Finance Minister Arun Jaitley presents Union Budget for 2016-17
29 February, New Delhi
Agriculture, infrastructure and social sectors are in the spotlight with much higher fiscal outlays in the Union Budget 2016-17 presented by Finance Minister Arun Jaitley in the Parliament Monday. Presenting his third successive Budget, He gave relief to small tax payers.
The Minister proposed to raise the ceiling of tax rebate under section 87A from two thousand rupees to five thousand for income not exceeding Rs 5 lakh. Two crore tax payers will get a relief of Rs 3000. While making no change in personal Income Tax slabs in the Union Budget, additional deduction of Rs 36,000 a year is proposed for those who do not own any house or get any house rent allowance.They will get an exemption upto Rs 60,000 now.
He proposed relief for the first time home buyers by announcing a deduction of additional interest of Rs 50,000 for loans upto Rs 35 lakh. For the ‘first – home buyers’, he proposed to give a deduction for an additional interest of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned during the next financial year, provided value of the house does not exceed Rs 50 lakh.
The Budget also focused on moving towards a pensioned society. Withdrawal upto 40 per cent of the corpus at the time of retirement will be exempted in National Pension Scheme.
In the agriculture sector, allocations for agriculture and farmers welfare has been doubled to Rs 44,000 crore and interest subvention to farmers will continue. The Finance Minsiter told the Parliament that a special focus has been given to ensure adequate and timely flow of credit to the farmers. Against the target of 8.5 lakh crores in 2015-16, the target of agricultural credit in 2016-17 will be an all time high of rupees nine lakh crore. To reduce the burden of loan repayment on farmers a provision of rupees 15 thousand crores has been made in the budgetary estimates of 2016-17 towards interest subvention. The government has also provided a path breaking crop insurance scheme, namely Prime Minister’s Fasal Bima Yojana. For effective implimentation of the scheme, Rs 5,500 crores has been provided in the budget of 2016-17. Mr. Jaitley proposed to impose a new cess Krishi Kalyan Cess to be levied on all taxable services. He proposed to impose a Cess, called the Krishi Kalyan Cess, i.e. 0.5% on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers.
The Cess will come into force with effect from 1st June 2016.
Referring to Rural Sector, the Finance Minister said that an overall Rs 87,700 crores have been allocated for its development. He said, Rs 2.87 lakh crore will be given as grant-in-aid to Gram Panchayat and Municipalities marking a quantum jump of 228 percent compared to the previous five year period. He added that Rs 38,500 crore have been allocated for Mahatma Gandhi National Rural Employment Generation Scheme, MGNREGS.
Mr. Jaitley said that allocation of Rs 19,000 crore is proposed during 2016-17 for implementation of Pradhan Mantri Gram Sadak Yojna. Mr Jaitley said that the scheme had suffered in the past because of underfunding. The government has substantially increased the allocation in the last two years and have now allocated Rs 19,000 crore in 2016-17.
Cars, cigarettes, branded garments, air travel and aerated drinks will become more expensive, following a host of changes in the tax structure in the Budget for 2016-17. The finance minister proposed the levy of an infrastructure cess of up to 4 percent on various kinds of vehicles. Diesel vehicles will see the highest increase in prices. As a result of additional levy of Krishi Kalyan and infrastructure cess on all services, activities including eating out and payment of bills will also become more expensive.
Continuing the trend set by his many predecessors, Finance Minister Arun Jaitley today imposed up to 15 per cent excise duty on all tobacco products.
On the other hand, computer parts, microwave, set-top box, broadband router, CCTV, mobile battery solar lamp, wind energy equipments and footwears would be cheaper. Reading-writing related paper, paperboard and newsprint will also become cheaper. Government has also given rebate in prices of sanitary pads, napkins, leading to their cheaper price. Also, dialysis and artificial body parts, will now cost less.
To tackle undisclosed income, the budget proposed payment of tax at 30 per cent, surcharge 7.5 per cent and penalty at 7.5 per cent amounting to a total of 45 per cent.
Mr. Jaitley also announced a New Health Protection Scheme in the Budget which will provide health cover up-to Rs 1 lakh per family. Serious illness of family members causes seious severe stress on financial circumstances of poor and economically weaker families.
In order to help such families, the Government will launch a new health protection scheme which will provide health cover upto rupees 1 lakh per family. For senior citizens of the age of 60 and above belonging to this category and additional top of package of Rs 30 thousand will be provided. The Minister announced Rs 2000 crore in the Budget to give LPG Connection to women member of poor households.
“We have decided to embark upon a massive mission to provide an LPG connection in the name of women members of poor households. I have set aside a sum of Rs 2000 crore in this year’s Budget to meet the initial cost of providing these LPG connections. This would benefit about 1 crore 50 lakh households below the poverty line in the year 2016-17.
Mr. Jaitley said, 1500 Multi Skill Training Institutes will be set-up across the country. He said, the government wants to bring enterpreneurship at the door step of youth through the Pradhan Mantri Kaushal Vikas Yojana. We have decided to set up 15 hundred multiskill training institute accross the country. I am setting aside an amount of Rs 17,00 crore for this initiative. We propose to further scale up the Pradhan Mantri Kaushal Vikas Yojana to skill one crore youth over the next three years.
The Minister also assured that the fiscal deficit target of 3.5 per cent for the year 2016-17 will be met. In a bid to popularise the ambitious Sovereign Gold Bond scheme, the Minister proposed exempting such bonds from capital gains tax on redemption.
The Union Budget has envisaged a total outlay of Rs 3,40,922 crore for the Defence ministry. Defence budget accounts for 17.21 per cent.