Income Tax:

• Individual and firm’s tax rate structure remains same.
• Wealth tax replaced with surcharge of 2% on tax with annual income above Rs. 1 crore (10 million)
• Transport allowance increased from Rs.800 to 1600 per month
• Limit of deduction on health insurance premium: increased from Rs.15,000 to 25,000 and for Senior Citizens from Rs.25,000 to Rs.30,000/-
• For very senior citizen, deduction for specified disease of serious nature – limit increased from Rs.60,000 to Rs.80,000/-
• Senior citizen above 80 years, with no health insurance, allowed deduction of Rs.30,000/- towards medical expenditure
• Increase in limit of deduction for contribution to pension fund and new pension scheme – from Rs.100,000 to Rs.150,000/- (u/s.80CCD)
• For differently able, additional deduction of Rs.25,000 (u/s.80DD and 80U)
• Corporate tax rate structure remains same. It is intended to be reduced to 25% in a phased manner in next 4 years. Along with reduction in tax slab, exemptions and incentives would be withdrawn. This is aimed to bring competitive corporate tax rate amongst ASEAN countries – so hopefully entrepreneurs need not go to neighbouring countries for manufacturing, sending goods to India at nil or concessional customs duty under Free Trade Agreement and pay less corporate tax abroad.
• Rate of Income Tax on royalty and fees from technical services reduced from 25% to 10% to facilitate technology inflow to even small businesses.
• Domestic Transfer Pricing threshold limit increased from Rs.5 crore (50 million) to Rs.20 crore (200 million) worth related party transactions.
• Permanent Establishment form to be modified to encourage fund managers to relocate to India.
• General Anti Avoidance Rule (GAAR) to be deferred by two years. It will apply prospectively for investments made on or after 01 April 2017.
• Tax pass through to be allowed to both category I and Category II alternate investment funds.
• Rental income of REITs from their own assets to have pass through facility.
• Pecuniary jurisdiction of a single member of ITAT increased from Rs. 5 lakh to Rs. 15 lakh.

Customs, Excise and Service tax

• Basic Custom Duty on 22 input/raw materials reduced.
• Central Excise and service tax assessee can maintain records electronically and issue digitally signed invoice.
• Online registration with Central Excise and service tax authorities in 2 working days.
• Service tax will be increased from 12% to 14% from date to be notified by Central Government. More about service tax proposal can be read from here.

LEGAL FRONT:

• NBFCs registered with RBI and having asset size of Rs.500 crore (5 billion) and above may be considered for notifications as ‘Financial Institution’ in terms of the SARFAESI Act, 2002.
• Comprehensive Bankruptcy Code of global standards to be brought in fiscal 2015-16 towards ease of doing business.
• Forward Markets commission to be merged with 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.
• Proposal to create a Task Force to establish sector-neutral financial redressal agency that will address grievance against all financial service providers.
• India Financial Code to be introduced soon in Parliament for consideration.
• Government to bring enabling legislation to allow employee to opt for EPF or New Pension Scheme.
• For employee’s below a certain threshold of monthly income, contribution to EPF to be option, without affecting employees’ contribution.
• A need for procurement law to contain malfeasance in public procurement.
• Proposal to introduce a public Contracts (resolution of disputes) Bill to streamline the institutional arrangements for resolution of such disputes.
• Proposal to introduce a regulatory reform Bill that will bring about a cogency of approach across various sectors of infrastructure.

MSME:

• A Trade Receivables discounting System (TReDS) which will be an electronic platform for facilitating financing of trade receivables of MSMEs to be established.
• Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs.20,000 crores (200 billion), and credit guarantee corpus of Rs.3,000 crores (30 billion) to be created. MUDRA Bank will be responsible for refinancing all Micro-finance Institutions which are in the business of lending to such small entities of business through a Pradhan Mantri Mudra Yojana.
• Priority lending will be given to SC/ST enterprises.
• A separate 7.5% sub limit is being created under priority sector lending for MSMEs.

SOCIAL:

• At least one member has access to means for livelihood.
• Housing for all – 2 crore houses in Urban areas and 4 crore houses in Rural areas.
• Providing medical services in each village and city.
• Basic facility of 24×7 power, clean drinking water, a toilet and road connectivity.
• 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 all weather roads.
• Ensure a Senior Secondary School within 5 km reach of every child, while improving quality of education and learning outcomes.
• Pradhan Mantri Suraksha Bima Yojna to cover accidental death risk of Rs.2 Lakh (200,000) for a premium of just Rs.12 per year.
• Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death risk of Rs.2 lakh (200,000) at premium of Rs.330 per year for the age group of 18-50.
• 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 Rs.1,000 each year, for five years, in the new accounts opened before 31st December 2015.

Senior Citizen:

• A new scheme for providing Physical Aids and Assisted Living Devices for senior citizens, living below the poverty line.
• Unclaimed deposits of about Rs.3,000 crores (30 billion) in the PPF, and approximately Rs.6,000 crores (60 billion) in the EPF corpus. The amounts to be appropriated to a corpus, which will be used to subsidize the premiums on these social security schemes through creation of a Senior Citizen Welfare Fund in the Finance Bill.

Young Citizen:

• To make India, the manufacturing hub of the World through Skill India and the Make in India Programmes.
• National skills mission to be launched soon; will consolidate skill initiatives spread across several ministries and allow standardization of procedures and outcomes. Rs. 1,500 crore (15 billion) set apart for Deen Dayal Upadhyay Gramin Kaushal Yojana (Gramin = Village; Kaushal = Skill; Yojna = Plan).
• Encourage and grow the spirit of entrepreneurship – to turn youth into job creators.
• 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. A sum of Rs.150 crore (1.5 billion) will be earmarked.
• Self Employment and Talent Utilisation (SETU) to be established as Techno-financial, incubation and facilitation programme to support all aspects of start-up business. Rs.1000 crore (10 billion) to be set aside as initial amount in NITI.
• Student Financial Aid Authority to be set up to administer and monitor scholarship as well as Educational Loan Schemes through Pradhan Mantri Vidya Lakshmi Karyakram (Pradhan Mantri = Prime Minister; Vidya=Education; Karyakram=Program).

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.

Foreign Investments:

• Foreign investments in Alternate Investment Funds to be allowed. Hence, private equity, hedge fund or real estate funds may now attract foreign investment.
• between different types of foreign investments, especially between foreign portfolio investments (FPI) and foreign direct investments (FDI) to be done away with. Replacement with composite caps.
  [FPI is investment through stock market whereas FDI is issue of securities by Indian company.]
• For overseas direct investment (investment by Indians outside India) – some boost to “Look East” policy – India to setup a project development company to facilitate setting up manufacturing hubs in CMLV countries, namely, Cambodia, Myanmar, Laos and Vietnam.

Government to raise funds:

• Tax free infrastructure bonds for projects in rail, road and irrigation sector.
• Disinvestment in some of the PSUs.