Takeaways from the Union Budget 2017

No service charge on online ticket booking: For rail travelers, there is good news as the Finance Minister announced no service charge to be levied on ticket bookings done through IRCTC website. The Finance Minister Mr. Arun Jaitley presented the fourth budget by the Narendra Modi government and the first since the demonetization drive. With many a wish list and high expectations preceding the annual exercise, the Finance Minister had to walk a tight rope by offering some respite for the common man while keeping the fiscal deficit under control.

Here are some of the major takeaways from the Union Budget of 2017.

Theme for Budget 2017

The Finance Minister announced in his speech that the annual budget was based on ten underlying themes to make for a balanced approach. The  ten fundamental themes as announced by the Finance Minister included farmers, rural population, youth, poor and underprivileged, infrastructure, financial sector, digital economy, public service, prudent fiscal management and tax administration.

Taxation

On the taxation front, the Finance Minister underlined the fact that India's direct tax collection was not commensurate with the income. Sharing some numbers, the Finance Minister revealed that out of 3.7 crore who filed tax returns in 2015-16, only 24 Lakh individuals showed income above Rs 10 Lakhs.

Given that only around 1.8 crore Indians have filed IT returns, he said that when too many people evade taxes, the burden falls on those who are honest. Announcing various tax measures, the Finance Minister revealed that his tax proposals were aimed at stimulating growth, promoting digital economy, and combating black money.

  • Capital Gains Tax holding period was reduced from current three years to two years for real estate. Tax will now be levied for unoccupied houses a year after getting completion certificate. However, a capital gains tax exemption has been offered for those involved in land pooling mechanism for the creation of Andhra Pradesh's new capital.
  • There will be an extension to the basket of financial instruments to which the capital gains can be invested sans payment of tax.
  • Small and medium enterprises having a turnover up to Rs 50 crore will now pay income tax at 25%, down from the earlier 30%. The time frame to carry forward Minimum Alternative Tax (MAT) has been increased to 15 years from 10 years currently.

Personal Income Tax

  • New tax structure: For individuals having annual income between Rs 2.5 Lakhs to Rs 5 Lakhs, the income tax rate has been reduced to 5 per cent from the current 10 per cent. As a result of the new tax structure, you will not be liable to pay any income tax for income below Rs. 3 lakhs given that there is a tax rebate of Rs 2,500 for taxpayers earning income below Rs. 5 lakhs. For income between Rs. 3 Lakhs to Rs. 3.5 lakhs a nominal tax of Rs. 2500 will be applicable. All other categories of taxpayers in subsequent brackets will get benefit of Rs 12,500.
  • Higher tax for the super-rich: To bring parity in taxation, the Finance Minister has announced a surcharge of 10 per cent on individuals earning between Rs. 50 Lakhs to Rs. 1 crore. The existing 15% surcharge on those with income above Rs 1 crore was left unchanged.
  • Ease of taxation: To make taxation easy, there will be a simple one page form for tax payees for income up to Rs 5 lakhs without business income. The Finance Minister also announced there will be no scrutiny of first-time tax payers unless there is credible evidence against the individual.

Business and finance

  • Cash transaction above Rs 3 lakhs barred: The one big change in the financial domain was banning of cash transactions above Rs. 3 lakhs to promote digital and cashless economy.
  • Increase in lending target of banks: The government has doubled the lending target of banks Pradhan Mantri Mudra Yojana to Rs 2.44 Lakhs crore for the financial year 2017-18. This will ensure easy loans for smaller enterprises and businesses without worrying about security and collaterals.
  • Eye on fiscal deficit: The government has pegged the fiscal deficit target at 3.2 % of GDP for 2017-18 and 3 % for next year.

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