.4 ‐2.9 4.7 ‐18.9Intermediategoods 1.7 2.5 2 3.4Consumergoods ‐3.4 3 4.1 1.8Durables ‐12.6 11.3 11.8 6.9Non‐durables 2.8 ‐1.8 ‐0.5 ‐1.8
(Source:CSO)
As per CSO data, the industrial sector (which broadly comprises ofmining,manufacturing andelectricity)attained0.4percentgrowthduringApril‐November2016‐17ascomparedto3.8percentduringthesameperiodof2015‐16duetothehighergrowthingenerationofelectricity.Theminingandmanufacturingsectorshowedverymoderate.
In terms of use‐based classification, basic goods, intermediate goods and consumer durable goodsattainedmoderategrowth.Conversely,theproductionofcapitalgoodsdeclinedsteeplyandconsumernondurablegoodssectorssufferedamodestcontractionduringApril‐November2016‐17.
Let’shavealookatthecomparisonontheperformanceofvarioussectors(basedonuse).
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The eight core infrastructure supportive industries, coal, crude oil, natural gas, refinery products,fertilizers,steel,cementandelectricitythathaveatotalweightofnearly38percentintheIIP,registeredacumulativegrowthof4.9percentduringApril‐November2016‐17ascomparedto2.5percentduringApril‐November2015‐16.Month‐wiseperformanceoftheeightcoresectorsshowsthattheproductionofrefineryproducts,fertilizers,steel,electricityandcementhaveincreasedsubstantially,whilethatofcrudeoilandnaturalgashavefallen.Coalproductionattainedlowergrowthduringthesameperiod.
Most indicators of infrastructure related activities showed expansion during first half of 2016‐17.Thermalpowerwithagrowthof6.9percentboostedoverallpowergenerationwhilehydroandnuclearpowergenerationcontractedmarginallyduringApril‐September2016.
Exactitudeannotations:
TheperformanceofoverallIIPisbelowtheaverageandatverylowlevelascomparedtothelastyearwhichhadshownsomegoodsignsofrecoverydespitethevariationsintheperformanceofsomeofthemajorindustriesduringApril‐November2016.Theseindicatorsshowthenegativetrajectoryfortheperformancesandthegovernmentshouldtakethenecessarystepstoboosttheindustrialoutput.TheGovernmenthasprovidedvariousschemestoboosttheindustrialproductionlikeMake‐in‐India,InvestIndia,StartUpIndiaande‐bizMissionModeProjectundertheNationale‐GovernancePlan.However,theseschemesarenotworkingatparthewayitworkedthelastyear.
-20
-15
-10
-5
0
5
10
15
IIP Comparison (Use based)
April-Nov. 2015-16 April-Nov. 2016-17
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2. SECTORALPERFORMANCE
2.1. AGRICULTURE
The farmers,agriculture and ruralpopulation was thelimelight of theBudget 2017. Theindustryexpertshavealso termed thebudget as “Budget ofthe Rural Economy”.With the continuingthrust of Hon’bleFinance Minister ondoublingthe farmer’sincome by 2022, hehas taken severalpolicy decisions toboostthefarming.Withtheproposedincentives,thesectorisexpectedtogrowat4.1%.
WehavebroadlydiscussedthemajorproposalsgivenbytheFinanceBudget2017ontheAgriculturalSectorinSection1.1(a).
TheagriculturerelatedcompanieslistedonStockExchangeswelcomedthesebudgetproposalswithcheer.ThesecompaniesbelongtothecategoriesofIrrigation,Fertilizers,Seeds,rice,foodprocessingetc.Itisexpectedthattheseproposalswillprovidefurtherimpetustoboosttheruraldemand.
ExactitudeAnnotations:Theunionbudgethasaimedtogiveabigpushtoagriculturalreformsbyextendingthehugefarmcredit and offering the crop insurance much higher. National Bank for Agriculture and RuralDevelopment(NABARD),anapexruralbank,hasbeenentrustedwithmoreschemestofacilitatethesetupofnewdairysectorandirrigationfund.
However,thegovernmentmustensuretheseamlessflowofthecredittothefarmerstoachievetheresultsthefinanceministerwishedtospellout.
Also,asperthefinanceminister,amodellawoncontractfarmingwillbecirculatedamongstatestohelpfarmersgetbettervaluefortheirproduce.Additionally,hereiteratedthegovernment’searliergoalofbringinginmoreregulatedagriculturemarketsontheelectronicNationalAgricultureMarket(e‐NAM)platform.Thesekindofschemesshouldbeimplementedattheearliestbythegovernment,at the backdrop of impact of demonetizationwhich has resulted into the crash of the prices ofvegetables,fruitsandpulses.
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2.2. BANKINGANDNBFCS
The Government has alreadyundertaken substantivereforms in FDI policy in thelasttwoyears.Morethan90%of the total FDI inflows arenow through the automaticroute. The government feelsthatithasnowreachedastagewhereFIPBcanbephasedout.ThereforethegovernmenthasdecidedtoabolishtheFIPBin2017‐18. A roadmap for thesamewillbeannouncedinthe
next fewmonths. In the meantime, further liberalization of FDI policy is under consideration andnecessaryannouncementswillbemadeinduecourse.
Thereareotherreformsproposedbythefinanceministerinthefinancialsectorwhichcanbeevidencedbythebelowpoints:
In line with the ‘Indradhanush’ roadmap, the government has provided Rs. 10,000 crores forrecapitalisationofBanksin2017‐18.Additionalallocationwillbeprovided,asmayberequired.
Anexpertcommitteewillbeconstitutedtostudyandpromotecreationofanoperationalandlegalframeworktointegratespotmarketandderivativesmarketforcommoditiestrading.e‐NAMwouldbeanintegralpartofsuchframework.
Chit fundschemeshavebeenexploiting thepooranduneducatedpeople since long.There isanurgent need to protect the poor and gullible investors from another set of dubious schemes,operatedbyunscrupulousentitieswhoexploittheregulatorygapsintheMultiStateCooperativeSocietiesAct,2002.ThisActwillbeamendedinconsultationwithvariousstakeholders.
Thebillrelatingtoresolutionoffinancialfirmswillbeintroduced.TogetherwiththeInsolvencyandBankruptcyCode,aresolutionmechanismforfinancialfirmswillensurecomprehensivenessoftheresolutionsysteminourcountry.
AComputerEmergencyResponseTeamforourFinancialSector(CERT‐Fin)willbeestablished.Thisentitywillworkinclosecoordinationwithallfinancialsectorregulatorsandotherstakeholders.
TheGovernmentwillputinplacearevisedmechanismandproceduretoensuretimeboundlistingofidentifiedCPSEsonstockexchanges.Thedisinvestmentpolicyannouncedinthelastbudgetwillcontinue.ThesharesofRailwayPSEslikeIRCTC,IRFCandIRCONwillbelistedinstockexchanges.
Thegovernmenthasproposedtocreateanintegratedpublicsector‘OilMajor’whichwillbeabletomatchtheperformanceofinternationalanddomesticprivatesectoroilandgascompanies.
ThelendingtargetunderthePRADHANMANTRIMUDRAYOJNAhasbeenproposedtobedoubledfrom2015‐16targetandissetatRs.2.44lakhcrore.
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Bankingstocksralliedimmediatelyafterthefinanceministerendedhisbudgetspeech.
ExactitudeAnnotations:UnionBudget2017hasofferedmorethanexpectedbytheindustry.HugeInfrastructurespending,big push to affordable housing and tax concession on the provision for bad loans were the keyproposalswhichwillbenefittheentirebankingsystem.The recent demonetization scheme has offered significant liquidity to the banking system andsignificantpotentialforriseincreditline.ThebudgethassetasideonlyRs.10,000croreforbankrecapitalization,lowerthantheRs.25,000croreinthepreviousbudget.Asperthebestestimatesavailable,PSUBankswouldneedadditionalcapitalofuptoRs240,000croreby2018tomeettheBaselIIIcapitaladequacynorms,putinplacetoguardagainstarepeatofthesituationfollowingthe2008USfinancialcrisis.The25,000croresoffundsarefarbelowtheactualrequirementoffunds.However,itwillstillprovidesomerelieftothebanks.The recovery of banking sector is now dependent on the Banks Board Bureau (BBB) that willrecommendappointmentofdirectorsinPSBsandadviceonwaysofraisingfundsanddealingwithstressedassets.
2.3. EDUCATION
Union budget2017 hasproposedseveralrevolutionarymeasures toboost thequality ofeducation andextend thereach ofeducation tolarger sectionsof thepopulation.Some of thekey measuresareasbelow:
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A systemofmeasuring annual learning outcomes in our schools. Emphasiswill be given onscienceeducationandflexibilityincurriculumtopromotecreativitythroughlocalinnovativecontent.
AnInnovationFundforSecondaryEducationwillbecreatedtoencouragelocalinnovationforensuringuniversalaccess,genderparityandqualityimprovement.ThiswillincludeICT‐enabledlearningtransformation.Thefocuswillbeon3,479educationallybackwardblocks.
ThegovernmentplanstoreformtheUGC.Goodqualityinstitutionswouldbeenabledtohavegreater administrative and academic autonomy. Colleges will be identified based onaccreditationandranking,andgivenautonomousstatus.Arevised frameworkwillbeput inplaceforoutcome‐basedaccreditationandcredit‐basedprogrammes.
Byleveraginginformationtechnology,thegovernmentwill launchSWAYAMplatformwithatleast350onlinecourses.Thiswouldenablestudentstovirtuallyattendthecoursestaughtbythebestfaculty;accesshigh‐qualityreadingresources;participateindiscussionforums;taketestsandearnacademicgrades.Access toSWAYAMwouldbewidenedby linkagewithDTHchannels,dedicatedtoeducation.
ANationalTestingAgencywill be established as an autonomous and self‐sustainedpremiertestingorganizationtoconductallentranceexaminationsforhighereducationinstitutions.Thiswould free CBSE, AICTE and other premier institutions from these administrativeresponsibilitiessothattheycanfocusmoreonacademics.
ExactitudeAnnotations:Theunionbudget2017hastriedtobringsomemajorreformstotheeducationsystem.However,thesereformsareforthehighereducationonlyanddoesnotfindplaceforprimaryeducation.Thegovernmentshouldhavebroughtmoreinclusivepoliciestoboosttheprimaryeducationinacountry like Indiawheremajorchunkofpopulationarebased in ruralwhich lacks thebetterschoolandbetterteachers.In the view of above, the budget will benefit only a select few children in higher education,deprivingmillionsofchildrenfromtheiruniversalrightstoeducation.
2.4. DIGITALECONOMY
Promotion of a digital economy is an integral part ofGovernment’sstrategytocleanthesystemandweedoutcorruption and black money. It has a transformativeimpactintermsofgreaterformalizationoftheeconomyandmainstreamingof financialsavings into thebankingsystem. This, in turn, is expected to energies privateinvestment in the country through lower cost of credit.Indiaisnowonthecuspofamassivedigitalrevolution.Ashifttodigitalpaymentshashugebenefitsforthecommonman.
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The BHIM app has been launched. It will unleash the power of mobile phones for digitalpaymentsandfinancialinclusion.TheGovernmentwilllaunchtwonewschemestopromotetheusageofBHIM; theseare,ReferralBonusScheme for individualsandaCashbackScheme formerchants.
AadharPay,amerchantversionofAadharEnabledPaymentSystem,willbelaunchedshortly.Bankshavetargetedtointroduceadditional10lakhnewPoSterminalsbyMarch2017.Theywillbeencouragedtointroduce20lakhAadharbasedPoSbySeptember2017.
Increased digital transactions will enable small and micro enterprises to access formal credit.Governmentwill encourageSIDBI to refinancecredit institutionswhichprovideunsecured loans,atreasonableinterestrates,toborrowersbasedontheirtransactionhistory.
ExactitudeAnnotations:In the current budget, the underlying theme of the government has been the digitization ofeconomy,bringingdownthecashtoGDPratioandgreaterfinancialinclusion.Thegovernmentseekstocreateanew‘normal’whereintheGDPwouldbebigger,cleanerandreal.ThisexerciseispartofourGovernment’sresolvetoeliminatecorruptionandblackmoney.Thefocusonthedigitizationofeconomyandfinancialinclusionofthemarginalizedisalsocommendable.
2.5. INFRASTRUCTURE
The infrastructure is one of the top priority sector under the union budget. A huge push in theinfrastructurespendingwillboosttheruraldemandandcreatetheemploymentopportunitiesforlarger
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sectionsofthesociety.Eventheinternationalcommunityhaspraisedthehugeallocationtowardsinfraspendswhichwillspurtheruraldemandandconsumptioninthemediumterm.
We have discussed many budget proposals relating to Infra in Section 1.1 (c). Some of the otherproposalsareasbelow:
In the road sector, the governmenthas steppedup theBudget allocation forhighways fromRs.57,976croreinBE2016‐17toRs.64,900croresin2017‐18.2,000kmsofcoastalconnectivityroadshavebeenidentifiedforconstructionanddevelopment.Thiswillfacilitatebetterconnectivitywithportsandremotevillages.Thetotallengthofroads,includingthoseunderPMGSY,builtfrom2014‐15tillthecurrentyearisabout140,000kmswhichissignificantlyhigherthanpreviousthreeyears.
Aspecificprogrammefordevelopmentofmulti‐modallogisticsparks,togetherwithmultimodaltransportfacilities,willbedrawnupandimplemented.
AnewandrestructuredCentralscheme,namely,TradeInfrastructureforExportScheme(TIES)willbelaunchedin2017‐18withanaimtomakeourexportinfrastructureofinternationalstandards.
ExactitudeAnnotations:AtotalallocationforinfrastructuredevelopmentamountingtoRs.396,135croresissignificantspend and may spur huge growth opportunities employment and rural consumption. Fortransportationsectorasawhole,includingrail,roads,shipping,theGovernmenthasprovidedRs.241,387croresin2017‐18.Thismagnitudeofinvestmentwillspurahugeamountofeconomicactivityacrossthecountryandcreatemorejobopportunities.Thepresentationofrailbudgetaspartofthegeneralbudgetisawelcomemove.Itbringsmoreaccountabilityandisinapositiontosynergizetheinvestmentinrailways,road,waterwaysandcivilaviation.
3. TAXPROPOSALS
3.1. DIRECTTAXPROPOSALS
A. RatesofIncomeTax TaxratefortheslabRs.2.5lakhtoRs.5lakhhasbeenreducedfrom10%to5%. Existing rebateofRs5,000 for taxpayershaving taxable incomeofup toRs5 lakhhasbeen
reducedtoRs2,500andonlyfortaxpayershavingtaxableincomeofuptoRs3.5lakh. Surchargeof10%hasbeenintroducedforTaxpayerhavingtaxableincomeofRs.50lakhto1
crore.
B. AdditionalResourceMobilization Withaviewtoensurehorizontalequityamongallcategoriesoftaxpayersderivingincomefrom
dividend,itisproposedtoamendsection115BBDAsoastoprovidethattheprovisionsofsaidsectionshallbeapplicabletoallresidentassesseesexceptdomesticcompanyandcertainfunds,trusts,institutions,etc.
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Inordertowidenthescopeoftaxdeductionatsource,itisproposedtoinsertanewsection194‐IBintheActtoprovidethatIndividualsoraHUF(otherthanthosecoveredunder44ABoftheAct),responsibleforpayingtoaresidentanyincomebywayofrentexceedingfiftythousandrupeesforamonthorpartofmonthduringthepreviousyear,shalldeductanamountequaltofivepercentofsuchincomeasincome‐taxthereon.
C. MeasuresforPromotingAffordableHousingandRealEstateSector Withaviewtopromotethereal‐estatesectorandtomakeitmoreattractiveforinvestment,it
isproposedtoamendsection2(42A)oftheActsoastoreducetheperiodofholdingfromtheexisting36monthsto24monthsincaseofimmovableproperty,beinglandorbuildingorboth,toqualifyaslongtermcapitalasset.
Inorder topromote thedevelopment of affordablehousingsector, it isproposed toamendsection80‐IBAsoastoprovidethefollowingrelaxations:—
a. Thesizeofresidentialunitshallbemeasuredbytakingintoaccountthe"carpetarea"asdefinedinRealEstate(RegulationandDevelopment)Act,2016andnotthe"built‐uparea".
b. Therestrictionof30squaremetersonthesizeofresidentialunitsshallnotapplytotheplacelocatedwithinadistanceof25kmsfromthemunicipallimitsoftheChennai,Delhi,KolkataorMumbai.
c. Theconditionofperiodofcompletionofprojectforclaimingdeductionunderthissectionshallbeincreasedfromexistingthreeyearstofiveyears.
CertainTaxincentivehasbeenintroducedforthedevelopmentofcapitalofAndhraPradesh
Special provisions has been inserted for computation of capital gains in case of jointdevelopmentagreement:
ShiftingofBaseyear:Section55oftheActhasbeenamendedsoastoprovidethatthecostofacquisitionofanassetacquiredbeforeApril1,2001shallbeallowedtobetakenasfairmarketvalueasonApril1,2001andthecostofimprovementshallincludeonlythosecapitalexpenseswhichareincurredafterApril1,2001
Section54EChasbeenamendedsoastoprovidethatinvestmentinanybondredeemableafterthree years which has been notified by the Central Government in this behalf shall also beeligibleforexemption..
Wherethehousepropertyconsistingofanybuildingandlandappurtenanttheretoisheldasstock‐in‐tradeandthepropertyoranypartofthepropertyisnotletduringthewholeoranypartofthepreviousyear,theannualvalueofsuchpropertyorpartoftheproperty,fortheperiodupto one year from the end of the financial year in which the certificate of completion ofconstructionofthepropertyisobtainedfromthecompetentauthority,shallbetakentobenil.
D. MeasuresforStimulatingGrowth
ExtensionofeligibleperiodofconcessionaltaxrateoninterestincaseofExternalCommercialBorrowingandExtensionofbenefittoRupeeDenominatedBonds.
Eligibleperiodofconcessionaltaxrateundersection194LDhasbeenextended
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Carryforwardandsetoffoflossincaseofstart‐upcompanies:InordertofacilitateeaseofdoingbusinessandtopromotestartupIndia,itisproposedtoamendsection79oftheActtoprovidethatwhereachangeinshareholdinghastakenplaceinapreviousyearinthecaseofaprivatecompany,andbeinganeligiblestart‐up,lossshallbecarriedforwardandsetoffagainsttheincomeofthepreviousyearwithcertainconditions.
Theperiodforclaimingdeductionbystart‐upshasbeenextendedfromfiveyearstosevenyears.
TaxcreditforMinimumAlternateTaxandAlternateMinimumTaxshallnotbeallowedtobecarriedforwardtosubsequentyeartotheextentsuchcreditrelatestothedifferencebetweentheamountofforeigntaxcredit(FTC)allowedagainstMAT/AMTandFTCallowableagainstthetaxcomputedunderregularprovisionsofActotherthantheprovisionsrelatingtoMAT/AMT.
Scopeofsection43DtoCo‐operativeBankshasbeenextended
Deductionlimitinrespectofprovisionforbadanddoubtfuldebtshasbeenextendedto8.5%ofthetotalincome.
E. PromotingDigitalEconomy
Section80Ghasbeenamendedsoastoprovidethatnodeductionshallbeallowedunderthesection80Ginrespectofdonationofanysumexceedingtwothousandrupeesunlesssuchsumispaidbyanymodeotherthancash.
where an assessee incurs any expenditure for acquisition of any asset in respect which apaymentoraggregateofpaymentsmadetoaperson inaday,otherwise thanbyanaccountpayeechequedrawnonabankoraccountpayeebankdraftoruseofelectronicclearingsystemthroughabankaccount,exceedstenthousandrupees,suchexpenditureshallbeignoredforthepurposesofdeterminationofactualcostofsuchasset.
Inordertodis‐incentivizecashtransactions,itisproposedtoamendtheprovisionofsection40AoftheActtoprovidethefollowing:
a. ToreducetheexistingthresholdofcashpaymenttoapersonfromRs.20,000toRs.10,000;
b. Deeming a payment as profits and gains of business of profession if the expenditure isincurredinaparticularyearbutthecashpaymentismadeinanysubsequentyearofasumexceedingtenthousandrupeestoapersoninasingleday;and
c. Furtherexpandthespecifiedmodeofpaymentunderrespectivesub‐sectionofsection40Afromanaccountpayeechequedrawnonabankoraccountpayeebankdrafttobyanaccountpayeechequedrawnonabankoraccountpayeebankdraftoruseofelectronicclearingsystemthroughabankaccount.
Existingrateofdeemedtotalincomeofeightpercenthasbeenreducedtosixpercentinrespectoftheamountofsuchtotalturnoverorgrossreceiptsreceivedbyanaccountpayeechequeoraccountpayeebankdraftoruseofelectronicclearingsystemthroughabankaccount.
Section269SThasbeeninsertedintheActtoprovidethatnopersonshallreceiveanamountofthreelakhrupeesormore,—
i. inaggregatefromapersoninaday;
ii. inrespectofasingletransaction;or
iii. inrespectoftransactionsrelatingtooneeventoroccasionfromaperson,
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otherwisethanbyanaccountpayeechequeoraccountpayeebankdraftoruseofelectronicclearingsystemthroughabankaccount.
F. TransparencyinElectoralFunding
Inordertodiscouragethecashtransactionsandtobringtransparencyinthesourceoffundingtopolitical parties, it is proposed to amend the provisions of section 13A to provide for additionalconditionsforavailingthebenefitofthesaidsectionwhichareasunder:
a. NodonationsofRs.2,000ormoreisreceivedotherwisethanbyanaccountpayeechequedrawnonabankoranaccountpayeebankdraftoruseofelectronicclearingsystemthroughabankaccountorthroughelectoralbonds,
b. Politicalpartyfurnishesareturnofincomeforthepreviousyearinaccordancewiththeprovisionsofsub‐section(4B)ofsection139onorbeforetheduedateundersection139.
G. EaseofdoingBusiness
Section9hasbeenamendedsoastoclarifythattheExplanation5shallnotapplytoanyassetorcapitalassetmentionedthereinbeinginvestmentheldbynon‐resident,directlyorindirectly,inaForeign Institutional Investor, as these entities are regulated and broad based. The proposedamendmentisclarificatoryinnature.
Conditionsofspecialtaxationregimeforoffshorefundsundersection9Ahasbeenmodified.
IncomeofForeignCompanyfromsaleofleftoverstockofcrudeoilfromstrategicreservesattheexpiryofagreementorarrangementhasbeenexempted.
EnablingofFilingofForm15G/15H(self‐declaration) forcommissionpaymentsspecifiedundersection194D
ThethresholdlimitofincomeandsalesturnoverformaintenanceofbooksofaccountsincaseofIndividualsandHinduundividedfamilyunderSection44AAhasbeenincreasedfromRs.120,000toRs.250,000andfromRs.1,000,000toRs.2,500,000.
Personswhodeclaresprofitforthepreviousyearinaccordancewiththeprovisionsofsub‐section(1) of section 44AD and his total sales, total turnover or gross receipts, as the casemay be, inbusinessdoesnotexceedtwocrorerupeesinsuchpreviousyear,areexcludedfromrequirementofauditofbooksofaccountsundersection44AB.
Section194Jhasbeenamendedtoreducetherateofdeductionoftaxatsourcetotwopercentfromtenpercent,incaseofpaymentsreceivedorcreditedtoapayee,beingapersonengagedonlyinthebusinessofoperationofcallcenter.
Expenditureinrespectofwhichpaymenthasbeenmadebytheassesseetoapersonreferredtoinundersection40A(2)(b)aretobeexcludedfromthescopeofsection92BAoftheAct
Wherethetotal incomeoftheassesseeincludesanyincomefromtransferofcarboncredit,suchincomeshallbetaxableattheconcessionalrateoftenpercent(plusapplicablesurchargeandcess)onthegrossamountofsuchincome.NoexpenditureorallowanceinrespectofsuchincomeshallbeallowedundertheAct.
The assessee who declares profits and gains in accordance with presumptive taxation regimeprovidedundersection44ADAshallalsobeliabletopayadvancetaxinoneinstalmentonorbeforethe15thofMarch.
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ExtensionofcapitalgainexemptiontoRupeeDenominatedBonds.
Fortheassessmentyear2018‐19,thetimelimitformakinganassessmentorderundersections143or144shallbereducedfromexistingtwenty‐onemonthstoeighteenmonthsfromtheendoftheassessmentyear,and fortheassessmentyear2019‐20andonwards, thesaidtime limitshallbetwelve months from the end of the assessment year in which the incomewas first assessable.Furthersuchrationalizationhasbeenproposedincaseofvariousotherassessmentcases.
H. Anti‐abuseMeasures
ExemptionunderSection10(38)forincomearisingontransferofequityshareacquiredoronafter1stdayofOctober,2004shallbeavailableonlyiftheacquisitionofshareischargeabletoSecuritiesTransactions Tax under Chapter VII of the Finance (No 2) Act, 2004. However, to protect theexemptionforgenuinecaseswheretheSecuritiesTransactionsTaxcouldnothavebeenpaidlikeacquisitionofshareinIPO,FPO,bonusorrightissuebyalistedcompanyacquisitionbynon‐residentinaccordancewithFDIpolicyoftheGovernmentetc.,itisalsoproposedtonotifytransfersforwhichtheconditionofchargeabilitytoSecuritiesTransactionsTaxonacquisitionshallnotbeapplicable.
Anewsection50CAhasbeeninsertedtoprovidethatwhereconsiderationfortransferofshareofacompany (other than quoted share) is less than the Fair Market Value (FMV) of such sharedeterminedinaccordancewiththeprescribedmanner,theFMVshallbedeemedtobethefullvalueofconsiderationforthepurposesofcomputingincomeunderthehead"Capitalgains".
ScopeofSection56hasbeenwidenedtotaxreceiptofmoneyexceedingRs.50,000whichiswithoutinadequateconsideration.
Inordertoensurethatreturnisfiledwithinduedate,itisproposedtoinsertanewsection234FintheActtoprovidethata feefordelayinfurnishingofreturnshallbe leviedforassessmentyear2018‐19andonwardsinacasewherethereturnisnotfiledwithintheduedatesspecifiedforfilingofreturnundersub‐section(1)ofsection139.Theproposedfeestructureisasfollows:—
a. afeeoffivethousandrupeesshallbepayable,ifthereturnisfurnishedaftertheduedatebutonorbeforethe31stdayofDecemberoftheassessmentyear;
b. afeeoftenthousandrupeesshallbepayableinanyothercase.
However,inacasewherethetotalincomedoesnotexceedfivelakhrupees,itisproposedthatthefeeamountshallnotexceedonethousandrupees.
Inordertoensurethatthepersonfurnishingreportorcertificateundertakesduediligencebeforemaking suchcertification, it isproposed to insert anewsection271J soas toprovide that if anaccountantoramerchantbankeroraregisteredvaluer,furnishesincorrectinformationinareportorcertificateunderanyprovisionsoftheActortherulesmadethereunder,theAssessingOfficerortheCommissioner (Appeals)maydirecthimtopayasumof tenthousandrupees foreachsuchreportorcertificatebywayofpenalty.
I. RationalizationMeasures
Section115JBisamendedsoastoprovidetheframeworkforcomputationofbookprofitforIndAScompliantcompaniesintheyearofadoptionandthereafter. Themainfeaturesofthisproposedframeworkhasbeenguidedinthebudget.
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Various rationalization of provisions have been proposed in view of applicability of Ind AS onvariousentities.
Section71oftheActrelatestoset‐offoflossfromoneheadagainstincomefromanother.Inlinewiththeinternationalbestpracticesitisproposedtoinsertsub‐section(3A)inthesaidsectiontoprovidethatset‐offoflossunderthehead"Incomefromhouseproperty"againstanyotherheadofincomeshallberestrictedtotwolakhrupeesforanyassessmentyear.However,theunabsorbedlossshallbeallowedtobecarriedforwardforset‐offinsubsequentyearsinaccordancewiththeexistingprovisionsoftheAct.
Explanation to sub‐section (1) and to sub‐section (1A) of section 132 and to sub‐section (1) ofsection132Ahasbeeninsertedtodeclarethatthe'reasontobelieve'or'reasontosuspect',asthecasemaybe,shallnotbedisclosedtoanypersonoranyauthorityortheAppellateTribunal.
ItisproposedtowidenthescopeoftheSection133Abyamendingsub‐section(1)toincludeanyplace,atwhichanactivityforcharitablepurposeiscarriedon.
J. BenefitforNPSsubscribers
InordertoprovidefurtherrelieftoanemployeesubscriberofNPS,itisproposedtoamendthesection10soastoprovideexemptiontopartialwithdrawalnotexceeding25%ofthecontributionmadebyanemployeeinaccordancewiththetermsandconditionsspecifiedunderPensionFundRegulatoryandDevelopmentAuthorityAct,2013andregulationsmadethereunder.
3.2. INDIRECTTAXPROPOSALS
3.2.1 GeneralamendmentsapplicableforServiceTax,ExciseDutyandCustomDutyActs
ApplicationfeeforseekingadvancerulingfromisincreasedfromRs.2,500toRs.10,000.
Existingtimelimitofpronouncementofadvancerulingbytheauthorityisextendedfrom90daysto6months.
Definition of “Authority” substituted to mean the Authority for Advance Ruling asconstitutedundersection245‐OoftheIncome‐taxAct,1961.
Vacancies (in the Authority for advance ruling) not to invalidate proceedings is beingomitted.
3.2.2 ServiceTax
3.2.2.1 AmendmenteffectivewitheffectfromFebruary2,2017
Amendment in Mega Exemption Notification No. 25/2012 ST dated June 20, 2012:Services by the Army, Naval and Air Force Group Insurance Funds by way of lifeinsurancetoitsexemptedfromservicetax
UndertheRegionalConnectivityScheme(RCS),exemptionfromservicetaxisprovidedinrespectoftheamountofviabilitygapfunding(VGF)payabletotheselectedairlineoperatorforselectedservicesforaperiodof1yearfromthedateofcommencement.
Page 28 of 37
CertainServicesprovidedbyIndianInstitutesofManagement(IIMs)isexempted.
3.2.2.2 AmendmenteffectivewitheffectfromthedateofenactmentofFinanceBill2017
Servicesbywayofcarryingoutanyprocessamountingtomanufactureorproductionofgoods excluding alcoholic liquor for human consumption” is proposed to be omittedfromthenegativelist.
Research and Development (R & D) Cess Act, 1986 to be repealed. Consequently,exemptionfromservicetaxequivalenttotheamountofR&DcesspayableontheimportoftechnologyunderthesaidActwouldnotbeavailablewithrespecttoataxableserviceinvolvingimportoftechnology.
Serviceportioninexecutionofworkscontractinvolvingtransferofgoodsandlandorundividedshareofland,asthecasemaybe,shallnotincludevalueofpropertyinsuchlandorundividedshareofland.
TransferringthependingapplicationsbeforetheAuthorityforAdvanceRulings(CentralExcise,CustomsandServiceTax)totheAuthorityconstitutedundersection245‐OoftheIncome‐taxActfromthestageatwhichsuchproceedingsstoodhasbeenprovided.
3.2.2.3 RetrospectiveExemptions
Onetimeupfrontamountpayableforgrantoflong‐termleaseofindustrialplotsbyStateGovernmentindustrialdevelopmentcorporations/undertakingstoindustrialunits.
3.2.3 ExciseDuty
3.2.3.1 AmendmenteffectivewitheffectfromFebruary2,2017
Atimelimitofthreemonthshasbeenprovided[furtherextendableby6months] forgrantingremissionofdutyfromthereceiptofapplicationincasethegoodsislost.
Time limit of threemonths [further extendable by 6months] has been provided forapprovalofrequestsregardingtransferofCENVATcreditonshifting,sale,merger,etc.ofthefactory.
Banks and financial institutions engaged in providing services by way of extendingdeposits,loansoradvanceshasbeenexcludedfromitsambitofCenvatCreditRules.
3.2.4 CustomDuty
Section 17 of the Customs Act, 1962 is proposed to be amended to rationalize therequirementofdocumentsforverificationofself‐assessment.
Section27(2)oftheCustomsAct,1962tobeamendedsoastokeepoutsidetheambitofunjustenrichment, therefundofdutypaidinexcessbytheimporterbeforeanorderpermittingclearanceofgoodsforhomeconsumptionismade,where‐ suchexcesspaymentisevidentfromthebillofentryinthecaseofself‐assessedbill
ofentryor thedutyactuallypayableisreflectedinthereassessedbillofentryinthecaseof
reassessment. Mannerofpaymentofdutyandinterestthereonhasbeenamendedinthecaseofself‐
assessedbillsofentry.
Page 29 of 37
.
ANNEXUREI:CHANGESININDIRECTTAXES
Sl.No. Changes Existing ProposedI ChangesinTaxBaseofServiceTax 1 Rule2AofServiceTax(DeterminationofValue)Rules,2006
isbeingamendedwitheffectfrom01.07.2010soastomakeit clear that value of service portion in execution ofworkscontract involving transfer of goods and land or undividedshareof land,asthecasemaybe,shallnot includevalueofpropertyinsuchlandorundividedshareofland.
4,.2% 4,.2%
2 The Negative List entry in respect of “services by way ofcarrying out any process amounting to manufacture orproduction of goods excluding alcoholic liquor for humanconsumption”,isproposedtobeomitted.However,thesameentryisbeingplacedinexemptionnotificationNo.25/2012‐Service Tax dated 20th June, 2012. Consequently, thedefinitionof‘processamountingtomanufacture’[clause(40)section65B]isalsoproposedtobeomittedfromtheFinanceAct,1994andisbeingincorporatedinthegeneralexemptionnotification
Nil Nil
3 Servicetaxexemptiontotaxableservicesprovidedoragreedto be provided by the Army, Naval and Air Force GroupInsuranceFundsbywayoflifeinsurancetomembersoftheArmy, Navy and Air Force under the Group InsuranceSchemesoftheCentralGovernment,isbeingmadeeffectivefrom10thdayofSeptember,2004,thedatewhenservicesoflifeinsurancebecametaxable
14% Nil
Actual Budget Revised Budget2015-2016 2016-2017 2016-2017 2017-2018
Customs Duties-Import Duty 2,03,074.88 2,23,204.00 2,09,950.00 2,38,200.00 Exporty Duty 7,263.12 6,796.00 7,050.00 6,800.00 Union Excise Duties 2,88,072.89 3,18,669.50 3,87,368.58 4,06,900.00 Service Tax 2,11,414.25 2,31,000.00 2,47,500.00 2,75,000.00 Taxes on union territories 3,878.26 4,121.08 4,277.16 4,679.46 Total Indirect Tax Revenue 7,13,703.40 7,83,790.58 8,56,145.74 9,31,579.46
Head of taxes
Page 30 of 37
Sl.No. Changes Existing Proposed4 BenefitoftheexemptionnotificationNo.41/2016‐STdated
22.09.2016isbeingextendedwitheffect from1.6.2007,thedate when the services of renting of immovable propertybecame taxable. Notification No.41/2016‐ST dated22.09.2016, exempts one time upfront amount (called aspremium, salami, cost, price, development charges or bywhatever name) payable for grant of long‐term lease ofindustrial plots (30 years or more) by State Governmenti d t i l d l t
14% Nil
5 Services provided or agreed to be provided by the Army,Naval and Air Force Group Insurance Funds byway of lifeinsurancetomembersoftheArmy,NavyandAirForceundertheGroup InsuranceSchemesof theCentralGovernment isbeingexemptedfromservicetaxfrom2ndFebruary,2017.
14% Nil
6 TheexemptionvideS.No.9BofnotificationNo.25/2012‐STdated20.06.2012, isbeingamendedsoastoomittheword“residential” appearing in the notification. The exemptionremainsthesameinallotherrespects.S.No.9BofnotificationNo. 25/2012‐ST exempts services provided by IndianInstitutesofManagement(IIMs)bywayoftwoyearfulltimeresidentialPostGraduateProgrammes(PGP)inManagementfor the Post Graduate Diploma in Management (PGDM), towhich admissions are made on the basis of the CommonAdmissionTest(CAT),conductedbyIIM.
14% Nil
7 Under the Regional Connectivity Scheme (RCS), exemptionfromservicetaxisbeingprovidedinrespectoftheamountofviability gap funding (VGF) payable to the selected airlineoperatorfortheservicesoftransportofpassengers,withorwithoutaccompaniedbelongings,byair,embarkingfromorterminatinginaRegionalConnectivityScheme(RCS)airport,foraperiodofoneyearfromthedateofcommencementofoperationsoftheRegionalConnectivityScheme(RCS)airportasnotifiedbyMinistryofCivilAviation.
14% Nil
II AmendmentInvolvingchangeintherateofAdditionalExciseDuty
Existing Proposed
1 TobaccoandTobaccoProducts
A. Non‐filterCigarettesoflengthnotexceeding65mm Rs.215perthousand
Rs. 311 perthousand
B. Non‐filterCigarettesof lengthexceeding65mmbutnotexceeding70mm
Rs.370perthousand
Rs.541perthousand
C. FilterCigarettesoflengthnotexceeding65mm Rs.215perthousand
Rs.311perthousand
D. Filter Cigarettes of length exceeding 65mm but notexceeding70mm
Rs.260perthousand
Rs.386perthousand
E. Filter Cigarettes of length exceeding 70mm but notexceeding75mm
Rs.370perthousand
Rs.541perthousand
Page 31 of 37
Sl.No. Changes Existing Proposed F. OtherCigarettes Rs.560per
thousandRs.811perthousand
G. Chewingtobacco(includingfilterkhaini) 10% 12%
H. Jardascentedtobacco 10% 12%
I. PanMasalacontainingTobacco(Gutkha) 10% 12%
J. PanMasala 6% 9%
K. UnmanufacturedTobacco 4.2% 8.3%
III AmendmentInvolvingchangeintherateofBasicExciseDuty
1 TobaccoandTobaccoProducts
A. Cigarandcheroots 12.5%orRs.3755perthousand,whicheverishigher
12.5%orRs.4006perthousand,whicheverishigher
B. Cigarillos 12.5%orRs.3755perthousand,whicheverishigher
12.5%orRs.4006perthousand,whicheverishigher
C. Cigarettesoftobaccosubstitutes Rs.3755perthousand
Rs.4006perthousand
D. Cigarillosoftobaccosubstitutes 12.5%orRs.3755perthousand,whicheverishigher
12.5%orRs.4006perthousand,whicheverishigher
E. Othersoftobaccosubstitutes 12.5%orRs.3755perthousand,whicheverishigher
12.5%orRs.4006perthousand,whicheverishigher
F. Paperrolledbiris–handmade Rs.21perthousand
Rs.28perthousand
G. Paperrolledbiris–machinemade Rs.21perthousand
Rs.78perthousand
2 RenewableEnergy
Page 32 of 37
Sl.No. Changes Existing Proposed Solar tempered glass for use in solar photovoltaic
cells/modules,solarpowergeneratingequipmentorsystems,flatplatesolarcollector,solarphotovoltaicmoduleandpanelforwaterpumpingandotherapplications,subject toactualusercondition
Nil 6%
Parts/rawmaterialsformanufactureofsolartemperedglassfor use in solar photovoltaic cells/modules, solar powergenerating equipment or systems, flat plate solar collector,solarphotovoltaicmoduleandpanelforwaterpumpingandotherapplications,subjecttoactualusercondition
12.5% 6%
Resin and catalyst formanufacture of cast components forWindOperatedEnergyGenerators[WOEG],subjecttoactualusercondition
12.5% Nil
All items of machinery required for fuel cell based powergenerating systems to be set up in the country or fordemonstrationpurposes
12.5% 6%
All items of machinery required for balance of systemsoperatingonbiogas/bio‐methane/by‐producthydrogen
12.5% 6%
3 Miscellaneous MembraneSheetandTricot/Spacerforuseinmanufacture
ofROmembraneelementforhouseholdtypefilters,subjecttoactualusercondition
12.5% 6%
AllpartsformanufactureofLEDlightsorfixtures,includingLEDlamps,subjecttoactualusercondition
ApplicableDuty
6%
Miniaturized POS card reader for m‐POS (not includingmobile phones, or tablet computers), micro ATM as perstandardsversion1.5.1,FingerPrintReader/ScannerorIrisScanner
ApplicableDuty
Nil
PartsandcomponentsformanufactureofminiaturizedPOScardreader for m‐POS (not including mobile phones, or tabletcomputers),microATMasperstandardsversion1.5.1,FingerPrintReader/ScannerorIrisScanner,subjecttoactualusercondition
ApplicableDuty
Nil
a. WasteandscrapofpreciousmetalsormetalscladwithpreciousmetalsarisingincourseofmanufactureofgoodsfallinginChapter71
b. Strips,wires,sheets,platesandfoilsofsilverc. Articlesofsilverjewellery,otherthanthosestuddedwith
diamond,ruby,emeraldorsapphired. Silver coin of purity 99.9%and above, bearing a brand
namewhenmanufacturedfromsilveron
Nil Nil, subjectto theconditionthat nocredit ofdutypaidoninputs orinputservices orcapital
Page 33 of 37
Sl.No. Changes Existing Proposedgoods hasbeen availedbymanufactureof suchgoods
IV AMENDMENTSINTHECENTRALEXCISERULES,2002ANDTHECENVATCREDITRULES,2004
Sub‐rule (2) is being inserted in rule 21 of Central ExciseRules,2002soastoprovideforatimelimitofthreemonths[further extendableby6months] for granting remissionofdutyunderthesaidrule21readwithsection5oftheCentralExciseAct,1944.
Sub‐rule (4) is being inserted in rule 10 of CENVAT CreditRules,2004soastoprovideforatimelimitofthreemonths[further extendable by 6months] for approval of requestsregardingtransferofCENVATcreditonshifting,sale,merger,etc.ofthefactory.
V RetrospectiveAmendments inExcise
To retrospectively [that is with effect from 01.01.2017]specifyatariffrateofexcisedutyof12.5%[asagainstpresenttariff rateof27%]onmotorvehicles for transportofmorethan13personsfallingundertariffitems87029021to87029029of theFirstSchedule to theCentralExciseTariffAct,1985.
27% 12.5%
VI PROPOSALSINVOLVINGCHANGESINBCD,CVD,SADANDEXPORTDUTYRATES
Existing Proposed
1 OresandConcentrates Otheraluminiumores,includinglaterite ExportDuty
‐NilExportDuty–15%
2 MineralfuelsandMineraloils LiquefiedNaturalGas BCD–5% BCD– 2.5%3 Chemicals&Petrochemicals
o‐Xylene BCD–2.5% BCD– Nil Medium Quality Terephthalic Acid (MTA) & Qualified
TerephthalicAcid(QTA)BCD–7.5% BCD– 5%
2‐EthylAnthraquinone[29146990]foruseinmanufactureofhydrogenperoxide,subjecttoactualusercondition
BCD–7.5% BCD– 2.5%
Clay 2 Powder (Alumax) for use in ceramic substrate forcatalyticconvertors,subjecttoactualusercondition
BCD–7.5% BCD– 5%
VinylPolyethyleneGlycol (VPEG) foruse inmanufactureofPolyCarboxylateEther,subjecttoactualusercondition
BCD–10% BCD– 7.5%
4 Textiles
Page 34 of 37
Sl.No. Changes Existing ProposedNylonmonofilamentyarnforuseinmonofilamentlonglinesystem for Tuna fishing, subject to certain specifiedconditions
BCD–7.5% BCD– 5%
5 FinishedLeather,FootwearandOtherLeatherProducts
Vegetabletanningextracts,namelyWattleextractandMyrobalanfruitextract
BCD–7.5% BCD– 2.5%
Limitofdutyfreeimportofeligibleitemsformanufactureofleather footwear or synthetic footwear or other leatherproductsforuseinthemanufactureofsaidgoodsforexport
3%ofFOBvalueofsaidgoods
exportedduringthe
precedingfinancialyear
5%ofFOBvalueofsaidgoods
exportedduringthe
precedingfinancialyear
6 Metals
Co‐polymer coated MS tapes / stainless steel tapes formanufacture of telecommunication grade optical fibres oropticalfibrecables,subjecttoactualusercondition
BCD–Nil BCD– 10%
Nickel BCD–2.5% BCD– Nil
MgO coated cold rolled steel coils [7225 19 90] for use inmanufactureofCRGOsteel,subjecttoactualusercondition
BCD–10% BCD– 5%
Hot Rolled Coils [7208], when imported for use inmanufactureofweldedtubesandpipesfallingunderheading7305or7306,subjecttoactualusercondition
BCD–12.5% BCD– 10%
7 Capital Goods
Ballscrews,linearmotionguidesandCNCsystemsforuseinmanufactureofallCNCmachinetools,subjecttoactualusercondition
Ball screwsand linermotionguidesBCD–7.5% CNCsystemsBCD–10%
BCD– 2.5%
8 Electronics/Hardware PopulatedPrintedCircuitBoards(PCBs)forthemanufacture
ofmobilephones,subjecttoactualuserconditionSAD–Nil SAD– 2%
9 RenewableEnergy Solar tempered glass for use in the manufacture of solar
cells/panels/modulessubjecttoactualuserconditionBCD–5% BCD– Nil
Page 35 of 37
Sl.No. Changes Existing Proposed Parts/rawmaterialsformanufactureofsolartemperedglass
for use in solar photovoltaic cells/modules, solar powergenerating equipment or systems, flat plate solar collector,solarphotovoltaicmoduleandpanelforwaterpumpingandotherapplications,subjecttoactualusercondition
CVD–12.5%
CVD– 6%
Resin and catalyst formanufacture of cast components forWindOperatedEnergyGenerators[WOEG],subjecttoactualusercondition
BCD–7.5%CVD–12.5%
BCD– 5%CVD–NilSAD–Nil
All items of machinery required for fuel cell based powergenerating systems to be set up in the country or fordemonstration purposes, subject to certain specifiedconditions
BCD–10%/7.5%CVD–12.5%
BCD– 5%CVD–6%
All items of machinery required for balance of systemsoperating on biogas/ bio‐methane/ by‐product hydrogen,subjecttocertainspecifiedconditions
BCD–10%/7.5%CVD–12.5%
BCD– 5%CVD–6%
10 Commodity Cashewnut,roasted,saltedorroastedandsalted BCD–30% BCD– 45% ROmembraneelementforhouseholdtypefilters BCD–7.5% BCD– 10%11 Miscellaneous MembraneSheetandTricot/Spacerfor useinmanufacture
ofROmembraneelementforhouseholdtypefilters,subjecttoactualusercondition
CVD–12.5%
CVD– 6%
AllpartsformanufactureofLEDlightsorfixtures,includingLEDlamps,subjecttoactualusercondition
ApplicableBCD,CVD
BCD– 5%CVD–6%
All inputs for use in the manufacture of LED Driver andMCPCB for LED lights or fixtures, including LED lamps,subjecttoactualusercondition
ApplicableBCD
5%
De‐minimis customs duties exemption limit for goodsimportedthroughparcels,packetsandletters
DutypayablenotexceedingRs.100perconsignment
CIFvaluenot
exceedingRs.1000perconsignment
Miniaturized POS card reader for m‐POS (not includingmobile phones, or tablet computers), micro ATM as perstandardsversion1.5.1,FingerPrintReader/ScannerorIrisScanner
ApplicableBCD,
CVDSAD
BCD– NilCVD–NilSAD–Nil
Page 36 of 37
Sl.No. Changes Existing Proposed PartsandcomponentsformanufactureofminiaturizedPOS
cardreaderform‐POS(notincludingmobilephones,ortabletcomputers),microATMasperstandardsversion1.5.1,FingerPrintReader/ScannerorIrisScanner,subjecttoactualusercondition
ApplicableBCD,
CVDSAD
BCD– NilCVD–NilSAD–Nil
Silvermedallion,silvercoinshavingsilvercontentnotbelow99.9%,semimanufacturedformofsilverandarticlesofsilver
CVD‐Nil CVD–12.5%
Goods imported for petroleum and coal bed methaneoperations by availing of the benefit of notificationNo.12/2012‐ Customs, dated 17.03.2012 [S. No.357A] nolongerrequiredforthesaidpurposearebeingallowedtobedisposedofonpaymentofapplicablecustomsdutiesorexciseduty,onthedepreciatedvaluecalculatedasperstraightlinemethod(subjecttodepreciatedvaluenotbeinglessthan30%oftheoriginalvalue)ofsuchgoods.
Clause(c)ofsub‐section(3)ofsection9isbeingsubstitutedsoastowithdraw the exemption to three categories of non‐actionablesubsidies specified therein from the scope of anti‐subsidyinvestigations.
Page 37 of 37
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