Budget 2014-2015 Presented by Sh. Arun Jaitley (Minister of Finance) on July 10, 2014 : With Modi Government Motto of Minimum Government Maximum Governance
STATE OF THE ECONOMY : Reducing fiscal deficit to 4.1 per cent of the GDP in the current year and fiscal deficit of 3.6 per cent for 2015-16 and 3 per cent for 2016-17 . Total Budget expenditure estimates thus stands at Rs 17,94,892 crore, To finance this expenditure, it is estimated that Gross Tax receipts will be Rs. 13,64,524 crore. After devolving the share of states, share of centre will be Rs. 9,77,258 crore. Non Tax Revenues for the current Financial Year will be Rs.2,12,505crore and capital receipts other than borrowings will be Rs.73,952 crore. With the above estimates, fiscal deficit will be 4.1% of GDP and Revenue deficit will be 2.9 per cent of GDP.
GST : Government will be able to find a solution in the course of this year and approve the legislative scheme which enables the introduction of GST.
FDI : He Propose to permit 26 per cent FDI in Defence manufacturing. The composite cap of foreign exchange is being raised to 49 per cent with full Indian management and control through the FIPB route. Insurance sector is proposed to be increased up to 49 per cent from the current level of 26 per cent, with full Indian management and control, through the FIPB route.
Real Estate: Real Estate Investment Trusts (REITS) have been successfully used as instruments for pooling of investment in several countries. Govt. intend to provide necessary incentives for REITS which will have pass through for the purpose of taxation
Senior Citizens: NDA Government during its last term in office had introduced the Varishtha Pension BimaYojana (VPBY) as a pension scheme for senior citizens. Under the scheme a total no. of 3.16 lakh annuitants are being benefitted and the corpus amounts to Rs.6,095 crore. he proposed to revive the scheme for a limited period from 15 August, 2014 to 14 August, 2015 for the benefit of citizens aged 60 years and above.
Tourism
- National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD) shall be launched in this financial year. A sum of Rs.100 crore is being set aside for this purpose.
- National Heritage City Development and Augmentation Yojana (HRIDAY) will also be launched for conserving and preserving the heritage characters of these cities. To begin with He Proposed to launch this programme in the cities such as Mathura, Amritsar, Gaya, Kanchipuram, Vellankani and Ajmer. He ProposedHe Proposed to set aside a sum of Rs.200 crore for this purpose.
- Sarnath-Gaya-Varanasi Buddhist circuit would also be developed with world class tourist amenities to attract tourists from all over the world.
- Integrated Ganga Conservation Mission called “NamamiGange” and set aside a sum of Rs.2,037 crores for this purpose.
Education
- The development of biotech clusters in Faridabad and Bengaluru will be scaled up and taken to the highest international quality. The nascent agri-biotech cluster in Mohali will be scaled up to include plant-genetic and phenotype platforms
- A programme for the up gradation of skills and training in ancestral arts for development for the minorities called “Up gradation of Traditional Skills in Arts, Resources and Goods” would be launched to preserve the traditional arts and crafts which are rich heritage.
Agriculture
As a very large number of landless farmers are unable to provide land title as guarantee, institutional finance is denied to them and they become vulnerable to money lenders’ usurious lending. He Propose to provide finance to 5 lakh joint farming groups of “BhoomiHeenKisan” through NABARD in the current financial year.
Financial Sector
- Introduction of uniform KYC norms and inter-usability of the KYC records across the entire financial sector.
- Introduce one single operating demat account so that Indian financial sector consumers can access and transact all financial assets through this one account.
- As part of strengthening the regulatory framework for commodity markets, the Warehouse Development and Regulatory Authority (WD&RA) has begun a transformation plan to invigorate the warehousing sector and significantly improve post-harvest lending to farmers against negotiable warehouse receipts. This plan will be implemented with vigor.
- There is an urgent need to converge the current Indian accounting standards with the International Financial Reporting Standards (IFRS). He ProposedHe Proposed for adoption of the new Indian Accounting Standards (Ind AS) by the Indian companies from the financial year 2015-16 voluntarily and from the financial year 2016-17 on a mandatory basis. Based on the international consensus, the regulators will separately notify the date of implementation of AS Ind for the Banks, Insurance companies etc. Standards for the computation of tax would be notified separately.
- To be in line with Basel-III norms there is a requirement to infuse Rs.2,40,000crore as equity by 2018 in our banks.
Defense Sector
- Propose to allocate an amount of Rs. 2,29,000crore for the current financial year for Defence.
- One Rank One Pension : We reaffirm our commitment to our brave soldiers. A policy of “One Rank One Pension” has been adopted by the Government to address the pension disparities. We propose to set aside a further sum of Rs.1,000 crore to meet this year’s requirement.
- Modernization of the armed forces is critical to enable them to play their role effectively in the Defence of India’s strategic interests. I, therefore, propose to increase the capital outlay for Defence by Rs. 5,000 crore over the amount provided for in the interim Budget. This includes a sum of Rs.1,000 crore for accelerating the development of the Railway system in the border areas.
- War Memorial : The country is deeply indebted to the officers and the jawans of the armed forces for having made huge sacrifices to defend its honour. In doing so a very large number of them gave up their lives. It is a privilege for the nation to erect a befitting memorial in their memory. I am happy to announce that a War Memorial will be constructed in the Princes Park. It will be supplemented by a War Museum. I am allocating a sum of Rs.100 crore for this purpose.
Tax Proposal
Direct Tax : Income Tax Proposals
- Propose to make no changes in the tax rate. However, with a view to provide relief to small and marginal taxpayers and senior citizens, propose to increase personal income tax exemption limit by Rs.50,000 that is, from Rs.2 lakh to Rs.2.5 lakh in the case of individual taxpayers who are below the age of 60 years. Similarly, propose to raise the exemption limit from Rs 2.5 lakh to Rs.3 lakh in the case of senior citizens.
- To encourage domestic investment in long term savings, propose to increase the investment limit under section 80C of the Income-tax Act from Rs.1 lakh to Rs1.5 lakh.
- Housing continues to be an area of concern for middle and lower middle class due to high cost of financing. Therefore, to reduce this burden,he proposed to increase the deduction limit on account of interest on loan in respect of self occupied house property from Rs.1.5 lakh to Rs.2 lakh.
- The concessional rate of tax at 15 percent on dividends received by Indian companies from their foreign subsidiaries has resulted in enhanced repatriation of funds from abroad. He ProposedHe Proposed to continue with this concessional rate of 15 percent on foreign dividends without any sunset date. This will ensure stability of taxation policy.
- Foreign Portfolio Investors (FPIs) have invested more than Rs.8 lakh crore (about 130 billion US $) in India, propose to provide that income arising to foreign portfolio investors from transaction in securities will be treated as capital gains.
- Mutual Funds, other than equity oriented funds, the capital gains arising on transfer of units held for more than a year is taxed at a concessional rate of 10% whereas direct investments in banks and other debt instruments attract a higher rate of tax, he proposed to increase the rate of tax on long term capital gains from 10 percent to 20 percent on transfer of units of such funds. I also propose to increase the period of holding in respect of such units from 12 months to 36 months for this purpose.
- where an assessee fails to deduct and pay tax on specified payments to residents, 100 percent of such payments are not allowed as deduction while computing his income. This has caused undue hardship to taxpayers, particularly where the rate of tax is only 1 to 10%. Hence, He Propose to provide that instead of 100 percent, only 30% of such payments will be disallowed.
- Enable resident taxpayers to obtain an advance ruling in respect of their income tax liability above a defined threshold
Indirect Tax : Cental Excise, Custom & Service Tax Proposals : In recent times, among indirect taxes, service tax has shown the highest rate of growth. Since my overall objective is to prepare the indirect tax regime for a smooth transition to Goods and Services Tax, changes have been kept minimal at this stage
Reduce the basic customs duty (BCD) on:
- Fatty acids, crude palm stearin, RBD and other palm stearin, specified industrial grade crude oils from 7.5 percent to Nil for manufacture of soaps and oleo-chemicals;
- Crude glycerin from 12.5 percent to 7.5 percent and crude glycerin used in the manufacture of soaps from 12.5 percent to Nil;
- Steel grade limestone and steel grade dolomite from 5 percent to 2.5 percent;
- Battery waste and battery scrap from 10 percent to 5 percent;
- Coal tar pitch from 10 percent to 5 percent;
- Specified inputs for manufacture of spandex yarn from 5 percent to Nil
As a measure of relief to the footwear industry, most of which are in SME sector, he propose to reduce the excise duty from 12 percent to 6 percent on footwear of retail price exceeding Rs.500 per pair but not exceeding Rs.1,000 per pair. Footwear of retail price up to Rs.500 per pair will continue to remain exempted.
Service tax on sale of space or time for advertisements in broadcast media, is being extended to cover such sales on other segments like online and mobile advertising. Sale of space for advertisements in print media however would remain excluded from service tax