Union Finance minister Arun Jaitley, in his budget, announced a slew of schemes for the empowerment of Rural India. The minister pleased the small tax payers and startups with the announcement of tax exception schemes. Jaitely, announced several policy majors to boost its flagship initiatives like Make in India, Start up India, Digital India and Skilled India.
Aiming to encourage start ups and SMEs, Jatiley announced 100 percent deduction on profits for startups for 3 out of the first 5 years. The minister also announced incentives for new manufacturing companies and relatively small enterprise companies. He announced to lower corporate IT rates for next financial year of relatively small enterprise companies with turnovers not exceeding 5 Crore.
Jaitley proposed several policy measures to boost flagship projects of his government like Make in India, Digital India, etc. He proposed to provide and ease of doing business in the country and to boost Make In India initiative, suitable changes will make in customs and excise duty rates. In order to bring digitization in the rural India, the minister proposed to launch Digital literacy scheme to cover 6 crore additional rural households. He announced to spend 1,700 crore for 1500 multi-skill development centres.
The Finance Minister also announced to phase out corporate tax exemptions, but restricted the marginal reduction in corporate tax rates only to small companies. Addressing the house, Jaitley said that benefits of phasing out corporate tax exemptions will be available to the government only gradually, thereby justifying not lowering the tax rates for big companies this year. Jaitley lowered the corporate tax rate for companies with a turnover of Rs.5 crore or less to 29% plus surcharge and cess from 30% plus surcharge and cess. He also announced a corporate tax rate of 25% for all new manufacturing companies incorporated from 1 April, provided they do not claim any exemptions. The exemptions that are proposed to be phased out in the budget include accelerated depreciation and benefits available to special economic zones.
In a good news for common citizens, Jaitely, announced deduction for additional interests of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned in 2016-17 for first time home buyers, where house costs do not exceed Rs 50 lakh. However, unlike the last financial year, the minister did not propose any change in the tax slab. Jaitley also proposed to increase the limit of deduction of rent paid from Rs 24,000 per annum to Rs 60,000 to those who don’t own any house and live in rented accommodation. The finance minister announced to raise the ceiling of tax rebate from Rs 2000 to Rs 5000 for those earning less than Rs 5 lakh per annum, giving an additional relief of Rs 3000 in their tax liability.
Other major highlights
- Limited tax compliance window from Jun 1 – Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties
- Govt to introduce bill to amend Companies Act for ease of doing business; to enable registration of cos. in a day
- Rs 1,000 crore allocated for new EPF (Employees’ Provident Fund) scheme
- Target of disbursement under MUDRA increased to 1,80,000 crore
- Scheme to get Rs.500 cr for promoting entrepreneurship among SC/ST
- 10 public and 10 private educational institutions to be made world-class.
- Digital repository for all school leaving certificates and diplomas. Rs. 1,000 crore for higher education financing
- 62 new navodaya vidyalayas to provide quality education
- Service tax exempted for housing construction of houses less than 60 sq. m
- Excise duty raised from 10 to 15 per cent on tobacco products other than beedis
- 100 per cent FDI in marketing of food products produced and marketed in India