Union Finance Minister Arun Jaitley on Wednesday proposed some income tax relief to middle class and small businesses and a substantial increase in spending for the agricultural, rural and infrastructure sectors. These and a 24% increase in capital expenditure across various sectors are part of his budgetary proposals unveiled in the Lok Sabha to revive the economy that has been hit by the Modi government’s demonetisation move last November.
Presenting the Budget for 2017-18 in the House, the finance minister proposed to reduce the personal income tax rate from the prevailing 10% to 5% for assessees with an income between Rs 2.5 lakh and Rs 5 lakh. This will give a tax benefit of Rs 12,500 for each assessee with an income of up to Rs 50 lakh.
Putting the tax benefit in the context of the demonetisation pain felt by the middle class, Jaitley said: “The present burden of taxation is mainly on honest tax payers and salaried employees who are showing their income correctly. Therefore, post-demonetisation, there is a legitimate expectation of this class of people to reduce their burden of taxation.” But the minister proposed a new surcharge of 10% on people with an income between Rs 50 lakh and Rs 1 crore. People exceeding Rs 1 core income will continue to pay 15% surcharge, he said.
Jaitley proposed a small relief to companies, which too have suffered economic slowdown in the wake of demonetisation. The small and medium enterprises with a turnover of up to Rs 50 crore last year will pay the corporation tax at a reduced rate of 25%, instead of the standard rate of 30%, the minister proposed. “The government should think more about smaller companies, the bigger ones are clever enough to take care of themselves,” Jaitley said in a post-Budget interaction, as he promised to bring in a law to confiscate assets of big-time offenders like Vijay Mallya, who owe lakhs of crores of rupees to the banks.
To take care of the slowing demand in the rural sector and job losses after the November 8 note ban, the minister proposed that a total allocation for rural, agriculture and allied sectors be increased by 24% to Rs 1,87 lakh crore. Funds for MGNREGA were increased by Rs 9,500 crore. Jaitley also increased agriculture credit to Rs 10 lakh crore in 2017-18, promising to double the incomes of farmers by 2022.
To spur economic revival, Jaitley proposed a massive allocation for infrastructure of Rs 3.96 lakh crore, which included Rs 2.41 lakh crore for the transport sector and Rs 1.31 lakh crore for the Railways. This was Jaitley’s fourth Budget and was a significant one on two counts – it merged the rail and general budgets, abolishing a 92-year-old practice of presenting a separate rail Budget. And, it was presented almost a month ahead of the usual February-end date.
Jaitley proposed a couple of transparency measures in election funding. One, limiting cash donations to political parties to just Rs 2,000 from a single anonymous source as recommended by the Election Commission, and two, an electoral bond for funding political parties, which will be launched after necessary changes to relevant laws.
The minister also proposed to ban cash transactions exceeding Rs 3 lakh as the government continues to accord priority to make a transition to a cashless economy post demonetisation. With economic revival topping the budget thrust, the minister avoided making any major hikes in taxation, though some changes can be expected during the year when the Goods and Services Tax (GST) is implemented. Jaitley also promised to contain fiscal deficit to 3.2% in 2017-18 and promised to bring it down to 3% the following year.
The finance minister acknowledged that demonetisation has inflicted considerable pain, but promised that its impact will not spill over to the next year as more jobs will be created through enhanced funds in almost all sectors. He said the government’s agenda for next year is “Transform, Energise and Clean India”, that is, TEC India. This agenda of TEC India seeks to transform the quality of governance and quality of life of our people, he said.
Presenting the Budget for 2017-18 in the House, the finance minister proposed to reduce the personal income tax rate from the prevailing 10% to 5% for assessees with an income between Rs 2.5 lakh and Rs 5 lakh. This will give a tax benefit of Rs 12,500 for each assessee with an income of up to Rs 50 lakh.
Putting the tax benefit in the context of the demonetisation pain felt by the middle class, Jaitley said: “The present burden of taxation is mainly on honest tax payers and salaried employees who are showing their income correctly. Therefore, post-demonetisation, there is a legitimate expectation of this class of people to reduce their burden of taxation.” But the minister proposed a new surcharge of 10% on people with an income between Rs 50 lakh and Rs 1 crore. People exceeding Rs 1 core income will continue to pay 15% surcharge, he said.
Jaitley proposed a small relief to companies, which too have suffered economic slowdown in the wake of demonetisation. The small and medium enterprises with a turnover of up to Rs 50 crore last year will pay the corporation tax at a reduced rate of 25%, instead of the standard rate of 30%, the minister proposed. “The government should think more about smaller companies, the bigger ones are clever enough to take care of themselves,” Jaitley said in a post-Budget interaction, as he promised to bring in a law to confiscate assets of big-time offenders like Vijay Mallya, who owe lakhs of crores of rupees to the banks.
To take care of the slowing demand in the rural sector and job losses after the November 8 note ban, the minister proposed that a total allocation for rural, agriculture and allied sectors be increased by 24% to Rs 1,87 lakh crore. Funds for MGNREGA were increased by Rs 9,500 crore. Jaitley also increased agriculture credit to Rs 10 lakh crore in 2017-18, promising to double the incomes of farmers by 2022.
To spur economic revival, Jaitley proposed a massive allocation for infrastructure of Rs 3.96 lakh crore, which included Rs 2.41 lakh crore for the transport sector and Rs 1.31 lakh crore for the Railways. This was Jaitley’s fourth Budget and was a significant one on two counts – it merged the rail and general budgets, abolishing a 92-year-old practice of presenting a separate rail Budget. And, it was presented almost a month ahead of the usual February-end date.
Jaitley proposed a couple of transparency measures in election funding. One, limiting cash donations to political parties to just Rs 2,000 from a single anonymous source as recommended by the Election Commission, and two, an electoral bond for funding political parties, which will be launched after necessary changes to relevant laws.
The minister also proposed to ban cash transactions exceeding Rs 3 lakh as the government continues to accord priority to make a transition to a cashless economy post demonetisation. With economic revival topping the budget thrust, the minister avoided making any major hikes in taxation, though some changes can be expected during the year when the Goods and Services Tax (GST) is implemented. Jaitley also promised to contain fiscal deficit to 3.2% in 2017-18 and promised to bring it down to 3% the following year.
The finance minister acknowledged that demonetisation has inflicted considerable pain, but promised that its impact will not spill over to the next year as more jobs will be created through enhanced funds in almost all sectors. He said the government’s agenda for next year is “Transform, Energise and Clean India”, that is, TEC India. This agenda of TEC India seeks to transform the quality of governance and quality of life of our people, he said.
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