The financial budget as introduced by the FM focused on high growth. Also, FM indicated in the budget that the reduction in fiscal deficit will slow down and investment will be boosted. This will ensure that the ordinary citizens benefit from the Financial Budget 2015. Some of the crucial highlights from the budget presented are described as follows;
During the financial budget presentation, it was proposed that SEBI will merge with the commodities regulator. A new code will be brought for handling bankruptcy by the government. The FM has also signaled various measures for the amendment of the RBI and share an updated monetary policy to the committee. A new agency will be established for managing the public debts. The settle public disputes faster and quicker, a new resolution bill will be passed by the government. For better management and growth of PSUs, an autonomous bureau of board will be established
The FM announced a comprehensive and more penetrating law for combating black money issues. Also, a universal or common social security structure has been announced for Indian citizens. For enhancing the employability status of the rural youth, national skills scheme has been launched. At present, the facility for visa-on-arrival is restricted to 43 countries. During the budget speech, the FM announced to increase the numbers to 150 nations. In the guarantee scheme for rural employment, Rupees 346.99 billion was added.
For the common man
For trusts in the real estate sector the tax regime for capital gains will be rationalized. From April 2016, the government expects to implement tax for services and goods. Also, it was announced during the budget that for 22 specific items, custom duty has been reduced. On the flip side, for commercial vehicles the custom duty has been increased to 20 percent. Also, proposals were announced to increase the service tax from current 12.36 percent to 14 percent, which is going to make outings costlier. The new bill on taxation will also include stringent penalties to curb tax evasion.
For steel and iron, import tax saw an increase in 5 percent from the current 10 percent. Similarly for metallurgical coke, import tax has been increased to 5 % from present 2.5 percent.
The government increased infrastructure investment from last year and proposal have also been made to introduce a national fund for infrastructure investment. For irrigation, roads and rail projects, the budget proposed infrastructure bonds to go tax free. The government announced additional one lakhs kilometers of road.
Gold and Cigarettes
Sovereign bond and deposit accounts will be launched for gold. Jewelers were disappointed when no decrease on import duty was announced. For cutting gold imports, proposals were made for indigenous gold coins. The excise duty for cigarettes was increased by 25 percent, for length below 65 mm. For others lengths, excise duty was heightened by 15 %.
Borrowing and GAAR
The estimated borrowing for at gross market rate is seen at rupees 6 trillion. At the same time, the estimated borrowing rate for net market is seen at rupees 4.56 trillion. The GAAR was supposed to be rolled out this month but has been deferred by 2 years. The GAAR will be positively applied from 1st April 2017. Apart from that, provisions for retrospective tax will be evaded.
During the budget, it was announced that wealth tax will be abolished and will be replaced with additional surcharge of 2 percent on the super-rich. Another big amendment in taxation was the reduction of corporate tax to 25 percent that will occur within next four annum. Overall, next gain by the exchequer from various tax proposals is expected to be around Rupees 150.68 billion. In order to curb the illegal tax exemption activities, the FM announced that merely having a fund manager will not ensure establishment of any permanent offshore fund, and the result of such activities can be adverse to the individual’s taxation.
The budget indicated that the consumer inflation will be around 5 % by the end of March. This will ensure easing of the monetary policies. The framework agreement for monetary policies made with the Reserve Bank of India clearly stated that their objective is to bring the inflation level to less than 6 percent. The FM positively stated that achievement of the new government that was conquering inflation. The decline in inflation has been, according to the FM, will be influential in bringing structural reforms.
The revenue deficit was seen as GDP’s 2.8 percent. The revenue from non-tax benefits is expected to be rupees 2.21 trillion which can be a huge addition boost to the current ailing economy. At present, income from agriculture is at a stressful condition. For this, the budget has announced a slew of measures aimed at agricultural developments. Though market stabilization reforms, the government is expected to earn rupees 200 billion.
Fiscal deficit is projected at 3.9 % of GDP for the year 2015/16. The FM also assured that the fiscal target set for GDP (4.1) shall also be achieved. The fiscal deficit for medium term has been set to 3% of GDP and the government has committed maintaining current deficit less than 1.3 % of the GDP. The Budget also committed to adhere to fiscal discipline even though for the growth and development of the nation’s economy, huge investment is required.
The current financial budget has assured GDP growth from 8 % to 8.5 % on a year on year basis. 11 % to 12 % is the expected Nominal growth in economy, as per the financial budget. The FM also indicated that growth rate of double digit is achievable and the government will be taking stringent steps for achieving this growth.
A sum of rupees 410 billion was targeted via stale sale across organizations in the year 2015/16. In correspondence to that, total sale achieved in the year 2015/16 was rupees. The target stake sale for the year 2016-17 is kept at Rupees 55 billion.