Finance Minister Arun Jaitley today announced some income tax changes, while presenting the Budget for financial year 2017-18 in Parliament.
The key points:
5% tax (instead of current 10%) for those earning 2.5 lakhs to 5 lakhs
After rebates, zero tax liability for people with income of 3 lakhs
All other categories will also get uniform benefit of Rs. 12,500
With the income tax rate dropping to 10% surcharge on those earning 50 lakhs to 1 crore
More than 1 crore : 15% surcharge (already exists)
The Finance Minister has raised the fiscal deficit target to 3.2 per cent of the GDP for 2017-18, higher than the 3 per cent pledged earlier. But he has vowed prudent fiscal management and said he was committed to a 3 per cent fiscal deficit the year after.
Continuing with the government’s war on black money, Mr Jaitley has proposed a ban on all cash transactions above Rs. 3 lakh beginning April 1, 2017.
Jaitley announced that donations in cash, currently allowed up to Rs. 20,000 without explaining the source, will now be capped at Rs. 2,000.
Income tax for persons who earn between 2.5 to 5 lakh has been cut from 10% to 5%. So after rebates, a person with a 3 lakh income has a zero tax liability, the Finance Minister said. To offset the loss to the government from this, those who earn between 50 lakh and one crore a year will now pay a 10% surcharge. Those who earn more than one crore a year, will continue to pay a 15% surcharge.
The total expenditure of the budget presented today is Rs. 21.47 lakh crore, the minister said. Defence Expenditure, excluding pensions, has been set at 2.74 lakh crore
Jaitley has announced that the Foreign Investment Promotion Board (FIPB) will be abolished, removing what is seen as a major hurdle for foreign investors. The FIPB clears applications for direct investment by outside investors.
He has announced the “highest ever allocation” of 48,000 crores for the rural employment scheme MNREGA.
Agriculture, said Mr Jaitley, is expected to grow at 4.1 per cent, announcing a number of measures to benefit farmers and the government is committed to doubling the income of farmers.
The Finance Minister has allocated Rs. 10,000 crore towards recapitalisation of public sector banks and said additional allocations would be made “as and when required.”
Jaitley said demonetisation, announced in November last to eliminate corruption and black money, was a “bold and decisive measure” that “seeks to create a GDP which is bigger, cleaner and real.” We are seen as an engine of global growth,” the Finance Minister said, cautioning that the prospect of US interest rate hikes, rising oil prices and signs that globalisation is in retreat could adversely affect India.
He said advancing the Budget by a month would help government departments start schemes right from the start of the fiscal year. He also said the merger of the Rail Budget with the Union Budget was a historic step, promising that the autonomy of the Railways would be maintained.
