Union Budget 2015-16: Provisions & promises
- Part 1 -

K Kenish *

Finance Minister Arun Jaitley leaving office for Parliament on February 28 2015 :: Pix - TSE / Agencies

"All state activities depend first on the treasury. Therefore, a King shall devote his best attention to it" – Arthashastra

Budget is a mammoth exercise in a country like India where every segment of the society expects its pound of flesh whether it is the man on the street, the salaried middle class or the business honchos. Every Budget brings with it a share of disappointment or joy depending on which side on the fence one is in. However no Budget can satisfy everyone equally.

The 2015-16 Budget is the first full budget of the new NDA government led by the Hon'ble Prime Minister of India, Shri Narendra Modi. Like every other budget, this budget was received differently by different sections of the society. However at the end of the day, a budget is a roadmap for a nation which it plans for the next one year. Proper implementation of the roadmap which the budget sets out to achieve is itself a success. After all, no budget can be panache to all the problems of a nation.

This article is a humble attempt to present the various provisions and promises of the Budget 2015-16. The contents/provisions of the budget are discussed under three headings: for individuals/consumers, for the economy and for business.

FOR INDIVIDUALS TAXPAYERS/ CONSUMERS:

* No change in the minimum taxable limit. No reduction in personal tax rates. The deduction limit under Section 80C remains same at the maximum of Rs.1.5 lakh. Also tax slab remains unchanged.

ª Increase in deduction for medical health insurance under Section 80D from Rs.15K to Rs.25Kfor ordinary tax payer. However for senior citizens the same has been increased from Rs.20Kto Rs.30K. This exemption is over and above the exemption permissible under Section 80C.

* In the case of very senior citizens (80 years and above) not covered under medical insurance such expense will also qualify for deductions within the limit of Rs.30K.

* Limit of deduction for persons with disabilities or severe disability or maintaining such person is proposed to be raised by Rs.25K (Section 80DD and 80U)

* Increase in deduction in transport allowance to Rs.16K per annum from Rs.800 per annum

* Additional exemption ofRs.50K under 80CCD towards contribution towards New Pension Scheme. This is over and above the exemption limit of Rs.1.5L available under Section 80C.

* However the aggregate deduction available to any individual in respect of health insurance premium and the medical expenditure incurred would be limited to Rs.30K.

* With the aim to curb black money, the use of debit/credit cards is encouraged and cash transactions discouraged. The budget contains provisions like prohibition of cash advances exceeding Rs.20K in property transaction and quoting PAN mandatory for sale/purchase of property exceeding Rs.1 lakh.

* A new law to be framed whereby evasion of foreign assets or income will be punishable with 10 years. Failure to file or inadequate disclosure of foreign assets in returns too would get seven years of imprisonment.

* Undisclosed income from foreign assets to be taxed at maximum marginal rate and penalty levied at 300% of tax with no recourse to the Settlement Commission.

* Lower income group may feel the pinch due to goods and services getting expensive as indirect and service tax have been increased.

* Wealth Tax has been abolished and income tax forms to be amended to capture the details of the assets which are currently subject to wealth tax. The super-rich (tax payers having taxable income exceeding Rs.1 Crore) will have to pay more as surcharge is proposed to be raised from 10% to 12%.

* Contribution to SukanyaSamriddhi Scheme will be eligible for deduction under Section 80C and interest earned on this scheme and repayment on maturity would also not be subject to tax

* If the proposed increase in service tax and education cess to 14% from 12.36% takes place, it is likely to impact all services in the household consumption basket to go up. The increase is likely to impact air travel, hotel stays, restaurant bills, telephone, banking charges, gyms, salons, courier,etc. Banking charges include ATM, demand draft, loan processing charges. Also payment for life insurance premium will go up by 1.5%.

* Leather shoes that cost more than Rs.1000 are set to get cheaper by around 5% as excise duty on the product has been reduced from 12% to 6%.

* Cigarettes set to cost more. The Budget has proposed a 25% increase in excise duty on cigarettes of length not exceeding 65mm and a 15% increase on cigarettes of other lengths, cigars, cheroots and cigarillos. The Budget has also increased the excise duty on cut-tobacco to Rs.70 per kg from Rs.60 per kg.

* Prices of products like solar water heater, ambulance, pacemakers, LED lights, Lamps lights, refrigerator, microwave oven, air conditioner, LED, LCD TVs, locally made mobile, tablets, footwear are to come down on account of cut in excise duties on these products. Also visit to museums, zoos, packaged fruits and vegetables, incense sticks are to come down.

* Similarly prices on imported car, aerated drinks and packaged water, liquor, plastic bags and sacks are to go up. Also travel by business and executive class air travel, music concerts, chit funds and lottery are to go up on account of increase in excise duty/service tax.

* Cement may be dearer by Rs.15-20 a bag on account of increase in excise duty in the budget on top of an increase in rail freights.

* Donations to Swachh Bharat Kosh (by both residents and non-residents) and the Clean Ganga Fund (by residents) would be eligible for 100% deduction under Section 80G of the Income Tax Act.

FOR THE ECONOMY:

* Promises to roll out Goods and Service Tax (GST) from April 1, 2016 GST seek to subsume a plethora of state-level and central taxes into one. Increase in service tax rate, subsuming education cess with excise duty and pruning items on the exempted list of items are among the important steps in the progression towards GST. As per one estimate, GST could lead to 0.9%-1.9% increase in GDP. Similarly it could impact exports and imports by increase in the range of 3.2%-6.3% and 2.4%-4.7% respectively.

* Three social security schemes introduced to help government move from Jan Dhan (financial inclusion) to Jan Suraksha (social security). Government plans to introduce three social security schemes, namely,PradhanMantri Suraksha BimaYojana, Atal Pension Yojana&PradhanMantri Jeevan JyotiBimaYojana. In the first scheme,PradhanMantri Suraksha BimaYojana, accidental death risk of Rs.2 lakh will be provided for a premium of just Rs.12 per year that will be debited from the bank account under PMJDY.

InAtal Pension Yojana, which will provide a defined pension, depending on the contribution and its period, the government will contribute 50% of the beneficiaries' premium limited to Rs, 1,000 each year for five years, in the new accounts opened before December 31, 2015. For PradhanMantri Jeevan JyotiBimaYojana, it will provide a cover of Rs.2 lakh against both natural and accidental death at a premium, of Rs.330 per year in the age group of 18-55.

To be continued..