Highlights of Union Budget 2016-17

Union Finance Minister has presented NDA government’s second budget.

According to the budget, the nine priority areas of the government are:

1. Agriculture and farmer welfare
2. Rural sector
3. Social sector
4. Education skills and job creation
5. Infrastructure investment
6. Financial sector reforms
7. Governance reforms and ease of doing business
8. Fiscal discipline
9. Tax reforms to reduce compliance burden

The government has also proposed rename Dept. of Disinvestment as Dept. of Investment and Public Asset Management. And fiscal deficit target has been retained at 3.5 per cent of GDP for next fiscal year in a big boost for stocks, currency and bond markets.
Who will get what?
Banks:

• Banks get a big boost: Rs 25,000 crore towards recapitalisation of public sector banks.
• Banking Board Bureau will be operationalised.
• More resources will be raised for additional capital if required.

Farmers:

• Farmers’ incomes to be doubled in five years by 2022. Total allocation for agriculture sector has been hiked to Rs. 35,984 crore.
• Big focus on rural distress: Government will spend a record Rs. 38,500 crore on rural jobs programme (MGNREGA).
• Rural road development schemes will get Rs. 19,000 crore, while another Rs. 20,000 crore will be used to fund irrigation schemes.

Infrastructure:

• Continued push for infrastructure development: The finance minister allocated Rs. 2.21 lakh crore for building road and rail infrastructure.
• Proposes to levy infrastructure cess of 1-4 per cent which will make cars costlier.
• 300 urban clusters to be set up under Shyama Prasad Mukherji Rurban Mission.

Black money:
A new amnesty scheme for those holding unaccounted money and assets has been announced. Those declaring undisclosed income under this scheme will have to pay 45 per cent tax.
Taxation:

• The government will not resort to retrospective taxation in future, while proposing a one-time tax dispute resolution for retrospective taxation.
• General anti avoidance tax rule (GAAR) will be implemented from April 1, 2017.

Vulnerable section:

• Target of disbursement under MUDRA increased to 1,80,000 crore.
• A “Krishi Kalyan” cess of 0.5 per cent has been proposed on all services effective June 1, 2016. This will make most of services (such as eating out, buying property, etc.) more expensive.
• Income tax relief for small taxpayers, more taxes for super-rich: Those earnings less than Rs. 5 lakh per annum will get additional relief of Rs. 3,000 on income tax, but the surcharge on super-rich (income of over Rs. 1 crore) has been hiked from 12 per cent to 15 per cent.
• Pollution cess of 1 per cent on small petrol, LPG and CNG cars; 2.5 per cent on diesel cars of certain specifications; 4 per cent on higher-end models.
• Government is launching a new initiative to provide cooking gas to BPL families with state support.
• LPG connections to be provided under the name of women members of family: Rs 2000 crore allocated for 5 years for BPL families.