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 Along with reduction in tax slab, exemptions and incentives would be withdrawn.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.
