The Hon. Finance Minister presented his budget 2016 on 29.02.2016.
The budget can be categorized as;
a) Major Steps i.e. bold initiatives.
b) Continuance Steps with some changes.
c) Minor Steps like cosmetic or announcement purpose.
d) Failed Steps Uncalled initiatives.
Major Steps ( Bold Initiatives):
One of the major initiate is to keep current account deficient under control less than 5%, so that, the same will help in controlling the inflationin the market. The budgeted revenue deficit also kept at 2.8 to 2.5% of GDP.
Major Initiatives steps in case of Agriculture, & Rural Sector are , Int Subvention on Agricultural Advances, providing Rs.5000/- crore allocation for for Rural Insurance Sector,Rs.8500/- for Rural Electrification Project in the name of Dindayal Upadhaya Scheme, and the highest allocation of Rs.38500/- crore for MANREGA scheme.
Another major step is to provide higher allocation for road development and other Infra Structure Projects, Rs.2.18 lacs crores together road & railways for for development of road & highways, including Rs.97000/- crores for development of road & highways. Increase in govt spending in infra structure will definitely helps in improving the growth rate of the economy.
To open up, various sector for 100% FDI is also a bold initiative as these sector requires huge investment and there is wide scope for the development. Major two sectors where 100% FDI is allowed are Food Processing sector and Insurance sector.
The major step is also give statutory backing for ADHAR link for subsidy. This will be definitely help in identifying the people and providing the subsidy to the needy and eligible population. This also helps in reducing the misappropriation and misutlisation of the subsides.
The major steps in case of health sector are providing for health insurance of Rs.1/- lac and National Dialysis services in all district hospitals except in few cases at a reasonable cost.
Increase in eligible turnover to Rs.2/-crores and allowing the all professional having gross receipts up to Rs.50/- lacs in the gambit of the presumptive taxation u/s 44AB of the Income Tax Act.
Applicability of Service Tax to the lawyers. This step taken earlier but not succeed. However, the govt is determined to brought the legal services under the gambit of service tax.
Rationalization of penalty provisions under the Income tax act to reduce the discretionary powers in the hand of officers. The step of minimum payment for admission of appeal, and the rationalization of payments for the disputes in appeal will definitely reduce the litigation in the taxation.
Continuance Steps with some changes:
Allocation of RS.25000/- crores to the PSB. The Union Govt. provides every year some funds for the PSB.The questions are who asses there requirement on year to year basis?, when majority of the PSB banks have given operational and other freedom to work in competitive market why there is erosion in the capital? Is the allocation, increased their productivity and profitability? & the same is measured? Are some terms & conditions attached for the infusion of additional capital in the PSB? I think, if the questions are not answered it is better to left them instead of giving additional funds and allow them and give some freedom to act , survive or die on their own disease.
The financial sector reforms, which include introduction of new derivative products in the market.100% stake in ARC , court for bankruptcy, are the steps which come as continuance with some changes.
Allowing the General Insurance to be listed in the stock exchanges, No classification of the expenditure in to plan and non-plan in the year 2016-17, are also the steps which are initiated in this budget.
Minor Steps like cosmetic or announcement purpose.
Some announcement like increase in reduction of income tax from
Rs.2000/- to Rs.5000/- in case of assesses where total income is less than Rs.5/-lacs. increase in rebate on rent from Rs.24000/- to Rs.60000/-.increased deduction of interest on housing loan for the first time buyers of Rs.50000/- if the housing loan is up to Rs.35/- lacs and the purchase value of the flat is up to Rs.50/- lacs. I think for getting this additional rebate of interest on housing loan, the first timer has to carry the budget book along with him while he select the house.
Increase in the rate of interest to 9% from 6% on the income tax refund, is the right step and the fixing of responsibility for the loss of the additional interest paid are good step in right direction. This will definitely helps in getting the refunds earlier.
Rationalization of the TDS provisions and setting of 11 benches of tribunal for taxes are the steps in continuance.
Failed Steps Uncalled initiatives.
Imposition of Excise Duty of 1% on Jewellery ornaments. This sector was already under stress and agitated when the provision of taking Pan Number for sale of RS.1/- lacs was introduced. There were strikes by the jewelers however, they digest the PAN provision seeing that opposition to the same were not getting results. The new provision to brought them under the gambit of excise duty having a negligible rate of 1% will definitely put them to corner of the dead wall. The presumption that they sell gold means they are wealthy might not hold good in all the cases. Moreover, the trading community resist not for the paying taxes but the licensee raj come along with the taxes. This step certainly not expected from a Govt. who comes to power with promises of removing the license raj & red tape.
Taxing of withdrawal of the EPF will be also a failed attempt. By explaining that, the major earner will effect more than the small earner does not give the govt a leverage to tax the retirement benefits. A sudden change in such retirement kitty earned by an employee in almost 25 to 30 years of his service for the betterment of old age is not received by the majority of the senior citizens in good sense.
MAT i.e. Minimum Alternative Tax on the Start up project is also a step In half direction. The Govt wants to give 100% tax benefits for start up units for their beloved project of Make in India but Govt does not want to give the benefits whole heartedly and attach a string of MAT for exemption offered in the new projects. This will reduce the working capital in the hand of the new entrepreneurs in the start up projects.
These are the failed initiatives and some consideration and second thought must be given for such provisions by the Hon Finance Minister.
The Budget focus mainly of Agriculture, Rural and Infra Structure development. And Assuming the effective implementation this budget will definitely increase the growth rate of Indian economy.
CA Satish C Badve