Economy & Key Policy Announcements :
- Fiscal deficit target for FY 15 = Rs. 5 lakh crores i.e 4.5% of GDP and for FY 16, estimated at 3.6%
- Revenue Deficit 2.9% of GDP
- Budget estimates of Revenues : Tax 13 lakh crores, Non-Tax 2.12 lakh crores, Capital Receipts 73k crores
- Budget estimates of Expenditure : Plan 5.75 lakh crores, Non-Plan 12.20 lakh crores
- Increase in taxes estimated at 21%
- Thrust on infrastructure viz. creations of smart cities, transport infrastructure, tourism and also on social sector
- A 10,000 crore fund set up to support and promote start up companies
- Lot of thrust on transportation viz. highways, ports, airports, waterways etc.
- Ceiling for MSME definition to be enhanced
- Financial sector reforms by way of single demat accounts, common KYC forms
- New accounting standards converged with IFRS to become mandatory from FY 2016-17 and separate tax computation standards to be announced
- No CRR/SLR etc. for banks when they invest in infrastructure bonds
Foreign Investment :
- Cap on FDI in defense increased to 49% from 24% subject to FIPB approval
- Cap in Insurance also increased to 49%
- Conditions on FDI In housing construction relaxed
- Manufacturing companies with FDI can sell online or through retail chains
- Concessional Withholding tax of 5% on overseas bonds
- Portfolio investment gains shall be treated as capital gains and not business income
Direct Tax :
- Limit for individual taxpayers increased from Rs. 2 lakhs to Rs. 2.5 lakhs
- Limit for senior citizens increased from Rs. 2.50 lakhs to Rs. 3 lakhs
- No other change in slab rates or surcharge
- Limit of exemption u/s. 80C increased from Rs. 1 lakh to Rs. 1.50 lakhs
- Interest on housing loans for self occupied properties to be deductible upto Rs. 2 lakhs now instead of Rs. 1.50 lakhs
- Investment allowance of 15% on capital investment in new P&L of Rs. 25 crores and above. Earlier scheme of Rs. 100 crore capex to continue
- Tax holiday to power plants extended
- Concessional tax of 15% on dividends from foreign subsidiaries to continue without any sunset clause
- Dividend to be taxed in the hands of recipients instead of companies (not very clearly mentioned and one needs to see the fine print)
- APA system to apply even for past 4 years
- Range concept introduced for arms length price in Transfer pricing with multiple year comparable
- LTCG on mutual fund units to be taxed at 20% and period for calculating LTCG increased from 12 months to 36 months
- Dis-allowance due to non deduction of TDS on any expense reduced to 30% instead of 100%
- Advance ruling concept introduced for residents also
Indirect Tax :
- Customs duty reduced on a lot of raw materials and intermediates to boost manufacturing
- Customs duty reduced on capital equipment and consumables for solar, wind, bio gas and other renewable energy sectors
- All types of cut, polished, broker, semi cut etc. diamonds and colour gems stones to be now liable to customs duty at 2.5%
- Free baggage allowance increased from Rs. 35,000 to Rs. 45,000
- Excise duty reduced on footware, food processing, renewable energy inputs/capital goods etc while duty on cigarettes, tobacco, carbonated soft drinks etc. increased
- No major change in service tax regulations except for a few items shifted in or out of negative list or exempted list
- Advance ruling concept introduced for residents
G&J Industry :
- Increase in ceiling for MSME definition shall enable more G&J companies to be eligible for 2% interest subvention scheme
- Customs duty increased on polished diamonds from 2 to 2.5% and even broken or semi cut diamonds to be now leviable to duty
- PF limit increased from Rs. 6500 to Rs. 15000 and EPS (Pension) limit shall be now a minimum of Rs. 1,000
Investments & Stock Markets :
- Real Estate Investment Trusts (REITS) and Infrastructure Trusts to become permissible
- Small saving schemes like NSC, KVP etc. to be boosted
- Investment limit in PPF increased from Rs. 1 lakh to Rs. 1.5 lakhs
