Saturday, February 28, 2015

BUDGET SPEECH Arun Jaitley Minister of Finance February 28, 2015


Budget 2015-2016 Speech of  Arun Jaitley Minister of Finance February 28, 2015

Madam Speaker, 

I rise to present the Budget of the Union for the year 2015-16. 

2. I present this Budget in an economic environment which is far more positive than in the recent past. When other economies are facing serious challenges, India is about to take-off on a faster growth trajectory once again. The International Monetary Fund (IMF) has downgraded its earlier forecast of global economic growth by 0.3%, and the World Trade Organization has revised its forecast of world trade growth from 5.3% to 4%. Forecasts for India, however, have either been upgraded, or remained the same, without downgrades. Madam Speaker, we have also embraced the States as equal partners in the process of economic growth. States have been economically empowered more than ever before and it is my belief that every rupee of public expenditure, whether undertaken by the Centre or the States, will contribute to the betterment of people’s lives through job creation, poverty elimination and economic growth.

3. In the last nine months, the NDA Government headed by Prime Minister Shri Narendra Modi, has undertaken several significant steps to energise the economy. The

Raising the limit of deduction under section 80DDB


Under the existing provisions of section 80DDB of the Act, an assessee, resident in India is allowed a deduction of a sum not exceeding forty thousand rupees, being the amount actually paid, for the medical treatment of certain chronic and protracted diseases such as Cancer, full blown AIDS, Thalassaemia, Haemophilia etc. This deduction is allowed up to sixty thousand rupees where the expenditure is in respect of a senior citizen i.e. a person who is of the age of sixty years or more at any time during the relevant previous year.


The above deduction is available to an individual for medical expenditure incurred on himself or a dependant relative. It is also available to a Hindu undivided family (HUF) for such expenditure incurred on its members. Dependant in case of an individual means the spouse, children, parents, brother or sister of an individual and in case of an HUF means a member of the HUF ,wholly or mainly dependant on such individual or HUF for his support and maintenance.


Under the existing provisions of this section, a certificate in the prescribed form, from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist working in a Government hospital is required. It has been represented that the requirement of a certificate from a doctor working in a Government hospital causes undue hardship to the persons intending to claim the aforesaid deduction .Government hospitals at many places do not have doctors specialising in the above branches of medicine. For this and other reasons, it may be difficult for the taxpayer to obtain a certificate from a Government hospital.


In view of the above, it is proposed to amend section 80DDB so as to provide that the assessee will be required to obtain a prescription from a specialist doctor for the purpose of availing this deduction.

Further, it is also proposed to amend section 80DDB to provide for a higher limit of deduction of upto eighty thousand rupees, for the expenditure incurred in respect of the medical treatment of a “very senior citizen”. 

A “very senior citizen” is proposed to be defined as an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year.


These amendments will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

80D Limit Increased from 15000 to 25000-Budget 2015 Deduction given for medical exp. of very senior citizen


Amendment in section 80D relating to deduction in respect of health insurance premia

The existing provisions contained in section 80D, inter alia, provide for deduction of 

a) upto fifteen thousand rupees to an assessee, being an individual in respect of health insurance premia, paid by any mode, other than cash, to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the Central Government Health Scheme or any other notified scheme or any payment made on account of preventive health check up of the assessee or his family; and

b) an additional deduction of fifteen thousand rupees is provided to an individual assessee to effect or to keep in force insurance on the health of the parent or parents of the assessee.

A similar deduction is also available to a Hindu undivided family (HUF) in respect of health insurance premia, paid by any mode, other than cash, to effect or to keep in force insurance on the health of any member of the HUF. The section also presently provides for a deduction of twenty thousand rupees in both the cases if the person insured is a senior citizen of sixty years of age or above.

The quantum of deduction allowed under Section 80D to individuals and HUF in respect of premium paid for health insurance had been fixed vide Finance Act, 2008 at Rs.15000/- and Rs.20,000/- (for senior citizens). In view of continuous rise in the cost of medical expenditure, it is proposed to amend section 80D so as to raise the limit of deduction from fifteen thousand rupees to twenty five thousand rupees. It is further proposed to raise the limit of deduction for senior citizens from twenty thousand rupees to thirty thousand rupees.

Further, very senior citizens are often unable to get health insurance coverage and are therefore unable to take tax benefit under section 80D. Accordingly, as a welfare measure towards very senior citizens ,it is also proposed to provide that any payment made on account of medical expenditure in respect of a very senior citizen, if no payment has been made to keep in force an insurance on the health of such person, as does not exceed thirty thousand rupees shall be allowed as deduction under section 80D. 

The aggregate deduction available to any individual in respect of health insurance premia and the medical expenditure incurred would however be limited to thirty thousand rupees. Similarly aggregate deduction for health insurance premia and medical expenditure incurred in respect of parents would be limited to thirty thousand rupees.

Example:

(i) For Individual and his family Rs.

                                                     Health insurance premia 21,000

(ii) For parents

                                                   Health insurance of Mother : 18,000

                 Medical expenditure on father (very senior citizen) 15,000

          Deduction eligible u/s 80D Rs. 21000 + Rs. 30000 = Rs. 51,000

It is also proposed to define a ‘very senior citizen’ to mean an individual resident in India who is of the age of eighty years 

or more at any time during the relevant previous year.

These amendments will take effect from the 1st April, 2016 and will, accordingly, apply in relation to the assessment year

2016-17 and subsequent assessment years.

Wealth-tax under Wealth-tax Act, 1957 abolished wef Fy 2015-16


Wealth-tax Act, 1957 (‘the WT Act’) was introduced w.e.f. 01.04.1957 on the recommendation of Prof. Nicholas Kaldor for achieving twin major objectives of reducing inequalities and helping the enforcement of Income-tax Act through cross checks.

Accordingly, all the assets of the assessees were taken into account for computation of net-wealth. The levy of wealth-tax was thoroughly revised on the recommendation of Tax Reform Committee headed by Raja J. Chelliah vide Finance Act, 1992 with effect from 01.04.1993. The Chelliah Committee had recommended abolition of wealth-tax in respect of all items of wealth other than those which can be regarded as unproductive forms of wealth or other items whose possession could legitimately be discouraged in the social interest.

Currently, wealth-tax is levied on an individual or HUF or company, if the net wealth of such person exceeds Rs.30 lakh on the valuation date, i.e. last date of the previous year. For the purpose of computation of taxable net wealth, only few specified assets are taken into account.

The actual collection from the levy of wealth-tax during the financial year 2011-12 was Rs.788.67 crore and during the financial year 2012-13 was Rs.844.12 crore only. The number of wealth-tax assessee was around 1.15 lakh in 2011-12.

Although only a nominal amount of revenue is collected from the levy of wealth-tax, this levy creates a significant amount of compliance burden on the assessees as well as administrative burden on the department. This is because the assessees

are required to value the assets as per the provisions of Wealth-tax Rules for computation of net wealth and for certain assets like jewellery, they are required to obtain valuation report from the registered valuer. Further, the assets which are specified for levy of wealth-tax, being unproductive, such as jewellery, luxury cars, etc. are difficult to be tracked and this gives an opportunity to the assessees to under report/under value the assets which are liable for wealth-tax. Due to this, the collection of wealth-tax over the years has not shown any significant growth and has only resulted into disproportionate compliance burden on the assessees and administrative burden on the department. 

It is, therefore, proposed to abolish the levy of wealth tax under the Wealth-tax Act, 1957 with effect from the 1st April, 2016. 

It is also proposed that the objective of taxing high net worth persons shall be achieved by levying a surcharge on tax payer earning higher income as levy of surcharge is easy to collect & monitor and also does not result into any compliance burden on the assessee and administrative burden on the department. The details regarding levy of enhanced surcharge on this account are given under the heading “Rates of Income-tax”. It is also proposed that information relating to assets which is currently required to be furnished in the wealth-tax return shall be captured by suitably modifying income-tax return.

This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

80C for the girl child under the Sukanya Samriddhi Account Scheme Income Also exempted


Pursuant to the Budget announcement in July 2014, a special small savings instrument for the welfare of the girl child has been introduced under the Sukanya Samriddhi Account Rules, 2014. The following tax benefits have been envisaged in the Sukanya Samriddhi Account scheme:-

(i) The investments made in the Scheme will be eligible for deduction under section 80C of the Act.

(ii) The interest accruing on deposits in such account will be exempt from income tax.

(iii) The withdrawal from the said scheme in accordance with the rules of the said scheme will be exempt from tax.

Accordingly, a new clause (11A) is proposed to be inserted in section 10 of the Act so as to provide that any payment from an account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 shall not be included in the total income of the assessee. As a result, the interest accruing on deposits in, and withdrawals from any account under the scheme would be exempt.

The Scheme has been notified under clause (viii) of sub-section (2) of section 80C vide Notification number 9/2015 S.O.210 (E),F.No. 178/3/2015-ITA-I dated 21.012015.

With a view to allow the deduction under section 80C to the parent or legal guardian of the girl child, amendment of section 80C of the Act is proposed to be made so as to provide that a sum paid or deposited during the year in the Scheme in the name of any girl child of the individual or in the name of any girl child for whom such individual is the legal guardian, would be eligible for deduction under section 80C of the Act.

These amendments will take effect retrospectively from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years.

View other details of  Sukanya Samriddhi Account Scheme

Income Tax Rates Changes for individual In Budget 2015 dated 28.02.2015


The Union Finance Minister Shri Arun Jaitley in his Budget Speech in Lok Sabha today proposed no change in the rate of personal Income-tax. He announced the tax proposals with no change in the rate of tax for companies in respect of the income earned in the financial year 2015-16, assessable in the assessment year 2016-17. 

However, Finance Minister Shri Arun Jaitley proposed to levy a surcharge at the rate of 12% on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding Rs 1 crore. Surcharge in the case of domestic companies having income exceeding Rs 1 crore and upto Rs 10 crore is proposed to be levied @ 7% and surcharge @ 12% is proposed to be levied on domestic companies having income exceeding Rs 10 crore. 

Shri Jaitley further proposed that in the case of foreign companies the surcharge will continue to be levied @ 2% if the income exceeds Rs 1 crore and is upto Rs 10 crore, and @ 5% if the income exceeds Rs 10 crore. 

It is also proposed to levy a surcharge @ 12% as against current rate of 10% on additional income-tax payable by companies on distribution of dividends and buyback of shares, or by mutual funds and securitization trusts on distribution of income. 

The education cess on income-tax @ 2% for fulfillment of the commitment of the Government to provide and finance universalized quality based education and 1% of additional surcharge called ‘Secondary and Higher Education Cess’ on tax and surcharge is proposed to be continued for the financial year 2015-16 for all taxpayers.


  1. Increase in the limit of deduction in respect of health insurance premium from Rs.15,000 to Rs.25,000.(read details of changes in Section 80D in budget 2015
  2. For senior citizens the limit will stand increased to Rs.30,000 from the existing Rs.20,000.(read details of changes in Section 80D in budget 2015
  3. For very senior citizens of the age of 80 years or more, who are not covered by health insurance, deduction of Rs.30,000 towards expenditure incurred on the treatment will allowed.(read details of changes in Section 80D in budget 2015
  4. The deduction limit of Rs.60,000 towards expenditure on account of specified diseases of serious nature is proposed to be enhanced to Rs.80,000 in case of very senior citizens.(read changes in budget 2015 in section 80DDB)
  5. Additional deduction of Rs.25,000 will be allowed for differently abled persons under Section 80DD and Section 80U of the Income-tax Act.
  6. The limit on deduction on account of contribution to a Pension Fund and the New Pension Scheme is proposed to be increased from Rs.1 lakh to Rs.1.5 lakh.
  7. To provide social safety net and the facility of pension to individuals and additional deduction of Rs.50,000 is proposed to be provided for contribution to the New Pension Scheme under Section 80 CCD. This will enable India to become a pensioned society instead of a pensionless society.
  8. Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C. All payments to the beneficiaries including interest payment on deposit will also be fully exempt.
  9. Transport allowance exemption is being increased from Rs.800 to Rs.1,600 per month.
  10. For the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.
  11. Wealth Tax abolished 

ASSESSMENT YEAR 2016-17 RELEVANT TO FINANCIAL YEAR 2015-16

1. Tax Slab for an Individual (resident & below 60 years) or HUF/AOP/BOI/AJP
Income Slabs
Tax Rates
Total income up to Rs. 2.5 Lac
0% Tax
Total income above Rs. 2.5 Lac and below Rs.5 Lac
10% on amount exceeding Rs. 2.5 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac
20% on Income exceeding Rs. 5 Lac + Rs. 25,000
Total income more than Rs. 10 Lac
30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 12% of Income tax is applicable
2. Tax Slab for an Individual (resident & above 60 years but below 80 years)
Income Slabs
Tax Rates
Total income up to Rs. 3.00 Lac
0% Tax
Total income above Rs. 3.00 Lac and below Rs.5 Lac
10% on amount exceeding Rs. 3.00 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac
20% on Income exceeding Rs. 5 Lac + Rs. 20,000
Total income more than Rs. 10 Lac
30% on Income exceeding Rs. 10 Lac + Rs. 1,20,000

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 12% of Income tax is applicable
3. Tax Slab for an Individual (resident & above 80 years)
Income Slabs
Tax Rates
Total income up to Rs. 5 Lac
0% Tax
Total income above Rs. 5 Lac and below Rs.10 Lac
20% on Income exceeding Rs. 5 Lac
Total income more than Rs. 10 Lac
30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 12% of Income tax is applicable
EDUCATION CESS
The amount of Income-tax shall be increased by Education Cess of 3% on Income-tax.

Benefits to Middle Class Tax Payers in the Budget 2015-16


The Union Minister of Finance Shri Arun Jaitley in his Budget Speech in Lok Sabha today proposed rationalization of various tax exemptions and incentives to reduce tax disputes and improve tax administration. He said, with a view to encourage savings and to promote health care among individual tax payers, it is proposed to increase the limit of reduction of health insurance premium from Rs 15,000 to Rs 25,000 and for senior citizen this limit is increase from Rs 20,000 to Rs 30,000.

For senior citizen above the age of 80 years, not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure. Deduction limit of Rs 60,000 on expenditure on account of specified diseases is enhanced to Rs 80,000 in the case of senior citizens.

Additional deduction of Rs 25,000 is allowed for differently-abled persons, increasing the limit from Rs 50,000 to Rs 75,000. It is also proposed to increase the limit of deduction from Rs 1 lakh to Rs 1.25 lakh in case of severe disability.

The Finance Minister Shri Jaitley also proposed to provide that investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income-tax and any payment from the scheme shall not be liable to tax.

Limit on deduction on account of contribution to a pension fund and the new pension scheme is proposed to be increased from Rs 1 lakh to Rs 1.5 lakh.

Additional deduction of Rs 50,000 will be allowed for contribution to the new pension scheme u/s 80 CCD increasing from Rs 1 lakh to Rs 1.5 lakh.

Details of tax deductions proposed are as follows:

·         
Deduction u/s 80C 

Rs 1,50,000
·         
Deduction u/s 80CCD
Rs 50,000
·         
Deduction on account of interest on house property loan (Self occupied property)
Rs 2,00,000
·         
Deduction u/s 80D on health insurance premium
Rs 25,000
·         
Exemption of transport allowance
 Rs 19,200

Total
Rs 4,44,200

BUDGET-2015 28-02-2015 MAIN HIGHLIGHTS


Budget 2015-16 Marks the Beginning of Co-Operative Federalism and Empowerment of the States. Several New Schemes Announced

Micro Units Development Refinance Agency (Mudra) Bank To Refinance Micro Finance Institutions
Pradhan Mantra Suraksha Bima Yojana To Cover Accidental Death Risk Of Rs. 2 Lakh For Just Rs. 12 Per Year Premium
Atal Pension Yojana For Defined Pension, Government To Contribute 50% Of The Premium
Pradhan Mantri Jeevan Jyoti Bima Yojana To Cover Both Natural And Accidental Death Risk
Proposal To Create Senior Citizen Welfare Fund
National Investment And Infrastructure Fund Proposed
Tax Free Infrastructure Bonds For  Projects In Rail, Road And Irrigation Sectors
Setu(Self-Employment And Talent Utilisation) Mechanism To Support Start-Up Businesses
5 New Ultra Mega Power Projects To Be Set Up
Gold Monetisation Scheme To Replace Present Gold Deposit And Gold Metal Loan Schemes
Another  Rs. 1,000 Crore For Nirbhaya Fund
New Institutions Including Aiims, Iit And Iim To Be Set Up
Total Expenditure Estimated To Be Rs. 17,77,477 Crore, Fiscal Deficit To Be 3.9% Of Gdp
Objective Of Stable Taxation Policy And A Non-Adversarial Tax Administration
Fight Against Scourge Of Black Money To Be Taken Forward
Efforts On Various Fronts To Implement Gst From Next Year
No Change In Rate Of Personal Income Tax.
Proposal To Reduce Corporate Tax From 30% To 25% Over The Next Four Years, Starting From Next Financial Year.
Rationalization And Removal Of Various Tax Exemptions
 Incentives To Reduce Tax Disputes And Improve Administration
Exemption To Individual Tax Payers To Continue To Facilitate Savings



TAX PROPOSALS


            The Finance Minister Shri Arun Jaitley has said that a very important dimension to our tax administration is the fight against the scourge of black money.  He said that taxation is an instrument of social and economic engineering.  Tax collections help the Government to provide education, healthcare, housing and other basic facilities to the people to improve their quality of life and to address the problems of poverty, unemployment and slow development.  To achieve these objectives, it has been our endeavour in the last nine months to foster a stable taxation policy and non-adversarial tax administration. 

            Shri Jaitley said that Goods and Services Tax (GST) introduced in the last Session will play a transformative role in the way our economy functions.  This transformative piece of legislation in indirect taxation needs to be matched with transformative measures in direct taxation.  He said that the rate of corporate tax is proposed to be reduced from 30% to 25% over the next four years.  This will lead to higher level of investment, higher growth and more jobs. The broad things adopted in finalizing the tax proposals include:-

A.     Measures to curb black money
B.     Job creation through revival of growth and investment and promotion of domestic manufacturing and ‘Make in India’;
C.     Minimum government and maximum governance to improve the ease of doing business;
D.     Benefits to middle class taxpayers;
E.      Improving the quality of life and public health through Swachch Bharat initiatives; and
F.      Stand alone proposals to maximize benefits to the economy.


           Shri Jaitley said that a considered decision has been taken to enact a comprehensive new law on black money to specifically deal with such money stashed away abroad.  The Bill in this regard is proposed to be introduced in the current Session of the Parliament.  The key features of the bill will include punishment of rigorous imprisonment up to ten years for concealment of income and assets and evasion of tax in relation to foreign assets.  This offence will be made non-compoundable and offenders will not be permitted to approach the Settlement Commission.  Penalty for such concealment of income and assets at the rate of 300 per cent of tax shall be levied.  Non-filing of return or filing of return with inadequate disclosure of foreign assets will be punishable with rigorous imprisonment up to seven years.

           As regards curbing domestic black money, a new and more comprehensive Benami Transactions (Prohibition) Bill will be introduced in the current Session of the Parliament.  Shri Jaitley said that this law will enable confiscation of benami property and provide for prosecution, thus, blocking a major avenue for generation and holding of black money in the form of benami property, especially in real estate.  Quoting of PAN is being made mandatory for any purchase or sale exceeding the value of Rs.1 lakh.  To improve enforcement, CBDT and CBEC will leverage technology and have access to information in each other’s data-base.

           Mentioning job creation as the second pillar of taxation proposals Shri Jaitley said that this will be ensured through revival of growth and investment and promotion of domestic manufacturing and ‘Make in India’.  The tax ‘pass through’ is proposed to be allowed to both Category-1 and Category-2 alternative investment fund so that tax is levied on the investors in these funds and not on the funds per se. To rationalize the capital gain regime for the sponsors  exiting at the time of listing of the units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) subject to payment of Securities Transaction Tax (STT) is proposed, he said. 

           Permanent Establishment (PE) norm will be modified to encourage fund managers to relocate to India. The Finance Minister said that General Anti Avoidance Rule (GAAR) will be deferred by two years.  It will apply to investments made on or after 01-04-2017, when implemented.  In order to facilitate young entrepreneurs rate of income tax on royalty and fees  for technical services will be reduced from 25 per cent to 10 per cent.  To generate greater employment opportunities the benefit of deduction for employment of new regular workman to all business entities will be extended.  The eligibility threshold of minimum 100 regular workmen will be reduced to 50.

           Recognizing the importance of indirect taxes in the context of promotion of domestic manufacturing and ‘Make in India’, the Finance Minister said basic custom duty on certain inputs, raw materials, intermediates and components in 22 items is proposed to be reduced to minimize the impact of duty evasion.  All goods except populated printed circuit boards for use in manufacture of ITA bound items are proposed to be exempted from SAD.  Subject to actual user condition SAD will be reduced on import of certain other imports and raw materials. 

           Shri Jaitley said wealth tax is proposed to be abolished and replaced with an additional surcharge of 2 per cent on the super rich with the taxable income of over Rs.1 Crore.  With this 2 per cent additional surcharge a collection of Rs.9,000 Crore is targeted against a tax sacrifice of Rs.1,008 Crore. To eliminate the scope for discretionary exercise of power and provide a hassle-free structure to the tax payers, Shri Jaitley proposed to increase the threshold limit from Rs.5 Crore to Rs.20 Crore.

In order to rationalize the MAT provisions for FIIs, profits corresponding to their income from capital gains on transactions in securities which are liable to tax at a lower rate, shall not be subject to MAT, Shri Jaitley said.

          Education cess and the Secondary and Higher education cess is proposed to be subsumed in central excise duty.  The general rate of central excise duty of 12.36 per cent including the cesses will be rounded off to 12.5 per cent.  The Ad-valorem rates of excise duty lower than 12 per cent and those higher than 12 per cent with a few exceptions are not proposed to be increased.  Excise duty on foot-wears with leather uppers and having retail price of more than Rs.1,000 per pair is proposed to be reduced to 6 per cent.  Shri Jaitley said on-line central excise and service tax registration will be done in two working days.  As a measure of business facilitation time limit for CENVAT credit on inputs and input services to be increased from 6 months to one year.  Service tax plus education cess is proposed to be increased from 12.36 per cent to 14 per cent to facilitate transaction to GST. 

          Shri Jaitley said that cleanliness of households and clean environment are very important social causes.  As an initiative to Swachh Bharat Abhiyan Shri Jaitley proposed 100 per cent reduction for contribution, other than by way of CSR contributions, to the Swachh Bharat Kosh.  A similar tax treatment is also proposed for the Clean Ganga Fund, he said. Shri Jaitley proposed an increase in clean energy cess from Rs.100 to Rs.200 per metric tonne of coal, etc. to finance clean environment initiatives.   He further said that excise duty of sacks and bags of polymers of ethylene other than for industrial use is proposed to be increased from 12 per cen to 15 per cent.  He also mentioned an enabling provision to levy Swachh Bharat Cess at the rate of 2 per cent or less on all or certain services if need arises.  Shri Jaitley said that services by common affluent treatment plant will be exempt from service tax.  He also proposed concessions on customs and excise duty available to electrically operated vehicle and hybrid vehicle extended up to 31-03-2016.

          The Finance Minister proposed no change in the rate of personal income tax and rate of tax for companies in respect of income earned in the finance year 2015-16, assessable in Assessment Year 2016-17.  Shri Jaitley proposed to levy a surcharge @ 12 per cent on individuals, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities having income exceeding Rs.1 Crore.  Surcharge in the case of domestic companies having income exceeding Rs.1 Crore and up to Rs.10 Crore is proposed to be levied @ 7 per cent and surcharge @ 12 per cent is proposed to be levied on domestic companies having income exceeding Rs.10 Crore.
     
          He  further proposed that in the case of foreign companies the surcharge will continue to be levied @ 2 per cent if the income exceeds Rs.1 Crore and is up to Rs. 10 Crore, and @ 5 per cent if the income exceeds Rs.10 Crore.

          It is also proposed to levy a surcharge @ 12 per cent as against current rate of 10 per cent on additional income tax payable by companies on distribution of dividends and buyback of shares, or by mutual funds and securitization trusts on distribution of income.

          The education cess on income tax @ 2 per cent for fulfilment of the commitment of the Government to provide and finance universalized quality based education and 1 per cent of additional surcharge called ‘Secondary and Higher Education Cess’ on tax and surcharge is proposed to be continued for the financial year 2015-16 for all taxpayers, the Minister said.

         Describing the extension of benefits to middle class tax payers as the priority of the government, Shri Jaitley proposed the following concessions:-

A.     Increase in the limit of deduction in respect of health insurance premium from Rs.15,000 to Rs.25,000.
(1)   For senior citizens the limit will stand increased to Rs.30,000 from the existing Rs.20,000.
(2)   For very senior citizens of the age of 80 years or more, who are not covered by health insurance, deduction of Rs.30,000 towards expenditure incurred on the treatment will allowed.
B.     The deduction limit of Rs.60,000 towards expenditure on account of specified diseases of serious nature is proposed to be enhanced to Rs.80,000 in case of very senior citizens.
C.     Additional deduction of Rs.25,000 will be allowed for differently abled persons under Section 80DD and Section 80U of the Income-tax Act.
D.     The limit on deduction on account of contribution to a Pension Fund and the New Pension Scheme is proposed to be increased from Rs.1 lakh to Rs.1.5 lakh.
E.      To provide social safety net and the facility of pension to individuals and additional deduction of Rs.50,000 is proposed to be provided for contribution to the New Pension Scheme under Section 80 CCD.   This will enable India to become a pensioned society instead of a pensionless society.
F.      Investments in Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C.  All payments to the beneficiaries including interest payment on deposit will also be fully exempt.
G.     Transport allowance exemption is being increased from Rs.800 to Rs.1,600 per month.
H.     For the benefit of senior citizens, service tax exemption will be provided on Varishta Bima Yojana.

         Mentioning change, growth, jobs and genuine effective up-liftment of the poor and the under-privileged as Government’s commitment and re-affirming its commitment to the Constitutional principles of equality and justice for all without concern for caste, creed or religion, Shri Jaitley ended his budget speech with the Upanishad-inspired mantra-

Om Sarve Bhavantu Sukhinah…..
(OM! May All Be Happy)….                   

Finance Minister Shri Arun Jaitley has said that the Indian Economy has turned around dramatically in the last nine months with the real GDP growth expected to accelerate to 7.4% making India the fastest growing large economy in the world. Presenting the General Budget for the year 2015-16 in Lok Sabha today, he said macro-economic stability has been restored and conditions have been created for sustainable poverty elimination, job creation and durable double digit economic growth. Shri Jaitley specifically talked about three key achievements of the Government, the Jan Dhan Yojana which brought over 12.5 crores families into financial mainstream in a short period of 100 days, transparent coal block auctions to augment resources of the states and ‘Swachh Bharat’ which has become a movement to regenerate India. Shri Jaitley said that India has now embarked on two more game changing reforms which are GST and the JAM Trinity-Jan Dhan, Aadhar and Mobile-to implement direct transfer of benefits. He added that GST will put in place a state-of-the art indirect tax system by 1st April 2016 while the JAM Trinity will allow transfer benefits in a leakage-proof, well-targetted and cashless manner.

Describing the declining inflation as one of the major achievements of the Government, the Finance Minister said that this represents a structural shift. He said CPI inflation is expected to remain at close to 5% by the end of the year which will allow further easing of monetary policy. Shri Jaitley said a Monetary Policy Framework Agreement has been concluded with the RBI to keep inflation below 6%.

Stating that while based on the new series, estimated GDP growth for 2014-15 is 7.4%, Shri Jaitley said growth in the next financial year is expected to be between 8 to 8.5% and aiming for a double-digit rate seems feasible very soon. The Minister underlined that India has to think in terms of a quantum jump. He said the year 2022 will be the Amrut Mahotsav, the 75th year, of India’s independence. He added the vision of what the Prime Minister has called ‘Team India’ led by the States and guided by the Central Government should include a roof for each family which will require to complete two crore houses in urban areas and four crore houses in rural areas with each house having 24 hour power supply, clean drinking water, a toilet and road connectivity. He said the vision includes that at least one member from each family should have access to the means of livelihood, substantial reduction in poverty, electrification of the remaining 20,000 villages including off-grid solar power by 2020, connecting each of the 1,78,000 un-connected habitation, providing medical services in each village and city, ensuring a Senior Secondary School within 5 km reach of every child, strengthening rural economy-increase irrigated area, ensuring communication connectivity to all villages, to make India, the manufacturing hub of the world through Skill India and the Make in India Programmes, encourage and grow the spirit of entrepreneurship and development of Eastern and North Eastern regions on par with the rest of the country.


The Finance Minister counted five major challenges faced by the Indian economy which are agricultural income under stress, weak private sector investment in infrastructure, decline in manufacturing, resource crunch in view of higher devolution in taxes to states and maintaining fiscal discipline. Shri Jaitley assured that the country will meet the challenging fiscal deficit target of 4.1% of GDP, that the Government had inherited. Talking about the fiscal roadmap Shri Jaitley said that the Government is firm to achieve fiscal target of 3% of GDP. He added that the journey for fiscal deficit target of 3% will be achieved in three years rather than two years.
           
            Stating that the Government is committed in its resolve, as Indians, to regain its pre-eminence as a just and compassionate country, Shri Jaitley said that what is needed is a well targetted system of subsidy delivery. He emphasized on need to cut subsidy leakages, to achieve which the Government is committed to the process of rationalizing subsidies. He said the direct transfer of benefits, started mostly in scholarship schemes, will be further expanded with a view to increasing the number of beneficiaries from the present 1 crore to 10.3 crore.

            Reiterating that the Government’s commitment to farmers runs deep, the Finance Minister proposed to fully support Agriculture Ministry’s organic farming scheme – “Paramparagat Krishi Vikas Yojana”. Stating that the Pradhanmantri Gram Sinchai Yojana is aimed at irrigating the field of every farmer and improving water use efficiency to provide ‘ Per Drop More Crop’’ , Shri Jaitley proposed allocation of Rs. 5,300 crore to support micro-irrigation, watershed development and the Pradhan Mantri Krishi Sinchai Yojana.
           
            In order to support the agriculture sector with the help of effective agriculture credit and focus on small and marginal farmers, the Finance Minister proposed to allocate Rs. 25,000 crore  to the corpus of Rural Infrastructure Development fund (RIDF) set up in NABARD, Rs. 15,000 crore for Long Term Rural Credit Fund; Rs. 45,000 crore for Short Term Cooperative Rural Credit Refinance Fund; and Rs. 15,000 crore for Short Term RRB Refinance Fund. He said that the Government has set up an ambitious target of Rs. 8.5 lakh crore of agricultural credit. Stating the Government’s commitment to supporting employment through MGNREGA, The Minister proposed an initial allocation of Rs. 34,699 crore for the programme.

            The Finance Minister proposed to create a Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs. 20,000 crore, and credit guarantee corpus of 3,000 crore, which will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana,. He added that priority will be given to SC/ST enterprises in lending.

            While showing concern over a large proportion of India’s population being without any kind of insurance, Shri Jaitley said that the soon-to-be- launched Pradhan Mantri Suraksha Bima Yojana, will cover accidental death risk of Rs. 2 lakh for a premium of just Rs. 12 per year. Similarly, he said, the Government will also launch the Atal Pension Yojana, which will provide a defined pension, depending on the contribution, and its period. To encourage people to join this scheme, the Government will 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. The third Social Security Scheme that the Minister announced is the Pradhan Mantri Jeevan Jyoti Bima Yojana which covers both natural and accidental death risk of Rs. 2 lakhs. The premium will be Rs. 330 per year, or less than one rupee per day, for the age group 18-50.

            Mentioning about unclaimed deposits of about Rs. 3,000 crores in the PPF and approximately Rs. 6,000 crores in the EPF corpus, the Minister said that the amounts will  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. He reiterated the Government’s commitment to the on-going schemes for the welfare of SCs, STs and Women.

            The Finance Minister underlined the pressing need to increase public investment in infrastructure. He said that he proposes increased outlays on both the roads and the gross budgetary support to the railways, by Rs. 14,031 crore and Rs. 10,050 crore respectively. He said the CAPEX of the public sector units is expected to be Rs. 3,17,889 crore, an increase of approximately Rs. 80,844 crore  over RE 2014-15. He also proposed to establish National Investment and Infrastructure Fund (NIIF) with an annual flow of Rs. 20,000 crore.  He said that he also intends to permit tax free infrastructure bonds for the projects in the rail, road and irrigation sector. He said the PPP mode of infrastructure development has to be revisited and revitalized.

            Shri Jaitley proposed to establish the Atal Innovation Mission(AIM) in NITI which will provide Innovation Promotion Platform involving academicians, and drawing upon national and international experiences. A sum of Rs. 150 crore is proposed to be earmarked for the mission.

            The Finance Minister said that the Government is establishing a mechanism to be known as SETU (Self-Employment and Talent Utilisation) which will support all aspects of start-up businesses, and other self-employment activities, particularly in technology-driven areas. Rs. 1,000 crore have been initially earmarked in NITI Aayog for the purpose.

            Shri Jaitley said the Government also proposes to set up 5 new Ultra Mega Power Projects each of 4000 MWs in the plug-and-play mode.

            In order to promote investment in the country, the Minister proposed to set up a Public Debt Management Agency (PDMA) which will bring both India’s external borrowings and domestic debt under one roof. He also proposed to merge the Forwards Markets Commission with SEBI to strengthen regulation of commodity forward markets and reduce wild speculation. He said enabling legislation, amending the Government Securities Act and the RBI Act is proposed in the Finance Bill, 2015.

            Regarding the Employees Provident Fund (EPF), the Minister said the employees need to be provided two options, EPF or the New Pension Scheme (NPS). He said, for employees below a certain threshold of monthly income, contribution to EPF should be optional, without affecting or reducing the employer’s contribution.

            Stating that India is one of the largest consumers of gold in the world, Shri Arun Jaitley proposed to introduce a Gold Monetisation Scheme, which will replace both the present Gold Deposit and Gold metal Loan Schemes. The New scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account.  Banks/other dealers would also be able to monetize this gold. He also proposed a Sovereign Gold Bond, as an alternative to purchasing metal gold. He also announced commencing work on developing Indian Gold Coin, which will carry the Ashok Chakra on its face.
            Highlighting need for increasing investments from all sources, the Finance Minister proposed to allow foreign investments in Alternate Investment
Funds. He said in order to catalyze investments from the Indian Private Sector  in South East Asia, a Project Development Company will set up manufacturing hubs  in Cambodia, Myanmar, Laos and Vietnam.

            In order to support Programmes for women security, advocacy and awareness, the Minister proposed to provide another Rs. 1,000 crore to the Nirbhaya Fund.

            Shri Jaitley said resources will be provided to start work along landscape restoration, signage and interpretation centres, parking, access for the differently abled, visitors’ amenities, including securities and toilets, illumination and plans for benefiting communities around them at various heritage sites.

Expressing concern over environmental degradation, the Minister said that the target of renewable energy capacity has been revised to 1,75,000 MW till 2022. He said the Government is also launching a Scheme for Faster Adoption and manufacturing of Electric Vehicles (FAME) with an initial outlay of Rs. 75 crore.

            The Minister emphasized on formal skill training and said the Government will soon launch a National Skills Mission which will consolidate skill initiatives spread across several Ministries. He said Rs. 1,500 crore has been set apart for Deen Dayal Upadhyay Gramin Kaushal Yojana. He proposed to set up a fully IT based Student Financial Aid Authority to administer and monitor Scholarship as well Educational Loan Schemes, through the Pradhan Mantri Vidya Lakshmi Karyakram.

            The Minister proposed to set up several New Institutions. An IIT will be set up in Karnataka and Indian School of Mines, Dhanbad will be upgraded in to a full-fledged IIT. New All India Institutes of Medical Sciences (AIIMS) will be set up in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam. Another AIIMS like institution will be set up in Bihar. A post graduate institute of Horticulture Research & Education will be set up in Amritsar. Three new National Institutes of Pharmaceutical Education and Research will be set up in Maharashtra, Rajasthan and Chattisgarh and one institute of Science and Education Research will be set up in Nagaland and Odisha each. IIMs will be setup in J&K and Andhra Pradesh.

            Shri Jaitley said India is making good progress towards digital India. He said the National Optical Fibre Network Programme (NOFNP) of 7.5 lakh kms networking 2.5 lakh villages is being further speeded up by allowing willing States to undertake its execution.

            The Minister said that in spite of the large increase in the devolution to states, adequate provision is being made for the schemes for the poor with allocation of Rs. 68,968 crore to the education sector including mid-day meals, Rs. 33,152 crore to the health sector and Rs. 79,526 crore for rural development activities including MGNREGA, Rs. 22,407 crore for housing and urban development, Rs. 10,351 crore for women and child development, Rs. 4,173 crore for Water Resources and Namami Gange. The Minister said that adequate funds have been provided for the needs of the armed forces. As against likely expenditure of this year of Rs. 2,22,370 crore the budget allocation for 2015-16 is Rs. 2,46,727 crore.
            Shri Arun Jaitley while giving the budget estimates for 2015-16 said Non-Plan expenditure estimates for the Financial Year are Rs. 13,12,220 crore. Plan expenditure is estimated to be Rs. 4,65,277 crore, which is very near to the R.E. of 2014-15. Total Expenditure has accordingly been estimated at Rs. 17,77,477 crore. Gross Tax receipts are estimated to be Rs. 14,49,490 crore. Devolution to the States is estimated to be Rs. 5,23,958 crore. Share of Central Government will be Rs. 9,19,842 crore. Non Tax Revenues for the next fiscal are estimated to be Rs. 2,21,733 crore. He said with the above estimates, fiscal deficit will be 3.9 percent of GDP and Revenue Deficit will be 2.8 percent of GDP.