Key highlights of union budget FY 2015-16:
Non tax proposals:
- Ambitious target of achieving a fiscal deficit of 3.9% in current financial year, 3.5% in FY 2016-17 and 3% in FY 2017-18.
- Goods & Services Tax expected to be implemented by 2016
- GDP expected at 8-8.50% in FY16
- Tax free infrastructure bond to be introduced for road, rail and irrigation projects
- Pradhanmantri Suraksha Bima Yojana for underprivileged: A premium of Rs.12 a year for accident insurance of Rs.2 lakh.
- Atal Pension Yojana to be introduced under which equal contribution up to a maximum of Rs.1000 will be contributed by the government on accounts opened before December 31, 2015.
- Pradhanmantri Jeevan Jyoti : Insurance given on natural death at a premium of Rs. 330 per year for the age group of 18-50
- Investment in infrastructure to go up by Rs.70,000 crore.
- National infrastructure fund to be established
- Forward Markets Commission (FMC) to be merged with SEBI
- A neutral investor grievances redressal agency for all financial services
- To introduce a sovereign gold bond with returns on par with gold prices
- To allow foreign investments in Alternate Investment Funds
- To set up an agency to provide financial data security
- Cash transactions being discouraged
- To do away with the distinction between FDI and FPI
- To amend Section 6 of Foreign Exchange Management (FEMA) Act to control capital flows
- Mudra bank for SC/STs to promote entrepreneurship, government to allocate Rs.20,000 crore
- Government to set up Public Debt Management Agency to strengthen Indian bond market
Tax proposals:
- To cut basic rate of corporate tax from 30% to 25% over the next 4 years beginning 2016-17
- Wealth tax replaced with 2% additional surcharge on super rich having income of Rs.1 crore and above.
- Mere presence of a fund manager would not constitute Permanent Establishment or PE of offshore funds resulting in adverse tax consequences.
- Proposed to increase the limit of deduction under section 80CCC of the income tax act on account of contribution to a pension fund of life insurers from Rs.1lakh to Rs.1.50 lakh
- Proposed to increase the limit of deduction in case of very senior citizens u/s 80DDB of the Income-tax Act on expenditure on account of specified diseases from Rs. 60,000 to Rs.80,000.
- Financial institutions to be prosecuted for negligence in order to curb black money
- Sukanya Samridhi Scheme gets EEE status (tax free)
- Increase in deduction limit under health insurance policies from Rs.15,000 to Rs. 25,000. For senior citizens, it has increased to Rs. 30,000.
- Very senior citizens of age 80 and above will get deduction up to Rs.30,000 for medical treatment
- To provide additional deduction of Rs. 50,000 for contribution to NPS under Section 80 CCD.
- Travel allowance exemption for individuals to be increased from Rs. 800 per month to Rs. 1600 per month
- Service tax exemption on Varishtha Pension Bima Yojana
- Alternate Investment Funds: Category 1 and Category 2 to get pass through status
- Individual tax payers can benefit up to the extent of Rs. 4,44,200
- An increase in surcharge of 2% from 10% to 12% on additional income-tax payable by companies on distribution of dividends and buyback of shares, or by mutual funds and securitisation trusts on distribution of income.
- Tax neutrality on transfer of mutual fund scheme under the process of consolidation of schemes of Mutual Funds as per SEBI Regulations, 1996
- Service tax exemption withdrawn on the services provided by mutual fund agents to an asset management company
- Modification in Permanent Establishment (PE) norms to the effect that mere presence of a fund manager in India would not constitute PE of the offshore funds resulting in adverse tax consequences. This would encourage fund managers operating from offshore locations to relocate to India.
