July 10, 2014

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Quick Links Union Budget 2014-15


Government Committed to Achieve Fiscal Deficit of 4.1% for 2014-15.

Subsidy Regime to be made more Targeted for Full Protection to the Marginalized, poor and SC/ST. 


Government to Promote FDI Selectively in Sectors.


Rs 1000 Crore Provided  for "Pradhan Mantri Krishi Sinchayee Yojna". 

Rs 500 Crore for “Deen Dayal Upadhyaya Gram Jyoti Yojana”. 

Rs. 150 Crores for increasing Safety of Women in Large Cities. 

"Swachh Bharat Abhiyan"to Cover Every Household with Sanitation Facility by the Year 2019. 

AIIMS Like Institutions in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP. 

5 IIMS to be opened in HP, Punjab, Bihar, Odisha and Rajasthan. 

Sustainable Growth of 4% in Agriculture to be Achieved. 

Rs.500 Crore “Price Stabilization Funds” for Mitigating the Risk of Price Volatility in  Agriculture Produce. 

Development of Industrial Corridors with Emphasis on Smart Cities Linked to Transport Connectivity. 

Skill India to be Launched to Skill the Youth with an Emphasis on Employability and Entrepreneur Skills. 

Scheme for Development of New Airports in Tier I and Tier II Cities to be Launched. 

Target of NH Construction of 8500 Km in Current Financial Year. 

A Further Sum of Rs 1000 Crore to meet Requirement for "One Rank One Pension". 

Rs 200 Crore Provided for the Statue of Unity(National Project). 

Rs 500 Crore Provided for Developing 5 Tourist Circuits Around Specific themes. 

Rs 2037 Crores Provided for Integrated Ganga Conservation Mission “NAMAMI GANGE”. 

Rs 100 Crore for Ghat Development and Beautification at Kedarnath, Haridwar, Kanpur, Varanasi, Allahabad, Patna ,  Delhi. 

Rs. 200 Crore for Power Reforms and Rs. 500 Crore for Water Reforms To Whom It May Concern: make Delhi A Truly World Class City. 

Rs 500 Crore Provided to Support Kashmiri Migrants for Rebuilding their Lives. 

Personal Income-Tax Exemption Limit Raised by Rs. 50,000; Investment Limit under Section 80C of Income-tax Act Raised to Rs. 1.5 Lakh. 

Deduction Limit on Account of Interest on Loan in Respect of Self Occupied House Property Raised  from Rs.1.5 Lakh to Rs.2 Lakh. 

Government Committed to Implement GST at the Earliest. issues Raised by the States to be Resolved. 
  

While making his maiden Budget Speech in Parliament today, the Union Finance Minister   Shri Arun Jaitley said that India has a strong urge to grow and free itself from the curse of poverty.  The people are in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance.  The Indian economy will have to maneuver its way through a sluggish global recovery, he added. 

            The Finance Minister Shri Jaitley said that the Government intends to usher in a policy regime that would bring the desired growth, lower inflation, sustained level of external sector balance and prudent policy stance.  The Finance Minister pointed out that the present economic situation presents a challenge of slow growth in manufacturing, in infrastructure and also the need to introduce fiscal prudence. The tax to GDP ratio must be improved and non-tax revenues increased.   He has set a target of fiscal deficit of 3.6 per cent for 2015-16 and 3 per cent for 2016-17. 

Shri Jaitley said that the Government will constitute an Expenditure Management Commission to look into every aspect of expenditure reform.  The Government also intends to overhaul the subsidy regime while providing full protection to the marginalized. 

The Finance Minister said that the Government would like to introduce Goods and Services Tax (GST) to streamline the tax administration, avoid harassment of business and ensure higher revenue collection.  The Government is committed to provide stable and predictable taxation regime that will be investor friendly and spur growth. 

Shri Jaitley said that the Indian Government will promote FDI selectively in sectors.  FDI in Defence and Insurance sector is being raised to 49 per cent with full Indian management and control.  FDI is also being encouraged in the development of `Smart Cities’.   

To infuse Rs. 2,40,000 crore in the Indian Banking system, citizens of India will be allowed  direct share holding in these banks.  The Government will also provide tax incentives for Real Estate Investment Trusts.   A similar incentive will also be announced for Infrastructure Investment Trusts. 

A national multi-skill programme called Skill India is proposed to be launched.  This will provide training in traditional professions like welding and carpentry etc. 

A sum of Rupees 1,000 crore will be provided to Pradhan Mantri Krishi Sinchayee Yojana to provide assured irrigation in rain fed areas. 

Central Government will also focus on Swatchh Bharat Abhiyan, under which, total sanitation will be provided to every household by the year 2019 to mark 150th  year of the Birth anniversary of Mahatma Gandhi.   

Shyama Prasad Mukherji Urban Mission will be launched in rural areas on the lines of Gujarat.  This will include economic activities and skill development in the PPP mode.  To further improve rural life, the Government will launch the Deen Dayal Upadhyay Gram Jyoti Yojana to augment power supply at a cost of Rs. 500 crore. 

To improve the life of the marginalized and handicapped, the Government will provide Rs. 50,548 crore under SC Plan and Rs. 32,387 crore under TSP.   Besides, the Centre will extend the scheme for Assistance to Disabled Persons for purchase/fitting of Aids and Appliances (ADIP) to include contemporary aids and assistive devices.  The Government will also establish 15 new Braille Presses. 

In its concern for women, the Government will pilot test a scheme on `Safety for Women on Public Transport’ at a cost of Rs. 50 crore.  Additionally, Rs. 150 crore will be spent by Ministry of Home to increase safety of women in large cities.  It will also set up Crisis Management Centre in all districts of NCT of Delhi.  The Government will also launch the Beti Bachao, Beti Padhao Yojana for which a sum of Rs. 100 crore will be set aside. 

In the area of rural development, the Government will provide a sum of Rs. 14, 389 crore to the Pradhan Mantri Gram Sadak Yojana to improve rural connectivity.  The MGNERGA will focus on productivity and asset creation, primarily in fields related to agriculture.     The Government also proposes to start up Village Entrepreneurship Programme  for encouraging rural  youth to take up local entrepreneurship programs for which an initial sum of Rs. 100 crore is to be provided.  The Government also proposes to start a new programme called `Neeranchal’  with an initial outlay of Rs. 2,142 crore  to further boost watershed development. The Government has also earmarked Rs. 3,600 crore under National Rural Drinking Water Programme for providing safe drinking water to approximately 20,000 habitations. 

In an attempt to provide Health for All, the Government will introduce two key initiatives i.e. the Free Drug Service and Free Diagnosis Service which would be taken up on priority.  The Government is to set up two National Institutes for Ageing in New Delhi and Chennai.  It is also planned to set up AIIMS like institutes in Andhra Pradesh, West Bengal, Maharashtra and Uttar Pradesh. 

To fill the gap in elementary education an amount of Rs. 28,635 crore is being funded for Sarva Shiksha Abhiyan and Rs. 4,966 crore for Rashtriya Madhyamik Shiksha Abhiyan.  A School Assessment Programme is being initiated at a cost of Rs. 30 crore.    Additionally,  the Pandit Madam Mohan Malviya New Teachers Training Programme is being launched  for an initial   sum of Rs. 500 crore. 

In the field of higher education, the Government proposes to set up Jai Prakash Narayan National Centre for Excellence in Humanities in Madhya Pradesh.  Also, five more IITs in Jammu, Chhatisgarh, Goa, Andhra Pradesh and Kerala will be set up, besides, five IIMs in Himachal Pradesh, Punjab, Bihar, Odisha and Maharashtra. 

To bridge the digital divide, a pan India programme –`Digital India’, that will provide broadband connectivity and other IT facilities at village level, is proposed to be launched.  A National Rural Internet and Technology Mission for services in villages and schools, training in IT skills and E-Kranti for government service delivery and governance scheme is also proposed at a cost of Rs. 500 crore. 

For urban dwellers, under the Pooled Municipal Debt Obligation Facility, the Government will focus on infrastructure, public transport, solid waste disposal, sewerage treatment and drinking water.  A sum of Rs. 100 crore will be allocated for metro projects in Lucknow and Ahmedabad.  A Mission on Low Cost Affordable Housing which will be anchored in the National Housing Bank will be allocated a sum of Rs. 4000 crore this year. 

An Upgradation of Traditional Skills in Arts, Resources and Goods programme  would be launched for enhancing skills and training in ancestral arts for development of minorities. 

To give a boost to agriculture, two institutions on the pattern of Indian Agricultural Research Institute, Pusa, will be established in Assam and Jharkhand.  Agricultural Universities are  proposed to be set up in Andhra Pradesh and Rajasthan, besides two horticulture universities in Telangana and Haryana.  To prevent soil deterioration, 100 mobile soil testing laboratories will be set up.  The Government intends to finance 5 lakh joint farming groups  of “Bhoomi Heen Kisan” through NABARD. 

The Government has set a target of Rs. 8 lakh crore for agriculture credit during 2014-15.  The Centre will continue the Interest Subvention Scheme and raise corpus of Rural Infrastructure Development Fund to Rs. 25,000 crores. The Warehouse Infrastructure Fund will get Rs. 5,000 crore this year.  The Government also proposes to set up Long Term Rural Credit Fund in NABARD for the purpose of providing refinance support to Cooperative Banks and Regional Rural Banks with an initial corpus of Rs. 5,000 crore. 

Towards food security, the Government has committed itself to restructuring FCI, reducing transportation and distribution losses and efficacy of PDS.  Wheat and rice will be provided at reasonable prices to weaker sections.  Kisan TV dedicated to interests of agriculture and allied sector will be launched in the current financial year at a sum of Rs. 100 crore. 

To give necessary impetus to the manufacturing sector, the eBiz platform aims to create a business and investor friendly ecosystem in India by making all business and investment related clearances and compliances available on a 24x7 single portal.  A National Industrial Corridor Authority, with its headquarters in Pune, is being set up to coordinate the development of the industrial corridors. 

An Export Promotion Mission will be set up to bring all stakeholders under one umbrella.  The Government is also committed to revive the Special Economic Zones  and make them effective. 

The Apprenticeship Act will be suitably amended to make it more responsive to industry and youth.  With a need to examine the financial architecture of SMEs, it is proposed to appoint a Committee of Finance Ministry, MSME and RBI to give concrete suggestions.  It is proposed to set up a Trade Facilitation Centre and a Crafts Museum with an outlay of Rs. 50 crore to promote handloom products.  To preserve and revive handloom and handicrafts, a Hastkala Academy is proposed to be created. 

`3P India’, an Institution to provide support to mainstreaming PPPs will be set up to give necessary thrust to infrastructure.  Also, 16 new port projects are proposed to be awarded this year with a focus on port connectivity for which Rs.11, 635 crore has been allocated. To promote inland waterways, `Jal Marg Vikas’ a project on river Ganga,  between Allahabad and  Haldia, will be developed. 

Airports Authority of India will support Airport modernization projects in Tier I and   Tier II cities.  To further improve connectivity, the Government will provide Rs. 37,880 crores for road construction by National Highways Authority of India.  8,500 KMs of roads will be added in this Financial Year. 

To promote clean and efficient thermal power, Rs. 100 crores will initially be provided for a new Scheme - `Ultra-Modern Super Critical Coal Based Thermal Power Technology’. It is hopeful that the existing impasse in the coal and mining sectors will be resolved. To facilitate this, changes in the MMDR Act, 1957 would be introduced. 

The Finance Minister stressed that new and renewable energy deserves a very high priority.  A scheme will be launched to drive agricultural pump sets and water pumping stations with solar energy for which Rs. 400 crore will be provided. 

The Finance Minister has reiterated the Government’s commitment to enact the Indian Financial Code for better governance and accountability, in close consultation with all stakeholders. While the impact of these measures will be realized in the medium term, he has proposed in the budget some measures such as liberalizing the ADR/GDR regime for depository receipts and extending 5% withholding tax to bonds issued by Indian Corporates abroad. 

The budget proposes adoption of the new Indian Accounting Standards (IndAs) by the Indian companies from the financial year 2015-16 voluntarily and from the financial year 2016-17 on a mandatory basis. 

To provide all households in the country with banking services, a time bound programme would be launched as ‘Financial Inclusion Mission’ on 15 August this year. A special small savings instrument to cater to the requirements of educating and marriage of the girl child will be introduced. A National Savings Certificate with insurance cover will also be launched to provide additional benefits for the small saver. In the PPF Scheme, annual ceiling will be enhanced to Rs. 1.5 lakh p.a. from Rs. 1 lakh at present. 

KYC norms will be made uniform and KYC records made usable across the entire financial sector. A single operating demat account will be introduced, which will allow transactions of all financial assets. 

Defence gets Rs. 2,29,000 crore. Rs. 1,000 crore have been allocated for implementing One Rank One Pension policy. Capital outlay for defence has been raised by Rs. 5,000 crore over the amout provided in the interim budget. This includes Rs. 1,000 crore for the accelerating the development of the Railway system in the border areas.  Rs. 100 crore have been provided for setting up a Technology Development Fund to provide resources to public and private sector companies to support  research and development of defence systems. 

The Finance Minister has also announced setting up a War Memorial, a War Museum and a National Police Memorial. 

For modernization of state police forces, Rs. 3,000 crore has been allocated. 

The new initiatives announced in the budget for promoting culture and tourism include creation of five tourist circuits around specific themes, a National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD) and a National Heritage City Development and Augmentation Yojana (HRIDAY). HRIDAY will be launched in Mathura, Amritsar, Gaya, Kanchipuram, Vellankani and Ajmer this year. Sarnath-Gaya-Varanasi Buddhist circuit would be developed with world class tourist amenities to attract tourists from all over the world. 

An Integrated Ganga Conservation Mission called “Namami Gange” is proposed to be set up with an outlay of Rs. 2,037 crore for this year. A NRI fund for Ganga will be set up which will finance special projects. Rs. 100 crore have also been set aside for Ghat development and beautification of river front at Kedarnath, Haridwar, Kanpur, Varanasi, Allahabad, Patna and Delhi. Rs. 100 crore have also been provided for preparation of detailed project reports of interlinking of rivers. 

National level sports academies for major games will  be set up in different parts of the country. Academies and training facilities will also be set up for some other sports. A Sports University will be set up in Manipur, sports stadiums   in Jammu and Kashmir will be upgraded, and an annual event will be started to promote traditional sports in the Himalaya Region. 

The Budget has special provisions for displaced Kashmiri migrants, conservation of Himalayas, the North-eastern region, NCT Delhi, A&N Island, Telangana and Andhra Pradesh. 

Out of the total budgeted expenditure, Rs. 98,030 crore will go towards women welfare and Rs. 81,075 crore to child welfare. Provisions for the North-East come to Rs. 53,706 crore. 

The total expenditure is estimated as Rs. 17,94,892 crore. Centre’s share of taxes will be Rs. 9.77,258 crore, non-tax revenues will be Rs. 2,12,505 crore and capital receipts other than borrowings will be Rs. 73,952 crore. As per budget estimates, fiscal deficit will be 4.1% of GDP and revenue deficit will be 2.9 percent of GDP. 

TAX PROPOSALS 

The Finance Minister has retained the targets of tax collection  at the level of the interim budget presented in February.  Taxation proposals have been made with a view to introduce measures  to  revive the economy, promote investment in manufacturing sector and rationalize  tax provisions so as to reduce  litigation as well as to address the problem of inverted duty structure in certain areas.  In addition, some relief is proposed to individual taxpayers and to certain sectors of the economy. 

            There is no change in income tax rates, surcharge and educational cess.  To provide relief to small and marginal tax payers, personal income tax exemption limit is being raised from      Rs. 2 lakh  to Rs. 2.5 lakh.  For senior citizens, the exemption limit will be Rs. 3 lakh.  Further, the investment limit under Section 80C of the Income-tax Act is being raised from Rs. 1 lakh to Rs. 1.5 lakh.  Deduction limit for interest on housing loan (for self-occupied house property) goes up from Rs. 1.5 lakh to Rs. 2 lakh. 

Free baggage allowance is proposed to be increased to Rs. 45000; it is Rs. 35000 at present. 

To incentivise small entrepreneurs in the manufacturing sector, it is proposed  to provide investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs. 25 crore in any year in new plant and machinery.  This benefit will be available for three years i.e. for investments upto 31.03.2017.  The scheme announced last year,  to provide investment allowance to manufacturing companies investing more than Rs. 100 crore in plant and machinery will continue till March, 2015. 

Investment linked deduction is being extended to two new sectors, namely, slurry pipelines for the transportation of iron ore, and semi-conductor wafer  fabrication manufacturing units.  Ten-year tax holiday is being proposed to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.  This long-term measure will help the investors to plan their investments better. 

On Direct Tax Code (DTC), the Government will consider the comments received from takeholders. It will review the DTC in its present shape and take a view in the whole matter. 

With a view to transition towards Goods and Services Tax (GST) changes in service tax have been kept at the minimum. The focus is on widening the tax base and enhancing compliance.  It is proposed to prune the negative list and exemptions. Services by air-conditioned contract carriages and technical testing of newly developed drugs on human participants are being brought under service tax. Services provided by the Employees’ State Insurance Corporation for the period prior to 1st July 2012 will now be exempt from service tax. Service tax on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled, will also be exempt from service tax. 

The Budget has a number of proposals for tax facilitation and dispute resolution.  For income tax facilitation, 60 new Aykar Seva Kendras will be opened in 2014-15.  Indirect tax facilitation measures include opening 24×7 customs clearance facility in 13 more airports in respect of all export goods and in 14 more sea ports in respect of specified import and export goods.  It is also proposed to implement an ‘Indian Customs Single Window Project’ to facilitate trade. 

The scheme of Advance Ruling in Indirect Taxes is being extended to cover resident private limited companies and the scope of Settlement Commission is being enlarged to facilitate quick dispute resolution.  Amendments are proposed in the Customs and Central Excise Acts with a view to freeing Appellate Authorities for fast disposal of appeals.  In order to reduce litigation on transfer pricing issues, a number of changes are proposed in Transfer Pricing Regulations. 

            To remove uncertainty in taxation of Foreign Portfolio Investors (FPIs) and to encourage their fund managers to shift to India, the Budget proposes to provide that income arising to them from transaction in securities will be treated as capital gains. 

            In order to augment low cost foreign borrowings by Indian companies, the eligible date of borrowing is being extended up to 30/06/2017 for availing concessional tax rate on interest payments. 

            Tax rates have been rationalized where needed, and made favourable to certain sectors to boost their growth.  Basic customs duty is being reduced on fatty acids, oils, glycerine, petrochemicals, certain wind energy equipment etc.  Cathode ray TVs, LCD and LED TV panels of below-19 inches and certain  inputs used in solar power equipment are being fully exempted from basic customs duty. 

            The Budget proposes rationalization of duties relating to different types of coal, scrap and diamond items. 

            Excise duty is proposed to be reduced on specified food processing and packaging machinery, footwear of retail price up to Rs. 1000 per pair and sports gloves.  A number of items in use in renewable energy industry are proposed to be exempted from excise duty.  Duty on a number of electronics items is being rationalized or reduced. 

The Finance Minister has proposed to mobilize resources by increasing excise duty on cigarettes, pan masala, gutka, chewing tobacco and aerated waters containing added sugar.  Clean energy cess will now be levied at higher rates on coal, peat and lignite.  Import of smart card will now attract higher CVD.  Imported flat-rolled stainless steel products will attract a higher basic customs duty. 

            The direct tax proposals will result in net revenue loss of Rs. 22,200 crore and indirect tax proposals, revenue yield of Rs. 7,525 crore.


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