When Finance Minister Arun Jaitley started presenting the Union Budget 2016 (third time for him), he had too many things on his mind. This crucial budget had the Herculean task of meeting the needs of both the agriculture and industry. Boosting public spending was also expected to feature in his budget.
Slight changes in tax exemptions were on the cards and winning investors’ confidence was also a concern area that the people of India wanted the 2016 Budget to address. Moreover, Jaitley is well aware of the fact that the implementation of the Seventh Pay Commission and the OROP will be additional burden on the exchequer.
Let’s see what new measures were announced in the budget and how far they were aimed at meeting people’s expectations.
Budget Announcements for Farmers and Rural Sector
- The government will inaugurate unified e-platform for farmers on Ambedkar’s birthday.
- Paramparagat Krishi Vikas Yojana will ensure that five lakh acres of area comes under organic farming.
- 28.5 lakh hectares will be brought under irrigation.
- Agricultural policy will be reorganised to double farmers’ income in five years.
- About six crore rural households will be covered under digital literacy schemes in the next three years.
- Total allocation for rural sector amounts to Rs. 87,769 crore.
- Government announces plans for initiating Direct Benefit Transfer for fertiliser subsidy.
Focus on Rural Health
- National dialysis service programme will be initiated under PPP model.
- Health insurance of upto Rs. 1 lakh per family will be provided.
- Around 3,000 stores to be opened for generic drugs.
Investments Announced for Development Schemes
- Rs. 9,000 crore has been announced for Swachch Bharat Abhiyan.
- Rs. 38,500 crore has been announced for MNREGA. It’s the highest ever allotment for rural employment scheme.
Budget Announcements for Infrastructure Sector
- Government announces a total outlay of Rs. 2.31 lakh crore.
- Total outlay on roads and rails is Rs. 2.80 lakh crore.
- 50,000 km state highways will be converted to NH roads.
- 160 airports and airstrips will be revived.
Budget Announcements for Education and Skill Development
- Rs. 1,700 crore has been allotted for 1500 multi-skill development centres.
- 10 public and 10 private educational institutions will be enhanced into world-class institutes.
- Rs. 1,000 crore has been allotted for financing higher education.
Budget Announcements for Banking Sector
- Government announced Rs. 25,000 crore for recapitalisation of public sector banks.
- Government-owned General insurance companies will be listed in stock exchanges.
- Amendmends will be proposed to help Asset Reconstruction Companies manage NPAs of public sector banks in a more efficient way.
- RBI Act will be amended to set up monetary policy committee.
Budget Announcements for Companies
- The Companies Act will be amended to ensure speedy registration of companies and encourage the growth of start-ups.
- The startups will get a tax holiday for the first three years of setting up the company.
- Corporate tax rate for companies, whose turnover doesn’t exceed Rs. 5 crore, has been lowered to 25% plus surcharge.
Budget Announcements on Income Tax
- Income Tax Rebate under Section 87A will be increased to Rs. 3000 from the present Rs. 2000.
- HRA deduction will be increased from Rs. 24,000 to Rs. 60,000 p.a.
- Rs. 50,000 additional exemption has been announced for home loans up to Rs. 35 lakh, provided the cost of house is not above Rs. 50 lakh.
- Tax will be exempted for 40% of withdrawal at the time of retirement under National Pension Scheme.
- No changes in existing income tax slabs.
Budget Announcements for Tax on Goods and Services
- 4% high capacity tax will be levied for SUVs.
- 1 per cent service charge will be levied on luxury cars over Rs. 10 lakh. It will also be applicable for in-cash purchase of goods and services over Rs. 2 lakh.
- Excise duty on tobacco has been further increased by 10-15 per cent.
Other Major Announcements
- The government will scrap 13 different cesses levied by various ministries as revenue collected has been less than Rs.50 crore a year.
- Government has incurred a loss of Rs. 1,060 crore through direct tax proposals and gained Rs. 20,670 crore through indirect tax proposals.
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