Zee Media Bureau/Akrita Reyar


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After much speculation whether the Union Budget will be presented today after the sudden demise of parliamentarian E Ahamed, the cat is finally out of the bag. Arun Jaitley has presented a comprehensive and balanced budget with some relief for the middle class post demonetisation.


A first in many senses


Budget 2017-18 was ground breaking in many ways. It is the first time that the presentation of Union Budget was advanced to 1st February to enable ministries to operationalise all activities from the commencement of the financial year. Second, the Railways Budget was merged with the General Budget. Thirdly, the plan and nonplan classification of expenditure was removed to facilitate a holistic view of allocations for sectors and ministries.


Income Tax


Considering that the middle class of India was waiting with bated breath that some tectonic shift will take place in way Income Tax is dealt with in India, the Union Budget presented by Arun Jaitley brought some respite. Immediately after demonetisation, there was grapevine about whether income tax will be reduced to next to nil for all slabs and a transaction tax on e-payments will be imposed. Later, there were hopes that income tax slab for exemption will be broadened and tax rates will be eased across the board to widen the net.


However, this has not happened. Tax rate has been brought down from 10% to 5% for slab between Rs 2.5-5 lakh and the ripple saving for all higher brackets will be just about Rs 12,900/- per annum. But those earning between Rs 50 lakh and Rs 1 crore will have to pay an additional surcharge of 10%, while the earlier surcharge and cess on earnings over Rs 1 crore stay.


The fact is that while the FM has lamented under-reporting of income especially in the higher bracket, the surcharge may do little to encourage higher net worth individuals to declare their earnings.


Real Estate


First things first – there is no further easing on home loan rates which was expected to be on the anvil. What is a plus is that to promote affordable housing, carpet area instead of built up area of 30 and 60 sq mtr. will be counted.


The 30 sq mtr. limit will apply only in case of municipal limits of four metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 sq mtr. will apply


For builders for whom constructed buildings are stock-in-trade, tax on notional rental income will only apply after one year of the end of the year in which completion certificate is received.


Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years. Also, the base year for indexation is proposed to be shifted from 1981 to 2001 for all classes of assets including immovable property.


For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed


Political Funding


There has been yet another attempt to clean up the system of political funding in India. How successful it will be, one can only guess.


Of what is proposed, an individual can make a maximum cash donation of Rs 2000. Anything above that would have be e-paid or deposited as cheque.


A novel method would be the issuance of electoral bonds that will not disclose the name of the donor thus encouraging payments through this method. This is particularly so as the previous method of payments by cheque failed as the name of the donor was revealed by default.


Tax Exemptions would be provided if the payments to parties are transparent and clean.


Financial Reform and Digital Economy


A major announcement related with brining in a law to confiscate property of financial offenders who have fled the country and are living a lavish life abroad while evading law in India. Clearly, those targeted will be the likes of Vijay Mallya and Lalit Modi. But the measure is in line with the government promising to book those who stash black money or default on loans.


A move that will affect millions in the country - no transaction above Rs 3 lakh would be permitted in cash.


Another big ticket announcement is the scrapping of Foreign Investment Promotion Board. The measure makes sense considering that 90% of FDI gets cleared through the automatic route. For the remaining 10%, the Finance Ministry will be coming up with an alternative mechanism including looking at empowering respective ministry covering the sector where the investment is coming.


On digitisation front, the government plans to launch two new schemes to promote the usage of BHIM; these are, Referral Bonus Scheme for individuals and a Cashback Scheme for merchants. Aadhar Pay, a merchant version of Aadhar Enabled Payment System is to be launched shortly.


Under scheme of presumptive income for small and medium tax payers whose turnover is upto 2 crores, the present, 8% of their turnover which is counted as presumptive income has been reduced to 6% in respect of turnover which is by non-cash means.


Fiscal Prudence


Fiscal deficit to be curtailed at 3% for the next three years, while it will be 3.2% of GDP in 2017-18. Net market borrowing of Government will be restricted to Rs 3.48 lakh crores after buyback in 2017-18, much lower than Rs 4.25 lakh crores of the previous year.


Revenue Deficit of 2.3% also stands reduced to 2.1% in the Revised Estimates. The Revenue Deficit for next year is pegged at 1.9% against 2% mandated by the FRBM Act


Agriculture and Rural Economy


The target for agricultural credit in 2017-18 has been fixed at a record level of Rs 10 lakh crores. Farmers will also benefit from 60 days’ interest waiver announced on 31 Dec 2016


Coverage under Fasal Bima Yojana scheme will be increased from current 30% of cropped area to 40% in 2017-18 and 50% in the following year.


The government has also set aside Rs 23,000 crores (up from Rs 15,00 crore) to build 1 crore houses by 2019 for the homeless and those living in kutcha


houses. This singular move would put a roof on the head of millions of poor and the other aim to make 50,000 Gram Panchayats poverty free by 2019 will coincide the 150th birth anniversary of Mahatma Gandhi.


In a landmark achievement, the government aims at 100% village electrification by 1st May 2018.


MGNREGA allocation to be the highest ever at Rs 48,000 crores in 2017-18 and proper utilization of allocated funds will also be focussed upon.