Union Budget 2015

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A brief note on Union Budget 2015

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Knowledge Capsules © COPYRIGHT

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Knowledge Capsules © COPYRIGHT STATE OF ECONOMY Inflation declined - a structural shift Monetary Policy Framework Agreement with RBI to keep inflation below 6. CPI inflation projected at 5 by the end of the year consequently easing of monetary policy. GDP growth in 2015-16 projected to be between 8 to 8.5. PRESENTED BY: ARUN JAITLEY ON: 28 th FEB 2015

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Knowledge Capsules © COPYRIGHT ACHIEVEMENTS SO FAR  Financial Inclusion - 12.5 crores families  Transparent Coal Block auctions  Swachh Bharat Mission  Goods and Service Tax GST  Jan Dhan Aadhar and Mobile JAM – for direct benefit transfer 12.5 crores families financially mainstreamed in 100 days

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Knowledge Capsules © COPYRIGHT Amrut Mahotsav - The year 2022 75th year of Independence Vision for “Team India” led by PM OTHER BUDGET KEY FEA TURES……………….. Housing for all - 2 crore houses in Urban areas and 4 crore houses in Rural areas At least one member has access to means for livelihood.

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Knowledge Capsules © COPYRIGHT Electrification of the remaining 20000 villages including off-grid Solar Power- by 2020. Connecting Each Of The 178000 Un-connected Habitation Ensure a Senior Secondary School within 5 km reach of every child To make India the manufacturing hub of the World through Skill India and the Make in India Programmes.

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Knowledge Capsules © COPYRIGHT  Agricultural income under stress  Increasing investment in Infrastructure  Decline in manufacturing  Resource crunch in view of higher devolution in taxes to states  Maintaining fiscal discipline. Fiscal Roadmap  Government firm to achieve fiscal target of 3 of GDP  Journey for fiscal deficit target of 3 will be achieved in 3 years rather than 2 years.  The fiscal deficit targets are 3.9 3.5 and 3.0 in FY 2015-16 2016-17 2017-18 respectively.

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Knowledge Capsules © COPYRIGHT FOR GOOD GOVERNANCE Need to cut subsidy leakages not subsidies themselves. Direct Transfer of Benefits to be extended further with a view to increase the number of beneficiaries from 1 crore to 10.3 crore

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Knowledge Capsules © COPYRIGHT 1. AGRICULTURE ‘Pradhanmantri Gram Sinchai Yojana’ to provide ‘Per Drop More Crop’ To support micro-irrigation watershed development and the ‘Pradhan Mantri Krishi Sinchai Yojana’ Paramparagat Krishi Vikas Yojana’ 5300 CRORE 8.5 LAKH CRORE Target Of Agriculture Credit

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Knowledge Capsules © COPYRIGHT 25000 CRORE 15000 CRORE 45000 CRORE 15000 CRORE to the corpus of Rural Infrastructure Development Fund maintained by NABARD for Long Term Rural Credit Fund Short Term Co-operative Rural Credit Refinance Fund Short Term RRB Refinance Fund.

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Knowledge Capsules © COPYRIGHT Need to create a National Agriculture Market for the benefit farmers which will also have the incidental benefit of moderating price rises. Government to work with the States in NITI for the creation of a Unified National Agriculture Market

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Knowledge Capsules © COPYRIGHT 2. Funding The Unfunded Micro Units Development Refinance Agency MUDRA Bank with a corpus of 20000 crores and credit guarantee corpus of 3000 crores to be created. Responsible for refinancing all Micro-finance Institutions which are in the business of lending to such small entities of business through a Pradhan Mantri Mudra Yojana. Trade Receivables discounting System TReDS which will be an electronic platform for facilitating financing of trade receivables of MSMEs to be established.

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Knowledge Capsules © COPYRIGHT Comprehensive Bankruptcy Code of global standards to be brought Postal network with 154000 points of presence spread across villages to be used NBFCs registered with RBI may be considered for notifications as ‘Financial Institution’ in terms of the SARFAESI Act 2002. Assest size 500 crore and above Pradhan Mantri Suraksha Bima Yojna to cover accidental death risk COVER: 2 LAKHS PREMIUM: 12/per year Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death risk age group: 18-50yrs COVER: 2 LAKHS PREMIUM: 330/Per year

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Knowledge Capsules © COPYRIGHT Atal Pension Yojana: Provide Pension Govt Contribution: 50 of the beneficiaries’ premium Limitation: 1000 each year for five years in the new accounts opened before 31st December 2015. Unclaimed deposits of about 3000 crores in the PPF and approximately 6000 crores in the EPF corpus. ….used to subsidize the premiums on these social security schemes through creation of a Senior Citizen Welfare Fund in the Finance Bill. A new scheme for providing Physical Aids and Assisted Living Devices for senior citizens living below the poverty line. Government ensure a functional social security system for all Indians specially the poor and the under-privileged.

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Knowledge Capsules © COPYRIGHT 3 INFRASTRUCTURE 20000 CRORE National Investment and Infrastructure Fund NIIF to be established Tax free infrastructure bonds for the projects in the rail road and irrigation sectors. SETU Self-Employment and Talent Utilization to be established as Techno- financial incubation and facilitation program to support all aspects of start-up business. 1000 CRORE

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Knowledge Capsules © COPYRIGHT 5 new Ultra Mega Power Projects each of 4000 MW in the Plug-and-Play mode PPP mode of infrastructure development to be revisited and revitalized Atal Innovation Mission AIM to be established in NITI to provide Innovation Promotion Platform involving academicians and drawing upon national and international experiences to foster a culture of innovation research and development. 150 CRORE An expert committee to examine the possibility and prepare a draft legislation where the need for multiple prior permission can be replaced by a pre-existing regulatory mechanism. This will facilitate India becoming an investment destination. Sharp increase in outlays of roads and railways. Capital expenditure of public sector units to also go up.

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Knowledge Capsules © COPYRIGHT 4 FINANCIAL MARKET Public Debt Management Agency PDMA to be set up Forward Markets commission to be merged with SEBI Enabling legislation amending the Government Securities Act and the RBI Act included in Finance bill 2015 India Financial Code to be introduced soon in Parliament for consideration. Proposal to create a Task Force to establish sector-neutral financial redressal agency Vision of putting in place a direct tax regime which is internationally competitive on rates

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Knowledge Capsules © COPYRIGHT Government to bring enabling legislation to allow employee to opt for EPF or New Pension Scheme. For employee’s below a certain threshold of monthly income contribution to EPF to be option without affecting employees’ contribution. Monetizing Gold Commence work on developing an Indian gold coin which will carry the Ashok Chakra on its face.

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Knowledge Capsules © COPYRIGHT Foreign investments in Alternate Investment Funds to be allowed Distinguish between FDI and FPI A project development company to facilitate setting up manufacturing hubs in CMLV countries namely Cambodia Myanmar Laos and Vietnam Investments 5. INVESTMENTS

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Knowledge Capsules © COPYRIGHT • 1000 crores to the Nirbhaya Fund. 6. SAFE INDIA • Visas on arrival to be increased to 150 countries in stages. 7. TOURISM

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Knowledge Capsules © COPYRIGHT renewable energy capacity revised • Total 175000 MW comprises of 100000 MW Solar 60000 MW Wind 10000 MW Biomass and 5000 MW Small hydro PUBLIC CONTRACTS BILL • Proposal to introduce a public Contracts resolution of disputes Bill to streamline the institutional arrangements for resolution of such disputes. REGULATORY REFORM BILL • Proposal to introduce a regulatory reform Bill that will bring about a cogency of approach across various sectors of infrastructure 8. GREEN INDIA A need for procurement law to contain malfeasance in public procurement.

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Knowledge Capsules © COPYRIGHT 9. SKILL INDIA Deen Dayal Upadhyay Gramin Kaushal Yojana to enhance the employability of rural youth. A Committee for 100th birth celebration of Deen Dayalji Upadhyay to be announced An IIT to be set up in Karnataka and Indian School of Mines Dhanbad to be upgraded in to a full fledged IIT. New All India Institute of Medical Science AIIMS to be set up in JK Punjab Tamil Nadu Himachal Pradesh and Assam AIIMS like institutions to be set up at BIHAR

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Knowledge Capsules © COPYRIGHT Post graduate institute of Horticulture Research Education in Amritsar 3 new National Institute of Pharmaceuticals Education and Research in Maharashtra Rajasthan Chattisgarh One institute of Science and Education Research is to be set up in Nagaland Orissa each. A student Financial Aid Authority to administer and monitor the front-end all scholarship as well Educational Loan Schemes through the Pradhan Mantri Vidya LakshmiKaryakram.

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Knowledge Capsules © COPYRIGHT An autonomous Bank Board Bureau to be set up to improve the governance of public sector bank. BANK The National Optical Fibre Network Programme NOFNP to be further speeded up by allowing willing states to execute on reimbursement of cost basis. TECH Part of Delhi-Mumbai Industrial Corridor DMIC Ahmedabad-Dhaulera Investment region and Shendra-Bidkin Industrial Park are now in a position to start work on basic infrastructure.

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Knowledge Capsules © COPYRIGHT TAX PROPOSAL No change in rate of personal income tax Reduction in corporate tax from 30 to 25 over the next four years.starts from next year Rationalization and removal of various tax exemptions and incentives to reduce tax disputes and improve administration.

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Knowledge Capsules © COPYRIGHT MEASURES TO CURB BLACK MONEY Key features of new law on black money: 1 Evasion of tax in relation to foreign assets to have a punishment of rigorous imprisonment up to 10 years be non compoundable have a penalty rate of 300 and the offender will not be permitted to approach the Settlement Commission. 2 Non-filing of return/filing of return with inadequate disclosures to have a punishment of rigorous imprisonment up to 7 years. 3 Undisclosed income from any foreign assets to be taxable at the maximum marginal rate. 4 Mandatory filing of return in respect of foreign asset. 5 Entities banks financial institutions including individuals all liable for prosecution and penalty. 6 Concealment of income/evasion of income in relation to a foreign asset to be made a predicate offence under PML Act 2002. 7 PML Act 2002 and FEMA to be amended to enable administration of new Act on black money.

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Knowledge Capsules © COPYRIGHT Limit of deduction of health insurance premium increased from 15000 to 25000 for senior citizens limit increased from 20000 to 30000.tax deduction Senior citizens above the age of 80 years who are not covered by health insurance to be allowed deduction of 30000 towards medical expenditures. Deduction limit of 60000 with respect to specified decease of serious nature enhanced to 80000 in case of senior citizen. Additional deduction of 25000 allowed for differently abled persons.

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Knowledge Capsules © COPYRIGHT Limit on deduction on account of contribution to a pension fund and the new pension scheme increased from 1 lakh to 1.5 lakh. Additional deduction of 50000 for contribution to the new pension scheme u/s 80CCD Service-tax exemption on Varishtha Bima Yojana. Payments to the beneficiaries including interest payment on deposit in Sukanya Samriddhi Scheme to be fully exempt.

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Knowledge Capsules © COPYRIGHT Simplification of tax procedures. Central excise/Service tax assesses to be allowed to use digitally signed invoices and maintain record electronically Penalty provision in indirect taxes are being rationalized to encourage compliance and dispute resolution Monetary limit for a case to be heard by a single member bench of ITAT increase from 5 lakh to 15 lakh Ease of doing business – Minimum Government Maximum Governance

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Knowledge Capsules © COPYRIGHT Ease of doing business – Minimum Government Maximum Governance Education cess and the Secondary and Higher education cess to be subsumed in Central Excise Duty. Specific rates of central excise duty in case of certain other commodities revised. Excise levy on cigarettes and the compounded levy scheme applicable to pan masala gutkha and other tobacco products also changed. Excise duty on footwear with leather uppers and having retail price of more than 1000 per pair reduced to 6. Online central excise and service tax registration to be done in two working days

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Knowledge Capsules © COPYRIGHT Wealth-tax replaced with additional surcharge of 2 per cent on super rich with a taxable income of over 1 crore annually Provision of indirect transfers in the Income-tax Act suitably cleaned up Domestic transfer pricing threshold limit increased from 5 crore to 20 crore Tax Administration Reform Commission TARC recommendations to be appropriately Ease of doing business – Minimum Government Maximum Governance

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Knowledge Capsules © COPYRIGHT Ease of doing business – Minimum Government Maximum Governance Time limit for taking CENVAT credit on inputs and input services increased from 6 months to 1 yr Service-tax plus education cess increased from 12.36 to 14 to facilitate transition to GST Donation made to National Fund for Control of Drug Abuse NFCDA to be eligible for 100 deduction u/s 80G of Income-tax Act Seized cash can be adjusted towards assesses tax liability.

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Knowledge Capsules © COPYRIGHT SWACHH BHARAT Deduction for contributions other than by way of CSR contribution to Swachh Bharat Kosh and Clean Ganga Fund. Clean energy cess increased from 100 to 200 per metric tonne of coal etc. to finance clean environment initiatives. Excise duty on sacks and bags of polymers of ethylene other than for industrial use increased from 12 to 15. Enabling provision to levy Swachh Bharat cess at a rate of 2 or less on all or certain services if need arises. Concessions on custom and excise duty available to electrically operated vehicles and hybrid vehicles extended upto 31.03.2016.

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Knowledge Capsules © COPYRIGHT Other features …………. Conversion of existing excise duty on petrol and diesel to the extent of 4/- per litre into Road Cess to fund investment. Service Tax exemption extended to certain pre cold storage services in relation to fruits and vegetables so as to incentivize value addition in crucial sector. Yoga to be included within the ambit of charitable purpose under Section 215 of the Income-tax Act Most provisions of Direct Taxes Code have already been included in the Income-tax Act therefore no great merit in going ahead with the Direct Taxes Code as it exists today To mitigate the problem being faced by many genuine charitable institutions it is proposed to modify the ceiling on receipts from activities in the nature of trade commerce or business to 20 of the total receipts from the existing ceiling of 25 lakh. Direct tax proposals to result in revenue loss of 8315 crore whereas the proposals in indirect taxes are expected to yield 23383 crore. Thus the net impact of all tax proposals would be revenue gain of 15068 crore.

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Knowledge Capsules © COPYRIGHT Other features …………. Increase in basic custom duty: ♦ Metallurgical coke from 2.5 to 5. ♦ Tariff rate on iron and steel and articles of iron and steel increased from 10 to 15. ♦ Tariff rate on commercial vehicle increased from 10 to 40. Basic custom duty on digital still image video camera with certain specification reduced to nil. Excise duty on rails for manufacture of railway or tram way track construction material exempted retrospectively from 17-03-2012 to 02-02-2014 if not CENVAT credit of duty paid on such rails is availed. Service-tax to be levied on service provided by way of access to amusement facility entertainment events or concerts pageants non recognized sporting events etc. Enabling provision made to exclude all services provided by the Government or local authority to a business entity from the negative list.. Service-tax exemption to construction erection commissioning or installation of original works pertaining to an airport or port withdrawn.

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Knowledge Capsules © COPYRIGHT Other features …………. Transportation of agricultural produce to remain exempt from Service-tax. Artificial heart exempt from basic custom duty of 5 and CVD. Excise duty exemption for captively consumed intermediate compound coming into existance during the manufacture of agarbathi. Service-tax exemption: ♦ Services of pre-conditioning pre-cooling ripening etc. of fruits and vegetables. ♦ Life insurance service provided by way of Varishtha Pension Bima Yojana. ♦ All ambulance services provided to patients. ♦ Admission to museum zoo national park wile life sanctuary and tiger reserve. ♦ Transport of goods for export by road from factory to land customs station.

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Knowledge Capsules © COPYRIGHT

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