BUDGET AT A GLANCE 2017-2018
Finance Minister Arun Jaitley pledged relief for middle class taxpayers, small and medium firms in the Union Budget 2017 today, saying the government would spend thousands of crores to double farmer incomes. Jaitley pledged to double the income of farmers, who have been hard hit by the currency ban, in the next five years and bring 10 million households out of poverty by 2019.
Jaitley projected economic growth of between 6.75 and 7.5 percent in 2017-18. He said the economy was doing well despite slowing growth in other emerging economies and a massive demonetisation programme late last year that affected the country’s mostly cash-based business activities.
- A significant reform initiative in the budgeting process, announced by the Finance Minister, in his Budget Speech of 2016-17 was the removal of the Plan and Non-Plan distinction in expenditure budgeting. This has been implemented from the Budget of 2017-18. With the removal of this distinction it is expected that the link between spending and outcomes will improve and become more holistic and focused.
- Budget 2017-18 reflects Government’s firm commitment to substantially boost investment in Agriculture, Social Sector, Infrastructure and Employment Generation on the one hand and simultaneously sticking to the fiscal consolidation path on the other hand. This is substantiated by increase of ` 1,32,328 crores over RE (2016-17) while simultaneously conforming to the fiscal deficit target of 3.2%.
- In RE (2016-17), the total expenditure at ` 20,14,407 crore is more than the BE (2016-17) by ` 36,347 crore. Accordingly, the Fiscal Deficit target of 3.5% in 2016-2017 has been achieved without reduction in expenditure at the RE stage. 6. Since 2015-16, the devolution of States’ share in taxes has witnessed a major jump. Continuing with this trend, the total resources going to States including the devolution of State’s share in taxes, Grants/Loans, and releases under Centrally Sponsored Schemes in BE (2017-18) is ` 10,85,075 crore, with a jump of ` 94,764 crore over RE (2016-17) and ` 2,50,592 crore more than the Actual (2015-16). These facts reflect Government’s firm commitment to co-operative federalism and strong belief in the principle that the Nation grows when States grow.
10 Key Steps in Budget 2017-18 : List
1⃣ Reduced tax rate for Rs 2.5 lakh to Rs 5 lakh to 5% from 10%. Overall average tax rate will come down for those with income below Rs 5 lakh and slightly even for those whose income is above Rs 5 lakh. Income tax returns forms will be made easy. One page form for returns for non business income below Rs 5 lakh.
2⃣ Holding period for immovable property for applicability of long-term capital gains (LTCG) tax reduced to 2 years from 3 years. Also tax will be levied for unoccupied houses a year after getting completion certificate. No cash transactions above Rs 3 lakh will be allowed.
3⃣ Tax on the rich and wealthy continues. Surcharge of 10% on those with income Rs 50 lakh to Rs 1 crore. Surcharge on Rs 1 crore and more stays as usual.
4⃣ Aadhar-based Point of Sale (PoS) terminals will be set up. The shift to digital platform will have huge benefits for common man, according to the finance minister.
5⃣ Senior citizens will get Aadhar smart cards with health details on them. The government will work with Life Insurance Corporation to implement a scheme for senior citizens with 8 percent return on annuity. Income tax in case of senior citizens above 60 years, there will be no tax up to Rs 3 lakh, while the exemption will be up to Rs 5 lakh in case of citizens above 80 years. Both categories will attract income tax of 20 per cent on income between Rs 5 lakh and Rs 10 lakh and 30 per cent for income above Rs 10 lakh.
6⃣ In a bid to boost infrastructure spending, a total of Rs 1,31,000 crore towards capital and development expenditure of the Railways which includes Rs 55,000 crore provided by the government with focus on four major areas of passenger safety, capital & development work, cleanliness and finance & accounting reforms. A passenger safety fund is being created with a corpus of Rs 1 lakh crore over five years.
7⃣ There will also be modernisation and upgradation of identified corridors. Railway lines of 3,500 km will be commissioned in the next fiscal against 2,800 km in the previous year. Steps would be taken to dedicated trains for tourism and pilgrimages.
8⃣ For the transportation sector as a whole, including rail, road and shipping, the Union Budget 2017 provides for Rs 2,41,387 crore in FY 18. In the road sector, allocation for highways has been stepped up to Rs 64,900 crore against Rs 57,976 crore in 2016-17.
9⃣ The total allocation for rural, agriculture and allied sectors has been pegged at Rs 187,223 crore, which is 24 per cent higher than the previous year. The Budget provides for Rs 9000 crore under the Crop Insurance Scheme and proposed to set up a dedicated micro-irrigation fund under NABARD with an initial corpus of Rs 5,000 crore. The Budget provisions under rural employment guarantee scheme MGNREGA has been increased from Rs 38,500 crore in the current year to Rs 48,000 crore in 2017-18, while Rs 19,000 crore has been given under the rural roads programme.
🔟 Since the proposed GST is expected to be rolled out soon, indirect taxes largely untouched expect for some changes in duties on tobacco products, solar panels and circuit for mobile phones. While excise duty on pan masala has been hiked to 9 per cent from 6 and that on unmanufactured tobacco to 8.3 per cent from 4.2, the same on filter and non-filter cigarettes of all lengths was also hiked. Mobile phones will be costlier with the Budget proposing a 2 per cent special auxillary duty on import of populated printed circuit boards (PCBs).