Finance Minister Arun Jaitley revealed the union budget 2016-17 on Monday, publicising new rural aid schemes and saving on a bank bailout.
Jaitley predicts that India would grow by 7.6% in the fiscal year that is drawing to a close. He believes the government wants to disperse the profits of growth more extensively among India's 1.3 billion people, but that he would stick to the government's existing fiscal deficit target for the coming year.
The following are budget highlights relevant to individual businesses and new start-up businesses:
- No Change in personal tax slabs
- Rebate in Income Tax u/s 87A proposed to be increased from Rs. 2,000 to Rs. 5,000 for individuals having income upto Rs. 5 Lakh
- Increase in limit of deduction of rent paid u/s 80GG from Rs. 24000 to Rs. 60000 (effectively Rs. 5000 per month) for self-employed and salaried individuals not getting HRA from employer.
- Additional interest deduction of Rs. 50,000 per annum for loans upto Rs. 35 Lakh where home house cost does not exceed Rs. 50 Lakh for first time home buyers
- Limit for contribution of employer in recognized Provident and Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit.
- Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme (NPS). Annuity fund which goes to legal heir will not be taxable.
- Surcharge increased to 15% from 12% for persons (other than companies, firms and co-operative societies) having income above Rs. 1 Crore.
- Increased limit for presumptive taxation scheme u/s 44AD for getting accounts audited
- Turnover limit increased from Rs. 1 Crore to Rs. 2 Crore with deemed profit @ 8%
- For professionals, gross receipt limit increased from Rs. 25 Lkah to Rs. 50 Lakh with deemed profit @ 50%
- Corporate tax rate for the next financial year for companies with turnover not exceeding Rs. 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess.
- Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.
- 100% deduction for profits to an undertaking in housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years. MAT will be applicable.
- Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years.
STARTUPINDIA and MAKEININDIA
- New manufacturing companies incorporated on or after 1.3.2016 to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.
- 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019. MAT will be applicable.
- 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident.
- Amendments in Companies Act to improve enabling environment for startups.
- Changes in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry in sectors like Information technology hardware, capital goods, defence production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling [MRO] of aircrafts and ship repair.
- Capital gain exemption proposed for investment in Startups under certain conditions.
TECHNOLOGY for ACCOUNTABILITY
- Expansion in the scope of e-assessments in 7 mega cities in the coming years.
- Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in giving effect to Appellate order beyond ninety days.
- e-Sahyog’ to be expanded to reduce compliance cost, especially for small taxpayers.
EDUCATION, SKILLS and JOB CREATION
- 62 new Navodaya Vidyalayas will be opened
- Sarva Shiksha Abhiyan to increasing focus on quality of education
- Regulatory architecture to be provided to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions Higher Education Financing Agency to be set-up with initial capital base of ` 1000 Crores
- Digital Depository for School Leaving Certificates, College Degrees,
- Academic Awards and Mark sheets to be set-up.
- 1500 Multi Skill Training Institutes to be set-up.
- National Board for Skill Development Certification to be setup in partnership with the industry and academia
- Entrepreneurship Education and Training through Massive Open Online Courses
- Government will pay contribution of 8.33% for of all new employees enrolling in EPFO for the first three years of their employment. Budget provision of ` 1000 crore for this scheme.
- Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses who are subject to statutory audit under the Act
- 100 Model Career Centres to operational by the end of 2016-17 under National Career Service. Model Shops and Establishments Bill to be circulated to States.
INFRASTRUCTURE and INVESTMENT
- Total investment in the road sector, including PMGSY allocation, would be 97,000 crore during 2016-17.
- India’s highest ever kilometres of new highways were awarded in 2015.
- To approve nearly 10,000 kms of National Highways in 2016-17.
- Allocation of 55,000 crore in the Budget for Roads.
- Additional 15,000 crore to be raised by NHAI through bonds.
- Total outlay for infrastructure - 2,21,246 crore.
- Amendments to be made in Motor Vehicles Act to open up the road transport sector in the passenger segment
- Action plan for revival of unserved and underserved airports to be drawn up in partnership with State Governments.
- To provide calibrated marketing freedom in order to incentivise gas production from deep-water, ultra deep-water and high pressure-high temperature areas
- Comprehensive plan, spanning next 15 to 20 years, to augment the investment in nuclear power generation to be drawn up.
- Reforms in FDI policy in the areas of Insurance and Pension, Asset
- Reconstruction Companies, Stock Exchanges.
- 100% FDI to be allowed through FIPB route in marketing of food products produced and manufactured in India.
- A new policy for management of Government investment in Public Sector Enterprises, including disinvestment and strategic sale, approved.
GOVERNANCE and EASE of DOING BUSINESS
- A Task Force has been constituted for rationalisation of human resources in various Ministries.
- Comprehensive review and rationalisation of Autonomous Bodies.
- Bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services by using the Aadhar framework to be introduced.
- Introduce DBT on pilot basis for fertilizer.
- Automation facilities will be provided in 3 lakh fair price shops by March 2017.
- Amendments in Companies Act to improve enabling environment for start-ups.
- Price Stabilisation Fund with a corpus of ` 900 crore to help maintain stable prices of Pulses.
- “Ek Bharat Shreshtha Bharat” programme will be launched to link States and Districts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism.
If you have any questions or concerns about the budget, or are considering business setup in India or the or UK feel free to call 08458382672 or email firstname.lastname@example.org to discuss in further.