Key Highlights of Union Budget 2016

The Union Budget was presented by the Finance Minister, Mr. Arun Jaitley in Lok Sabha The budget was later tabled in the Upper House.

Some key Budget highlights are given below:
Expenditure: The government proposes to spend Rs 19,78,060 crore in 2016-17, which is 10.8% above the revised estimates of last year.

Receipts: The receipts (other than net borrowings) are expected to increase by 15.5% to Rs 14,44,156 crore, driven by disinvestment receipts, union excise duties and income tax.

GDP growth: The government has assumed a nominal GDP growth rate of 11% (i.e., real growth plus inflation) in 2016-17. The growth estimate for 2015-16 was 11.5% as announced in the 2015-16 Budget.

Deficits: Revenue deficit is targeted at 2.3% of GDP, and fiscal deficit is targeted at 3.5% of GDP.

Our vital stats documents, attached presents some trends regarding the central government’s sources of financing including tax revenue, borrowings and disinvestments, its expenditure across sectors, and subsidies. We also look at estimates presented in the 2016-17 Union Budget.

Some findings from the document is given below:

• Total receipts are estimated to increase by 15.5% in 2016-17; non tax revenue expected to increase by 24.9%
• Tax revenue is slated to increase by 11.7%, corporation and income tax to increase by 9% and 18.1%
• Disinvestment target has been met only three times since 2001; target for 2016-17 is Rs 56,500 crore
• Revenue expenditure to increase by 11.8%; Capital expenditure grows moderately at 3.9%
• Expenditure on food, fertilizer and petroleum subsidy to decrease in 2016-17 by Rs 7,368 crore

Key Tax Proposals:

1. Raise the ceiling of income tax rebate from Rs 2,000 to Rs 5,000 on individuals with income up to Rs 5 Lakh.
2. Limit of income tax deduction that can be claimed on house rent paid is raised from Rs 24,000 per annum to Rs 60,000, for those who live in rented houses and whose employer does not provide house rent allowance benefits.
3. In case of domestic company, the rate of Income-tax shall be 29% per cent of the total income if the total turnover in the previous year does not exceed Rs 5 crore and 30% in all other cases.
4. It is proposed to provide a deduction of 100% of the profits and gains derived by eligible start-ups.
5. A one-time compliance opportunity is provided to declare undisclosed domestic income and pay tax, surcharge and penalty totaling in all to 45%.
6. Direct and Indirect Tax Dispute Resolution Schemes are proposed for cases in litigation, where the assessee may pay duty, interest and penalty equivalent to 25% of the duty. In such cases the proceedings against the assessee will be closed and he will also get immunity from prosecution.
7. Infrastructure Cess is being levied on motor vehicles: Petrol/LPG/CNG driven motors (not exceeding 1200cc) of 1%; Diesel (not exceeding 1500cc) 1500cc – 2.5%; other higher engine capacity motor vehicles and SUVs and bigger sedans – 4%.