IT rates unchanged; sops to small, marginal assessees in Bud
The Budget for 2014-15 on Thursday left income tax rates unchanged but provided sops to small and marginal assessees by raising the threshold
New Delhi: The Budget for 2014-15 on Thursday left income tax rates unchanged but provided sops to small and marginal assessees by raising the threshold exemption limit from Rs. 2 lakh to Rs. 2.5 lakh and investments under 80C by Rs. 50,000 to Rs. 1.5 lakh while promising not to bring tax changes with retrospective effect.
Presenting the maiden budget of the BJP-led NDA government, Union Finance Minister Arun Jaitley raised the deduction limit on interest on housing loan for self-occupied property from Rs. 1.5 lakh to Rs. 2 lakh and free-baggage allowance for inbound passengers from Rs. 35,000 to Rs. 45,000.
The Budget makes cigarettes, tobacco, pan-masala, gutka and cold-drinks costlier by raising excise duties while CRT TVs used by poor, LCD and LED TV panels of less than 19-inches will be cheaper through cuts in customs duties.
In encouraging signals to domestic and foreign investors, Mr. Jaitley announced that all fresh cases arising out of retrospective amendments of 2012 in respect of indirect transfers will be scrutinised by a high level committee to be constituted by the CBDT before any action is initiated.
“I hope the investor community both within India and abroad will repose confidence on our stated position and participate in the Indian growth story with renewed vigour,” he said, offering a stable and predictable tax regime.
He also said the government will revive the revised Direct Taxes Code (DTC) taking into account the comments of stakeholders.
The Finance Minister said government will promote FDI by raising the cap to 49 per cent in Defence and Insurance with full Indian management and control.
The direct tax proposals involve a sacrifice of Rs. 22,200 crore while indirect tax proposal will yield a revenue of Rs. 7,725 crore.
The Budget raises defence spending by 12.5 per cent to Rs. 2.29 lakh crore. Non-plan expenditure for the current year has been estimated at Rs. 12,19,892 crore with additional amount for fertiliser subsidy and capital expenditure for armed forces.
The total expenditure estimates stand at Rs. 17,94,892 crore. Gross tax receipts will be Rs. 13,64,524 crore, of which Centre’s share will Rs. 9,77,258 crore. Non-tax revenues for current financial year will be Rs. 2,12,505 crore and capital receipts other than borrowings will be Rs. 73,952 crore.
The Budget pegs the fiscal deficit for the current fiscal at 4.1 per cent of the GDP and 3.6 and 3 per cent in 2015-16 and 2016-17 respectively.
In an apparent reference to the previous government, Mr. Jaitley said slow decision making had resulted in a loss of opportunity and two years of sub-5 per cent growth in the economy has resulted in challenging situation.
He said government intends to usher in a policy regime that would bring the desired growth, lower inflation, sustained level of external sector balance and prudent policy stance.
The Finance Minister said the present situation presents a challenge of slow growth in manufacturing sector, in infrastructure and also the need to introduce fiscal prudence.
The tax to GDP ratio must be improved and non-tax revenue increased, he said while pruning the negative list for levy of service tax.
The government will constitute an Expenditure Management Commission to look into every aspect of expenditure reform. It will overhaul the subsidy regime while providing full protection to the marginalised.
Mr. Jaitely said the government would like to introduce the Goods and Services Tax (GST) to streamline tax administration, avoid harassment of business and ensure higher revenue collection.
The Budget proposes to infuse Rs 2.40 lakh crore in PSU banks in which citizens will be allowed direct shareholding.
The Budget sets a target of Rs 8 lakh crore for agriculture credit during the current year and will continue the interest subvention scheme and raise the corpus of rural infrastructure development fund (RIDF) to Rs 25,000 crore.
Towards food security, the government commits itself to restructuring Food Corp of India (FCI), reducing transportation and distribution losses and efficacy of PDS.
Wheat and rice will be provided at reasonable prices to weaker sections.
In direct taxes, the Budget makes no changes in the rate of surcharge for any class of tax payer while continuing the education cess at 3 per cent for all.
As a measure of encouraging infrastructure and construction sectors to revive growth and provide jobs, the Budget provides tax incentives for real estate investment trust and infrastructure investment trust.
In manufacturing, considering the need to incentivise smaller entrepreneurs, it provides investment allowance at the rate of 15 per cent to a manufacturing company that invests more than Rs 25 crore in a year in plant and machinery for three years.