Highlights of India

Budget 2015-16

Chartered Accountants

Caratteristiche salienti di India Budget 2015-16

Höhepunkte Indiens Budget 2015-16

インドの予算2015から16のハイライト

印度2015-16年财政预算案的要点

ไฮไลทข์องอินเดียงบประมาณ 2015-16

Faits saillants de l'Inde Budget 2015-16

Aspectos destacados de la India Presupuesto 2015-16

2015-16

Keywords of Budget

energise

growth

financial inclusion

foreign inflows

manufacture

black money

job creation

higher educationdoing business

health

welfare

infrastructure

revival

maximum governance

red tape

maximise

2015-16

General budget

2015-16

State of Economy

• Mood of pessimism and uncertainties engulf a number of advanced and emerging economies

Global economy

• Brighter prospects in India as economy stands relieved of economic slowdown, persistent inflation, elevated fiscal deficit, slackening domestic demand, external account imbalances, and oscillating value of the rupee

Worst behind us

• India‟s growth accelerating from 5.1 % during 2012-13 to 6.9% during 2013-14 and to 7.4% in 2014-15Take-off India

• Economic reforms can give steam to the rolling engine of Indian economy to take it to double digit growthThrust area

2015-16

India Macromized

Fiscal Deficit Stronger

Current Account Deficit

Inflation under check

• Fiscal target of 4.1 % of GDP

• New excises on diesel and petrol (revenue yield of about Rs 20,000 crores), reduced subsidies, and expenditure compression will ensure the commitment to discipline

• Global crude petroleum prices and moderated gold imports help

• Current account deficit has shrivelled from a peak of 6.7% of GDP ( 2012-13) to an estimated 1.0% in the coming fiscal year

• Inflation has declined by over 6 percentage points since late 2013

• Lower crude helped in cooling of inflation

• Currently Inflation is about 4%

2015-16

Challenges Ahead

Challenges

Increasing investment in infrastructure

Decline in manufacturing

Resource crunch in view

of higher devolution in

taxes to states

Agricultural income under

stress

Maintaining fiscal

discipline

2015-16

Key Achievments

Achievments

Financial Inclusion -12.5 crores families

financially mainstreamed in 100

days

Transparent Coal Block auctions to

augment resources of the States

Swachh Bharat is not only a programme to improve hygiene and cleanliness but has

become a movement to regenerate India

Game changing reforms on the anvil:

• Goods and Service Tax (GST)

• Jan Dhan, Aadhar and Mobile (JAM) - for direct benefit transfer

2015-16

Team India Vision

House

• Housing for all - 2 crore houses in Urban areas and 4 crorehouses in Rural areas

• Basic facility of 24x7 power, clean drinking water, a toilet and road connectivity

Infra upgrade

• Electrification of the remaining 20,000 villages including off-grid Solar Power- by 2020.

• Connecting each of the 1,78,000 un-connected habitation with roads

• Communication connectivity to all villages

Health and education

• Providing medical services in each village and city.

• Senior Secondary School within 5 km reach of every child, while improving quality of education and learning outcomes

Economic upgrade

• Increase irrigated area, improve efficiency of existing irrigation systems, and ensure farm produce value addition and pricing

• Make India, the manufacturing hub of the World through Skill India and Make in India Programmes

2015-16

Farmy Army To The Rescue

• Address two major factors critical to agricultural production that of soil and water

• Ambitious Soil Health Card Scheme has been launched to improve soil fertility on a sustainable basis

• Support to Agiculture Ministry‟s organic farming scheme – “Paramparagat KrishiVikas Yojana

Organic Soil

• Improving water use efficiency to provide RsPer Drop More Crop‟

• Support micro-irrigation, watershed development and the Pradhan Mantri KrishiSinchai Yojana

• States urged to chip in

Efficient Water

• Hassle-free agriculture credit with a special focus on small and marginal farmers

• Rs25,000 crore to the corpus of Rural Infrastructure Development Fund (RIDF) set up in NABARD; Rs15,000 crore for Long Term Rural Credit Fund; Rs45,000 crore for Short Term Co-operative Rural Credit Refinance Fund; and Rs15,000 crore for Short Term RRB Refinance Fund

Farm Finance

• National Agriculture Market for the benefit farmers

• Government to work with the States, in NITI, for the creation of a Unified National Agriculture Market

National market

2015-16

Funding the Unfunded

MUDRA bank

• Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs20,000 crores, and credit guarantee corpus of Rs3,000 crores to be created

• MUDRA Bank will be responsible for refinancing all Micro-finance Institutions which are in the business of lending to small entities of business through a Pradhan Mantri MudraYojana.

• Priority will be given to SC/ST enterprises

Trade fund

• Need to improve the liquidity in the MSME sector significantly

• A Trade Receivables discounting System (TReDS) which will be an electronic platform for facilitating financing of trade receivables of MSMEs to be established

• Postal network with 1,54,000 points of presence spread across villages to be used for increasing access of the people to the formal financial system

Ease of finance

• Comprehensive Bankruptcy Code of global standards to be brought in fiscal 2015-16 towards ease of doing business

• NBFCs registered with RBI and having asset size of Rs500 crore and above may be considered for notifications as „Financial Institution‟ in terms of the SARFAESI Act, 2002

2015-16

Socially Secure India

Life Insurance

• The Pradhan Mantri Jeevan Jyoti Bima Yojana which covers both natural and accidental death risk of Rs2 lakhs. The premium will be Rs330 per year

Accident Insurance

• Pradhan Mantri Suraksha Bima Yojna will cover accidental death risk of Rs2 lakh for a premium of just Rs12 per year

Pension

• Atal Pension Yojana to provide a defined pension, depending on the contribution and the period of contribution

• Government to contribute 50% of the beneficiaries‟ premium limited to Rs1,000 each year, for five years, in the new accounts opened before 31st December 2015

Senior Citizen Welfare Fund

• Corpus will be used to subsidize the premiums of vulnerable groups such as old age pensioners, BPL card-holders, small and marginal farmers and others

• Senior Secondary School within 5 km reach of every child, while improving quality of education and learning outcomes

2015-16

Matching Infrastructure with Ambition

• National Investment and Infrastructure Fund (NIIF), to be established with an annual flow of Rs20,000 crores to it

• Tax free infrastructure bonds for the projects in the rail, road and irrigation sectorsInfra fund

• PPP mode of infrastructure development to be revisited and revitalised.

• In infrastructure projects major issue is rebalancing of risk. The sovereign will have to bear a major part of the risk without absorbing it entirely

Track change

• Atal Innovation Mission (AIM) to be established in NITI to provide Innovation

• Promotion Platform involving academicians, and drawing upon national and international experiences to foster a culture of innovation , research and development. sum of Rs150 crore will be earmarked

Innovate India

• (SETU) Self-Employment and Talent Utilization) to be established as Techno-financial

• incubation and facilitation programme to support all aspects of start-up business. Rs1000 crore to be set aside as initial amount in NITI

Tech Start up

• 5 new Ultra Mega Power Projects, each of 4000 MW, in the Plug-and-Play mode

• Second unit of Kudankulam Nuclear Power Station will be commissioned in 2015-16

Mega powered up

2015-16

Financial Market ReVitalized

• Need to deepen Indian Bond market

• Public Debt Management Agency (PDMA) will bring both India‟s external borrowings and domestic debt under one roof

Bond market

• To strengthen regulation of commodity forward markets and reduce wild speculation merge the Forwards Markets Commission with SEBI FMC = SEBI

• Section-6 of FEMA to be amended through Finance Bill to provide control on capital flows as equity will be exercised by Government in consultation with RBI.

• Thus Capital Account Controls moving from regulatory matter to policy matter Fund Free

flow

• Proposal to create a Task Force to establish sector-neutral financial redressal agency that will address grievance against all financial service providersRedress

• India Financial Code to be introduced soon in Parliament for consideration

• Vision of putting in place a direct tax regime, which is internationally competitive on rates, without exemptions

New financial regime

2015-16

Golden Investment

Monetising Gold

• Gold monetisation scheme to allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account to be introduced

• Sovereign Gold Bond, as an alternative to purchasing metal gold scheme to be developed

• Commence work on developing an Indian gold coin, which will carry the Ashok Chakra on its face

Investment

• Foreign investments in Alternate Investment Funds to be allowed.

• Distinction between different types of foreign investments, especially between foreign portfolio investments and foreign direct investments to be done away with. Replacement with composite caps

• A project development company to facilitate setting up manufacturing hubs in CMLV countries, namely, Cambodia, Myanmar, Laos and Vietnam

2015-16

Will and Skill India

• National Skills Mission through the Skill Development and Entrepreneurship Ministry. The Mission will consolidate skill initiatives spread across several Ministries and allow us to standardize procedures and outcomes across 31 Sector Skill Councils

• Deen Dayal Upadhyay Gramin Kaushal Yojana to enhance the employability of rural youth

Mission Skills

• A student Financial Aid Authority to administer and monitor the front-end all scholarship as well Educational Loan Schemes, through the Pradhan Mantri VidyaLakshmi Karyakram

Easy Eduloan

• An IIT to be set up in Karnataka and Indian School of Mines, Dhanbad to be upgraded in to a full-fledged IIT

• New All India Institute of Medical Science (AIIMS) to be set up in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam

• A post graduate institute of Horticulture Research & Education is to be set up in Amritsar

• 3 new National Institute of Pharmaceuticals Education and Research in Maharashtra, Rajasthan & Chattisgarh and one institute of Science and Education Research is to be set up in Nagaland & Orissa each.

• An autonomous Bank Board Bureau to be set up to improve the governance of public sector bank

New Schools

2015-16

Tax proposals

2015-16

Tax Highlights

• Efforts on various fronts to implement GST from next yearGST coming

• No change in rate of personal income taxIndividual tax same

• Proposal to reduce corporate tax from 30% to 25% over the next four years, starting from next financial year

Lower corporate

tax

• Rationalisation and removal of various tax exemptions and incentives to reduce tax disputes and improve administrationEasy of tax

2015-16

Themed Tax

Themes for tax

proposals

Measures to curb black money

Job creation through growth revival and

investment and promotion of

domestic manufacturing –“Make in India”

Improve ease of doing business -

Minimum Government and

maximum governance

Improve quality of life and public health – Swachh

Bharat

Benefit to middle class tax-payers

Stand alone proposals to

maximise benefit to the economy

2015-16

Black Money Beware

Investigate

• Generation of black money and its concealment to be dealt with effectively and forcefully

• Investigation into cases of undisclosed foreign assets has been given highest priority in the last nine months

• Major breakthrough with Swiss who agreed to:

• Provide information in respect of cases independently investigated by IT department

• Confirm genuineness of bank accounts and provide non-banking information;

• Provide such information in time-bound manner

• Commence talks for automatic exchange of information

New Black Money Law

• Evasion of tax in relation to foreign assets - punishment of rigorous imprisonment upto 10 years, non-compoundable, penalty rate of 300%

• Non-filing of return/filing of return with inadequate disclosures to have a punishment of rigorous imprisonment upto 7 years

• Undisclosed income from any foreign assets to be taxable at the maximum marginal rate

• Mandatory filing of return in respect of foreign asset

• Entities, banks, financial institutions including individuals all liable for prosecution and penalty

• Concealment of income/evasion of income in relation to a foreign asset to be made a predicate offence under PML Act, 2002.

• PML Act, 2002 and FEMA to be amended to enable administration of new Act on black money

Track Black Money

• Benami Transactions (Prohibition) Bill to curb domestic black money to be introduced

• Acceptance or re-payment of an advance of Rs 20,000 or more in cash for purchase of immovable property to be prohibited

• PAN being made mandatory for any purchase or sale exceeding Rupees 1 lakh

• Third party reporting entities would be required to furnish information about foreign currency sales and cross border transactions

• Provision to tackle splitting of reportable transactions

• Leverage of technology by CBDT and CBEC to access information from either‟s databases

2015-16

Make in India

Investment fund easy

•Tax “pass through” to be allowed to both category I and category II alternative investment funds

REiTnalisation

•Rationalisation of capital gains regime for the sponsors exiting at the time of listing of the units of REITs and InvITs

•Rental income of REITs from their own assets to have pass through facility

GAAR no roar

•General Anti Avoidance Rule (GAAR) to be deferred by two years

•GAAR to apply to investments made on or after 01.04.2017, when implemented

Investment welcome

•Additional investment allowance (@ 15%) and additional depreciation (@35%) to new manufacturing units set up during the period 01-04-2015 to 31-03-2020 in notified areas of Andhra Pradesh and Telangana

Tech free flow

•Rate of Income-tax on royalty and fees for technical services reduced from 25% to 10% to facilitate technology inflow

Workmen addition

•Benefit of deduction for employment of new regular workmen to all business entities and eligibility threshold reduced from 100 to 50

Lower Custom duty

•Basic Custom duty on certain inputs, raw materials, inter mediates and components in 22 items, reduced to minimise the impact of duty inversion

•All goods, except populated printed circuit boards for use in manufacture of ITA bound items, exempted from SAD

•SAD reduced on import of certain inputs and raw materials

Powered up

•Additional depreciation @ 20% is allowed on new plant and machinery installed by a manufacturing unit or a unit engaged in generation and distribution of power

2015-16

Ease of doing business – Minimum Government Maximum Governance

Vodafone case tuned up

• Provision of indirect transfers of assets in India in the Income-tax Act suitably cleaned up

• Vodafone mishaps to be avoided

Wealth tax abolished

• Wealth-tax replaced with additional surcharge of 2 per cent on super rich with a taxable income of over Rs1 crore annually

TP threshold up

• Domestic transfer pricing threshold limit increased from Rs5 crore to Rs 20 crore

Dividend east

• Applicability of indirect transfer provisions to dividends paid by foreign companies to their shareholders to be addressed through a clarificatory circular

FIIs MAT no more

• MAT provisions for FIIs, profits corresponding to their income from capital gains on transactions in securities which are liable to tax at a lower rate, shall not be subject to MAT

Service tax up

• Service-tax plus education cesses increased from 12.36% to 14% to facilitate transition to GST

Cut the red tape

• Online central excise and service tax registration will be done in two working days

• Digitally signed invoices and electronic records allowed

Longer credit period

• Time limit for taking CENVAT credit on inputs and input services is being increased from six months to one year as a measure of business facilitation

2015-16

Swacch Bharat (Clean India)

Lets contribute

• 100% deduction for contributions, other than by way of CSR contribution, to Swachh Bharat Kosh and Clean Ganga Fund

Cleaner Coal

• Clean energy cess increased from Rs100 to Rs200 per metric tonne of coal, etc. to finance clean environment initiatives

Tax the plastic

• Excise duty on sacks and bags of polymers of ethylene other than for industrial use increased from 12% to 15%

Swachh Bharat Cess

• Enabling provision to levy SwachhBharat cess at a rate of 2% or less on all or certain services, if need arises

Clean technology

• Services by common affluent treatment plant exempt from Service-tax

Electronic vehicles helped

• Concessions on custom and excise duty available to electrically operated vehicles and hybrid vehicles extended upto 31.03.2016

2015-16

Benefits to middle class tax-payers

Transport allowance up

•Transport allowance exemption is being increased from Rs800 to Rs1,600 per month

Health insured

•Limit of deduction of health insurance premium increased from Rs15000 to Rs 25000, for senior citizens limit increased from Rs20000 to Rs30000

Elderly help

•Senior citizens of 80+ years, to be allowed deduction of Rs 30000 towards medical expenditures

•Deduction limit of Rs 60000 with respect to specified decease of serious nature enhanced to Rs 80000

Pension

•Limit on deduction for contribution to pension fund and the new pension scheme increased from Rs 1 lakhto Rs1.5 lakh

•Additional deduction of Rs 50000 to the new pension scheme u/s 80CCD

Yoga is charity

• Yoga to be included within the ambit of charitable purpose under Section 2(15) of the Income-tax Act

Girl Child Account

• Investments in Sukanya SamriddhiScheme is already eligible for deduction under Section 80C

Life insurance tax free

• For the benefit of senior citizens, service tax exemption will be provided on Varishta BimaYojana

2015-16

Service tax: Recreation expensive

Entertainment expensive

• Service-tax to be levied on service: access to amusement facility, entertainment events or concerts, pageants, non recoganised sporting events

Fruits and ambulance cheaper

• Services of pre-conditioning, pre-cooling, ripening etc. of fruits and vegetables

• All ambulance services provided to patients

Safari cheaper

• Admission to museum, zoo, national park, wile life sanctuary and tiger reserve

• Transport of goods for export by road from factory to land customs station

Government services costlier

• Enabling provision made to exclude all services provided by the Government or local authority to a business entity from the negative list. Thus taxable

Building ports expensive

• Service-tax exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port withdrawn

Agriculture tax free, alcohol not

• Transportation of agricultural produce to remain exempt from Service-tax

• Processes as job work for production or manufacture of alcoholic liquor taxable

Agent epensive

• Services provided by a mutual fund agent taxable

• Marketing agent of lottery ticket taxable

2015-16

Others

Trucks expensive

• Increase in basic custom duty -

• Metallergicalcoke from 2.5 % to 5%

• Tariff rate on iron and steel increased from 10% to 15%

• Tariff rate on commercial vehicle increased from 10 % to 40%

Cameras cheaper

• Basic custom duty on digital still image video camera with certain specification reduced to nil.

LED cheaper

• Basic customs duty reduced -

• Black Light Unit Module for use in the manufacture of LCD/LED TV panels from 10% to Nil.

• Organic LED (OLED) TV panels from 10% to Nil

Telecom connected

• Basic customs duty reduced -

• HDPE for use in the manufacture of telecommunication grade optical fibrecables from 7.5% to Nil

2015-16

Overall Budget

• Non-Plan expenditure estimates for the Financial Year are estimated at Rs13,12,200

crore

• Plan expenditure is estimated to be Rs4,65,277 crore, which is very near to the R.E. of

2014-15

• Total Expenditure has accordingly been estimated at Rs17,77,477 crore

• The requirements for expenditure on Defence, Internal Security and other necessary

expenditures are adequately provided

• Gross Tax receipts are estimated to be Rs14,49,490 crore

• Devolution to the States is estimated to be Rs5,23,958

• Share of Central Government will be Rs9,19,842

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