Finance Minister Arun Jaitley placed consumers before rigid fiscal discipline as he spelt out a carefully crafted plan to boost people’s spending power, create jobs and improve rural incomes in 2017-18 Budget, mixing welfare economics with a new wave of reforms.
He exempted foreign portfolio investors (FPIs) from indirect transfers, a move that will soothe frayed nerves following a tax circular in December that had sparked fears among overseas investors.
He offered the most to those at the lowest salary bracket, farmers and small businesses which endured the demonetisation shock and could also influence the outcome in five upcoming assembly elections.
Jaitley also proposed a new law to confiscate assets of economic offenders who have left the country, a move that will pave the way for launching a crackdown on corporate loan defaulters.
The finance minister announced changes in electoral funding, under which political parties can only receive up to Rs 2,000 in cash from a single source, and proposed to ban cash transactions above Rs 3 lakh.
The minister announced Mission Antyodaya, an ambitious umbrella initiative aimed at lifting 10 million out of poverty by stitching together a raft of programmes.
The world’s largest job guarantee scheme, received top billing with budgetary allocation of Rs 48,000 crore, a 24 percent jump over the previous year’s Rs 38,500 crore, but only a Rs 1000 crore more than the actual spend of 2016-17.
The Finance Minister raised the Budget for programmes for scheduled castes (SCs) for 2017-18 to 52,393 crore from Rs 38,000 crore currently. Likewise, the annual budget for initiatives for scheduled tribes (STs) was raised to Rs 31,920 crore and for minorities to Rs 4,195 crore in 2017-18.
LESS TAX FOR SMALL SALARIES
Jaitley kept the income-tax exemption limit — the threshold below which taxes are not required to be paid – at Rs 2.5 lakh a year, but marginally rejigged the tax rates at the lower and higher ends. Those earning between Rs 2.5 lakh and Rs 5 lakh will now be taxed at 5 percent from 2017-18, from 10 percent earlier, and those earning between Rs 50 lakh and Rs 1 crore annually will have to pay surcharge of 10 percent in addition to a 30 percent income tax. The surcharge for people with an annual Rs 1 crore taxable income will remain at 15 percent.
He announced a scheme to enable NABARD to digitise 63,000 primary agricultural cooperatives, withdrew service charges on e-tickets booked via IRCTC, proposed an allocation at Rs 10,000 crore for Bharatnet, an umbrella plan for nation-wide broad-band connectivity. “A shift to the digital platform will benefit the common man,” Jaitley said Two new schemes –Refer and Bonus and the Aadhar Pay—to supplement the BHIM app will be launched to fund digital payment systems in rural and remote areas as part of the government’s strategy to move India towards a “less-cash” society.
CORPROATE TAX REJIG
He proposed changes in India’s corporate tax system, but left the headline corporate income tax rate unchanged at 30 percent. That said, medium and small enterprises with annual turnover of upto Rs 50 crore, would now be taxed at 25 percent, from 30 percent earlier. The lower rate is a carryover from Jaitley’s to-do list of 2015 when he said the corporate income tax would progressively be cut to 25 percent over four years, but will be accompanied by fewer deductions.
Jaitley proposed incentives for the labour-intensive leather sector as part of the government’s signature Make in India initiative to boost manufacturing and create jobs.
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