Union Budget 15-16

Too much of topic-less writing. So here i am presenting to u all in the capacity of a CA student the key highlights of this budget. Special thanks to my bro Sai who helped me with this.

Here we go...

The first full budget of the NDA government was announced on 28^th February 2015 in Lok Sabha by Finance Minister. Unless otherwise stated the provisions of the Finance Act, 2015 shall come into effect from 1^st of April 2015.

DIRECT TAX:

Income Tax slab and rates of tax remains unchanged for Individuals / HUF. However, an additional surcharge of 2% will be levied for taxable income more than 1 crore for individuals / HUF. The existing slab and rates of tax are as follows:

Income Slab (in Rs.)	Rates of Tax (in %)
0 to 2,50,000	-
2,50,000 to 5,00,000	10%
5,00,000 to 10,00,000	20%
10,00,000 and above	30%

Tha amendments made are as stated below:

INCOME TAX:

Ø  Transport Allowance u/s 10(14) has been increase to Rs.1,600 p.m as against Rs.800 p.m currently.

Ø  Deduction u/s 80D for Mediclaim insurance has been increased by Rs.10,000 w.e.f 1^st April 2016.

Ø  Deduction of Rs.30,000 available u/s 80D for Super Senior citizens not covered under Mediclaim insurance towards medical expenditure incurred. Deduction is also allowed on such expenditures incurred on Super Senior parents w.e.f 1^st April 2016.

Ø Deduction  u/s 80DD for dependents with Normal disability has been increased to Rs.75,000 from Rs.50,000 w.e.f 1^st April 2016.

Ø Deduction u/s 80DD for dependents with severe disability has been increased to Rs.1,25,000 from Rs.1,00,000 w.e.f 1^st April 2016.

Ø Deduction u/s 80U where the assesse himself is normally disabled is increased to Rs.75,000 from Rs.50,000 w.e.f 1^st April 2016.

Ø Deduction u/s 80U where the assesse himself is severely disabled is increased to Rs.1,25,000 from Rs.1,00,000 w.e.f 1^st April 2016.

Ø ThedeductionlimitunderSection80CCC have been increased to Rs.1,50,000 fromRs.1,00,000foranyamountreceivedunderLICAnnuityPensionPlan.

Ø Deduction u/s 80DDB in case of specified disease of serious nature has been increased by Rs.40, 000 w.e.f 1^st April 2016.

Ø Additional deduction of Rs.50,000 is made available from 1^st April 2016 for investment in new pension scheme u/s 80CCD.

Ø  Donation made to Swachh Bharat Kosh, Clean Ganga fund and National fund for Control of Drug Abuse shall be eligible for deduction u/s 80G w.e.f 1^st April 2016.

Ø  Individual Tax payers can now plan tax upto Rs.4.44 lakhs.

Ø  Additional Surcharge of 2% applicable for taxable income more than 1 crore.

Ø  Tax rate on income by way of Royalty or fees for Technical Service has reduced from 25% to 10% for Non-Residents.

Ø  Threshold for Domestic Transfer pricing increased to Rs.20 crores from Rs.5 crores.

Ø  Corporate tax to be reduced to 25% over the next four years.

Ø  Amendment in 269ss and 269t of the Income tax Act, 1961 to prohibit acceptance or repayment of advance in cash or Rs. 20,000 or more for any transaction in immovable property with a view to curb black money.

Ø  The threshold of minimum workmen u/s 80JJAA is reduced to 50 from 100. This section provides deduction for a person manufacturing goods in a factory and paying wages to new regular workmen.

Ø  Amendments to Section 197A to provide the facility of Self declaration of non-deduction of Tax by the recipient of Taxable maturity proceeds of LIP.

WEALTH TAX:

Wealth Tax has been abolished and replaced by a provision for additional Surcharge of 2%  on Super Rich Tax payers.

INDIRECT TAX:

Ø  SERVICE TAX:

§  Service Tax rates to be increased from 12.36% to 14%.

§  Education Cess and Secondary and higher Education Cess shall be included in the 14%.

§  Cess of 2% towards Swachh Bharat initiative shall be levied on all or certain taxable services from a date yet to be notified.

§  EXCISE DUTY:

The following amendments in rates of Excise duty have been made:

§  Wafers for use in the manufacture of integrated circuit (IC) modules for smart cards from 12% to 6%.

§  Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 12% to 6%.

§  Mobiles handsets, including cellular phones from 1% without CENVAT credit or 6% with CENVAT credit to 1% without CENVAT credit or 12.5% with CENVAT credit.

§  Tablet computers from 12% to 2% without CENVAT credit or 12.5% with CENVAT credit.

§  Specified raw materials [battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel), tubing (silicone)] for use in the manufacture of pacemakers to Nil.

§  Pig iron SG grade and Ferro-silicon-magnesium for use in the manufacture of cast components of wind operated electricity generators to Nil, subject to certification by MNRE.

§  Solar water heater and system from 12% to Nil without CENVAT credit or 12.5% with CENVAT credit.

§  Excise duty on cigarettes is being increased by 25% for cigarettes of length not exceeding 65 mm and by 15% for cigarettes of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos

§  Round copper wire and tin alloys for use in the manufacture of Solar PV ribbon for manufacture of solar PV cells to Nil subject to certification by Department of Electronics and Information Technology (DeitY).

OTHER AMENDMENTS:

Ø  Online Central Excise/Service Tax Registration within two working days.

Ø  Time limit for taking CENVAT Credit on inputs and input services is being increased from six months to one year.

Ø  Central Excise/Service Tax assesses are being allowed to issue digitally signed invoices and maintain other records electronically.

Ø  Excise duty of 2% without CENVAT credit or 6% with CENVAT credit is being levied on condensed milk put up in unit containers. It is also being notified under section 4A of

the Central Excise Act for the purpose of valuation with reference to the Retail Sale Price with an abatement of 30%.

Ø  Excise duty of 2% without CENVAT credit or 6% with CENVAT credit is being levied on peanut butter. Relief Measures.

Ø  Full exemption from excise duty is being extended to captively consumed intermediate compound coming into existence during the manufacture of Agarbattis. Agarbattis attract Nil excise duty.

GST:

GST to come into force by 01.04.2016.

EDUCATION SECTOR:

• AIIMS in Jammu and Kashmir, Punjab, Tamil Nadu, Himachal Pradesh, Bihar and Assam

• IIT in Karnataka, Indian School of Mines in Dhanbad to be upgraded to IIT

• PG institute of Horticulture in Amritsar.

• Kerala to have University of Disability Studies

• Centre of film production, animation and gaming to come up in Arunachal Pradesh

• IIM for Jammu and Kashmir and Andhra Pradesh

REAL ESTATE SECTOR:

·   In respect of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INViTs), it is proposed to provide that the sponsor will be given the same treatment on offloading of units at the time of listing as would have been available to him if he had offloaded his shareholding of special purpose vehicle (SPV) at the stage of direct listing.  Further, the rental income arising from real estate assets directly held by the REIT is also proposed to be allowed to pass through and to be taxed in the hands of the unit holders of the REIT.

·   Establishment of National Investment and Infrastructure Fund (NIIF), and an ensured annual flow of Rs.20,000 crores to it.

·   Establishment of Atal Innovation Mission (AIM), in NITI.AIM will be an Innovation Promotion Platform involving academics, entrepreneurs, and researchers and draw upon national and international experiences to foster a culture of innovation, R&D and scientific research in India. The platform will also promote a network of world-class innovation hubs and Grand Challenges for India.  Initially, a sum of Rs.150 crore will be earmarked for this purpose.  

AGRICULTURE SECTOR:

Ø  Rs. 5,300 crore for Micro Irrigation Programme.

Ø  Farm credit of Rs.8.5 lakh crores has been ear-marked.

Ø  Creation of Unified National Agricultural market.

Ø  Launch of Soil Health Card Scheme to improve soil fertility.

DEFENCE SECTOR:

Ø  FDI in defence raised from 26% to 49%

Ø  100% FDI allowed in defence sector for modern technology

Ø  Portfolio investment in defence sector permitted upto 24% under automatic route.

Ø  Allocation of Rs.2,46,727 crores to defence sector

Ø  Extension of Make in India Policy to defence sector to achieve greater self-sufficiency including in aircraft.

MONETIZING GOLD:

Ø  Gold Monetization Scheme, which will replace both the present Gold Deposit and Gold metal Loan Schemes has been introduced.

Ø  To develop an Indian gold Coin, which will carry the Ashok Chakra on its face, to reduce the demand for foreign coins and recycle the gold available in the country.

Ø  Sovereign Gold Bond, as an alternative to purchasing metal gold.

SWACHH BHARAT INITIATIVE:

Ø  Improvement of Quality of life and public health through Swachh Bharat Initiatives.

Ø  100% deduction for contributions, other than by way of CSR contributions, to the Swachh Bharat Kosh.  A similar tax treatment is also proposed for the Clean Ganga Fund.

Ø  Cess of 2% towards Swachh Bharat initiative shall be levied on all or certain taxable services from a date yet to be notified.

MAKE IN INDIA AND SKILL DEVELOPMENT INITIATIVE:

Ø  Job creation through revival of growth and investment and promotion of domestic ‘manufacturing’ and ‘Make in India’.

Ø  The Skill India and the Make in India programmes are aimed at ensuring that the young people of India get proper jobs.

Ø  The Make in India programme is aimed at meeting the challenge posed by decline in manufacturing sector from 18% to 17% of GDP and stagnated exports manufacturing at 10% of GDP.

Ø  The second pillar of taxation proposals this year is job creation through revival of growth and investment and promotion of domestic manufacturing and ‘Make in India’. 

SAFE INDIA:

Ø  Allocation of Rs.1000 crores to the Nirbhaya Fund.

GREEN INDIA:

Ø  Target of renewable energy capacity revised to 175000 MW till 2022, comprising 100000 MW Solar, 60000 MW Wind, 10000 MW Biomass and 5000 MW SmallHydro.

Ø  Proposal to introduce a public Contracts (resolution of disputes) Bill to streamline theinstitutional arrangements for resolution of such disputes.

Ø  Proposal to introduce a regulatory reform Bill that will bring about a cogency of approachacross various sectors of infrastructure.

TOURISM:

Ø  Resources to be provided to start work along landscape restoration, signage and interpretation centres, parking, access for the differently abled, visitors’ amenities,including securities and toilets, illumination and plans for benefiting communities around them at various heritage sites.

Ø  Visas on arrival to be increased to 150 countries in stages.

OTHER ANNOUNCEMENTS:

Ø  Country's fiscal deficit target for the 2015/16 fiscal year at 3.9% of GDP and the target to gradually reduce to 3 percent by 2017/18.

Ø  Growth in 2015-16 is expected to be between 8-8.5 per cent.

Ø  Revenue Deficit to be 2.8% in 2015-16.

Ø  Current Account Deficit for 2014-15 to be below 1.3% of GDP.

Ø  Unclaimed deposits of about Rs.3,000 crores in the PPF, and approximately Rs.6,000 crores in the EPF corpus. Theamounts to be appropriated to a corpus, which will be used to subsidize the premiums on social security schemes.