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The Budget Boon For Common People- Jaitley Opines Nation’s Economy “Flying High”

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The Budget Boon For Common People- Jaitley Opines Nation’s Economy “Flying High”

With the elation that common people is relishing after the advent of the Modi Government, the Budget of the financial year 2015-16 is all set to give a bit more relief, when Finance Minister Arun Jaitley announced the growth budget and addresses the nation’s economy as “Flying”. The budget 2015 is expected to be benefiting the common people as well as the corporate sector.
Jaitley, further added, “India is about to take off” while delivering his first full-year budget. He describes this financial year as a time for “quantum leap” on reforms and building on expectations that the budget this financial year would definitely deliver some colossal reforms. Delivering the full year budget since Prime Minister Narendra Modi’s phenomenal victory last May, Arun Jaitley said that the economic growth of the country would accelerate between 8 to 8.5 per cent in the fiscal year starting in April.
The revamps in the economic data is all set to drive India to the top of the league of fast-growing major economic counties. The current account deficit is estimated to fall below 1 per cent next year, that would help stabilizing the rupee and reinforces the reserves. Expectations further rises in expenditure from subsidies to infrastructure are sky kissing among investors who made India the best performing stock market in Asia after China last year that reside on hopes that Modi Government will bring radical reforms to labour, tax and land laws.
There are the budget 2015-16 highlights for you:
FISCAL DEFICIT

* Fiscal deficit seen at 3.9 per cent of GDP in 2015/16

* Will meet the challenging fiscal target of 4.1 per cent of GDP

* Remain committed to meeting medium term fiscal deficit target of 3 per cent of GDP

* Current account deficit below 1.3 per cent of GDP

* Jaitley says have to keep fiscal discipline in mind despite need for higher investment

MARKET REFORMS

* Propose to merge commodities regulator with SEBI

* To bring a new bankruptcy code

* Jaitley says will move to amend the RBI act this year, and provide for a monetary policy committee

* To set up public debt management agency

* Proposes to introduce a public contract resolution of disputes bill

* To establish an autonomous bank board bureau to improve management of public sector banks

POLICY REFORMS

* To enact a comprehensive new law on black money

* Propose to create a universal social security system for all Indians

* To launch a national skills mission soon to enhance employability of rural youth

* To raise visa-on-arrival facility to 150 countries from 43

* Allocates 346.99 billion rupees for rural employment guarantee scheme

TAXATION

* To abolish wealth tax

* Replaces wealth tax with additional 2 pct surcharge on super rich

* Proposes to cut to 25 per cent corporate tax over next four years

* Corporate tax of 30 per cent is uncompetitive

* Net gain from tax proposals seen at 150.68 billion rupees

* Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.

* Proposes to rationalise capital gains tax regime for real estate investment trusts

* Expects to implement goods and services tax by April 2016

* To reduce custom duty on 22 items

* Basic custom duty on commercial vehicle doubled to 20 ..
* Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.

* Proposes to rationalise capital gains tax regime for real estate investment trusts

* Expects to implement goods and services tax by April 2016

* To reduce custom duty on 22 items

*Basic custom duty on commercial vehicle doubled to 20 per cent.
* Proposes to increase service tax rate and education cess to 14 per cent from 12.36 per cent

* Plans to introduce direct tax regime that is internationally competitive on rates without exemptions

* Exemptions for individual tax payers to continue

* To enact tough penalties for tax evasion in new bill * Tax dept to clarify indirect transfer of assets and dividend paid by foreign firms

INFRASTRUCTURE

* Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year

* Plans to set up national investment infrastructure fund

* Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects

* Proposes 5 “ultra mega” power projects for 4,000 MW each

* Second unit of Kudankulam nuclear power station to be commissioned

* Will need to build additional 100,000 km of ro ..

EXPENDITURE

* Plan expenditure estimated at about 4.65 trillion rupees

* Non-plan expenditure seen at about 13.12 trillion rupees

* Allocates 2.46 trillion rupees for defence spending

* Allocates 331.5 billion rupees for health sector

* If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion rupees

INVESTMENT

* Propose to do away with different types of foreign investment caps and replace them with composite caps

* To allow foreign investment in alternative investment funds

* Public investment needed to catalyse investment
SUBSIDIES

* Food subsidy seen at 1.24 trillion rupees

* Fertiliser subsidy seen at 729.69 billion rupees

* Fuel subsidy seen at 300 billion rupees

* Major subsidies estimated at 2.27 trillion rupees

* We are committed to subsidy rationalisation based on cutting leakages

GOLD

* To develop a sovereign gold bond

* To introduce gold monetisation scheme to allow depositors to earn interest

* To introduce Indian-made gold coin to reduce demand for foreign gold coins

GROWTH

* GDP growth seen at between 8 per cent and 8.5 per cent y/y

* Aiming double digit growth rate, achievable soon

INFLATION

* Expects consumer inflation to remain close to 5 per cent by March, opening room for more monetary policy easing

* Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 per cent

* “One of the achievements of my government has been to conquer inflation. This decline in my view represents a structural shift.”

REVENUES

* Revenue deficit seen at 2.8 per cent of GDP

* Non tax revenue seen at 2.21 trillion rupees

* Agricultural incomes are under stress

DISINVESTMENT

* Government targets 410 billion rupees ($6.7 billion) from stake sales in companies in 2015/16

* Total stake sale in 2015/16 seen at 695 billion rupees

* Sets stake sale target for 2016/17 at 550 billion rupees

* Revises down stake sale target for 2014/15 to 313.5 billion rupees

BORROWING

* Gross market borrowing seen at 6 trillion rupees

* Net market borrowing seen at 4.56 trillion rupees

GENERAL ANTI-AVOIDANCE RULES (GAAR)

* Government defers rollout of anti-tax avoidance rules GAAR by two years

* GAAR to apply prospectively from April 1, 2017

* Retrospective tax provisions will be avoided

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