India Budget Highlights_D N Sharma & Associates_FY14-15

8/11/2019 India Budget Highlights_D N Sharma & Associates_FY14-15

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Highlights of India

Budget 2014-15

Chartered Accountants


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2014-15

General budget


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2014-15

State of Economy

Crisis in the Euro area and general slowdown in theglobal economy, compounded by domestic structuralconstraints and inflationary pressures, resulted in aprotracted slowdown

Globaleconomy

Average growth in the emerging markets anddeveloping economies including China declined from6.8 % to 4.9 %

Peerpressured

Indias growth declined from an average of 8.3 %per annum during 2004-05 to 2011-12 to anaverage of 4.6 % in 2012-13 and 2013-14

Indian

struggle

Bold steps required to enhance economic activitiesand spur growth in the economyNeed of hour


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2014-15

The fight continues

Declining FiscalDeficit

Decline in fiscaldeficit from 5.7%in 2011-12 to4.5% in 2013-14mainly achievedby reduction inexpenditure rather

than by way ofrealization ofhigher revenue.

TurnaroundCurrent Account

Deficit

The year endedwith a CAD of 1.7% of GDP asagainst 4.7 % in2012-13 throughrestriction on non-essential import

and slow-down inoverall aggregatedemand

UncomfortableInflation

Wholesale priceindex (WPI)inflation declinedin 2013-14 to6.0% vis- -vis8.9% in 2011-12and 7.4% in

2012-13 WPI food inflation

averaged 12.2 %annually in the fiveyears ending2013-14


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2014-15

The New Admin

Sovereign right of the Government to undertake retrospective legislation to beexercised with extreme caution and judiciousness keeping in mind the impact of eachsuch measure on the economy and the overall investment climate

No retro -dance

A stable and predictable taxation regime which will be investor friendly and spur

growth Resident tax payers enabled to obtain on advance ruling in respect of their income-tax liability above a defined threshold

PolicyPredictability

Legislative and administrative changes to sort out pending tax demands of morethan 4 lakh crore under dispute and litigation

High level committee to interact with trade and industry on regular basis toascertain areas requiring clarity in tax laws is required to be set up

Taxmenworketh

Convergence with International Financial Reporting Standard (IFRS) by Adoption ofthe new Indian Accounting Standards (2nd AS) by Indian Companies

Setting up of Expenditure Management Commission to look into expenditure reformsSimplifying


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2014-15

Welcome investors

Government topromote FDIselectively in

sectors

The compositecap of foreigninvestment to be

raised to 49 %with full Indianmanagementand controlthrough the FIPBroute

FDIPromoted The composite

cap in theinsurance sectorto be increasedup to 49 % from

26 % with fullIndianmanagementand controlthrough the FIPBroute.

Manufacturingunits to beallowed to sellits productsthrough retailincludingEcommerceplatforms.

Insuranceand E -

commerce

Requirement ofthe built uparea andcapitalconditions forFDI to bereduced from50,000 squaremeters to20,000 squaremeters and fromUSD 10 millionto USD 5 millionrespectively fordevelopment ofsmart cities

Smart city


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2014-15

India wants to be Healthy and Educated

Free Drug Service and Free Diagnosis

Service to achieve Health For All

Two National Institutes of Ageing to be set

up at AIIMS, New Delhi and Madras

Medical College, Chennai

National level research and referral Institutefor higher dental studies to be set up

AIIMS like institutions in Andhra Pradesh,

West Bengal, Vidarbha in Maharashtra and

Poorvanchal in UP. A provision of 500 crores

made.

12 new government medical colleges set up

States Drug Regulatory and Food

Regulatory Systems to be strengthened by

creating new drug testing laboratories and

strengthening the 31 existing State

laboratories.

500 crore provided for setting up 5 more

IITs in the Jammu, Chhattisgarh, Goa,

Andhra Pradesh and Kerala.

5 IIMs in the States of HP, Punjab, Bihar,

Odisha and Rajasthan.

Simplification of norms to facilitateeducation loans for higher studies

A School Assessment Programme is being

initiated at a cost of 30 crore

500 crore provided for Pandit Madan

Mohan Malviya New Teachers Training

Programme to infuse new training tools and

motivate teachers

100 crore provided for setting up virtual

classrooms as Communication Linked

Interface for Cultivating Knowledge (CLICK)

and online courses

Health Education


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2014-15

Metro - Urban; Low cost - Housing

Vision of theGovernment isthat 500 urbanhabitations tobe providedsupport forrenewal ofinfrastructureand services innext 10 yearsthrough PPPs

100 croreprovided forMetro Projects inLucknow andAhemdabad.

Urbandevelopme

nt Mission on LowCost AffordableHousinganchored in theNational

Housing Bank tobe set up.

A sum of 4000crores for NHBfrom the prioritysector lendingshortfall with a

view to increasethe flow ofcheaper creditfor affordablehousing to theurbanpoor/EWS/

LIG segment isprovided

Housingbank Extended

additional taxincentive (200000interest deduction)on home loansshall be providedto encouragepeople, especiallythe young, to ownhouses.

Slum developmentto be included in

the list ofCorporate SocialResponsibility(CSR) activities toencourage theprivate sector tocontribute more.

Incentives


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2014-15

The differently privileged: Women,

minority and Senior citizen

Women and Children

Nirbhay - Outlay of 50crores for pilot testing ascheme on Safety forWomen on Public RoadTransport

Crisis ManagementCentres in all the districts ofNCT of Delhi this yeargovernment and privatehospitals

A sum of 100 crore isprovided for Beti Bachao,Beti Padhao Yojana, afocused scheme to generate

awareness and help inimproving the efficiency ofdelivery of welfare servicesmeant for women

Sum of 150 crores on ascheme to increase thesafety of women in largecities

Minorities

A programme for the upgradation of skills andtraining in ancestral arts fordevelopment for theminorities Up gradation of

Traditional Skills in Arts,Resources and Goods to belaunched

An additional amount of100 crores forModernization of Madarsas

Senior Citizen & DifferentlyAbled Persons

Varishtha Pension BimaYojana (VPBY) to be revivedfor the benefit of citizensaged 60 years and above

Government notified aminimum pension of 1000per month to all subscribermembers of EmployeePension Scheme. Initialprovision of 250 crore.

Scheme for Assistance toDisabled Persons forpurchase/fitting of Aids andAppliances (ADIP) extended

to include contemporary aidsand assistive devices Assistance to State

Governments to establishfifteen new Braille Pressesand modernize ten existingBraille Presses


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2014-15

Farm Fresh Ideas

100 croreTwo more Agricultural Research Institute of excellence in Assam & Jharkhand and

Agri-tech Infrastructure Fund

200 croreOpen Agriculture Universities in Andhra Pradesh and Rajasthan and HorticultureUniversities in Telangana and Haryana.

150 croreSoil health card in a Mission mode & 100 Mobile Soil Testing Laboratories

100 croreMeet the vagaries of climate change a National Adaptation Fund

5000 croreLong Term Rural Credit Fundrefinance support to Cooperative Banks andRegional Rural Banks

25000 croreRural Infrastructure Development Fund

5000 croreWarehouse Infrastructure Fund

5000 croreShort Term Cooperative Rural Credit

PricelessCentral Government to work closely with the State Governments to re-orient their

respective APMC Acts


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Industrial Corridor is secret of our energy

100 crore provided for setting up a National Industrial Corridor Authority

Amritsar Kolkata Industrial master planning to be completed expeditiously

Master planning of 3 new smart cities in the Chennai-Bengaluru Industrial

Corridor region, viz., Ponneri in Tamil Nadu, Krishnapatnam in Andhra Pradesh

and Tumkur in Karnataka to be completed

Perspective plan for the Bengaluru Mumbai Economic corridor (BMEC) and

Vizag- Chennai corridor to be completed with the provision for 20 new

industrial clusters

Development of industrial corridors with emphasis on Smart Cities linked totransport connectivity to spur growth in manufacturing and urbanization will

be accelerated

2014 15


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Infra drive

Infrastructure - Institution to provide support to mainstreaming People-Private-PublicPartnerships (PPPPs) called 4PIndia to be set up4P India

Development of Outer Harbour Project in Tuticorin for phase I. SEZs will be developed in Kandla and JNPT.Shipping

Project on Ganges called Jal Marg Vikas to be developed between Allahabad andHaldiaRiver

Scheme for development of new airports in Tier I and Tier II Cities to be launched.Little airports

Target of NH construction of 8500 km will be achieved in current financial year. 37,880 crores for NHAI and State Roads Expressways in parallel to the development of the Industrial Corridors

Road

2014 15


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Energy rush

Energy

Ultra-Modern SuperCritical Coal BasedThermal Power

Technology100 crore Comprehensive

measures for enhancingdomestic coalproduction

Exercise to rationalizecoal linkages tooptimize transport of

coal and reduce cost ofpower

New and renewable

Ultra Mega SolarPower Projects inRajasthan, Gujarat,

Tamil Nadu, AndhraPradesh and Laddakh

Solar power drivenagricultural pump setsand water pumpingstations

1 MW Solar Parks onthe banks of canals

Green Energy CorridorProject - facilitateevacuation ofrenewable energyacross the country

Petroleum & Natural Gas

Production andexploitation of CoalBed Methane reserves

will be accelerated Possibility of using

modern technology torevive old or closedwells to be explored

Usage of PNG to berapidly scaled up in aMission mode

Proposal to developpipelines usingappropriate PPPmodels

2014 15


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MSME - Tech Savvy: TextilesCluster push

Corpus of 200 crore to be set up to

establish Technology Centre Network

Programme to facilitate forward and

backward linkages with multiple value chain

of manufacturing and service delivery to be

put in place. Skill India to be launched to skill the youth

with an emphasis on employability and

entrepreneur skills

Fund of Funds with a corpus of 10,000 crore

for providing equity through venture capital

funds, quasi equity, soft loans and other risk

capital specially to encourage new startupsby youth to be set up

A nationwide District level Incubation and

Accelerator Programme to be taken up for

incubation of new ideas and necessary

support for accelerating entrepreneurship

Textile mega-cluster at Varanasi and six

more at Bareilly, Lucknow, Surat, Kutch,

Bhagalpur and Mysore

Trade Facilitation Centre and a Crafts

Museum for Varanasi

Hastkala Academy for the preservation,revival, and documentation of the

handloom/handicraft sector in PPP mode in

Delhi

Pashmina Promotion Programme (P-3) and

development of other crafts of Jammu &

Kashmir

Micro, Small and Medium Enterprises (MSME ) Textiles

2014 15


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BFSINew map

Differentiated banks serving niche interests, local area banks, payment banks etc.are contemplated to meet credit and remittance needs of small businesses,unorganized sector, low income households, farmers and migrant work forceNew Banks

Banks to be encouraged to extend long term loans to infrastructure sector withflexible structuring with minimum regulatory pre-emption such as CRR, SLR and

Priority Sector Lending

Infra not

untouchable

Pending insurance laws (amendment) Bill to be immediately brought forconsideration of the Parliament

Regulatory gap under the Prize Chits and Money Circulation Scheme (Banking) Act,1978 will be bridged

Insurancerevamp

Kissan Vikas Patra (KVP) to be reintroduced Special small savings instrument for educating and marriage of the Girl Child National Savings Certificate with insurance cover In the PPF Scheme, annual ceiling will be enhanced to 1.5 lakh p.a. from 1 lakh

SmallSavings

2014 15


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2014-15

Defence armored

Defence

1000 crore to meet requirement forOne Rank One Pension

Capital outlay for Defenceincreased by 5000 crore includinga sum of 1000 crore foraccelerating the development ofthe Railway system in the borderareas

100 crore is provided to set up aTechnology Development Fund forDefence

Internal security

Modernization of state police

forces3000 crore Additional Central Assistance for

Left Wing Extremist Affecteddistricts

Strengthen and modernize borderinfrastructure2250 crore

Socio economic development of the

villages along the borders990crore Marine Police Station, Jetties and

for the purchase of boats150crore

2014 15


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2014-15

Tourists welcome; Clean Ganga; Lets play

Tourism

Statue of unity200 crore Electronic Travel

Authorization (e-Visa) at 9airpoirts 5 tourist circuits around

specific themes500 crore National Mission on

Pilgrimage Rejuvenationand Spiritual AugmentationDrive100 crore

National Heritage CityDevelopment andAugmentation200 crore

Sarnath-Gaya-VaranasiBuddhist circuitworldclass

Ganga

Detailed Project Reports forlinking of rivers100 crore

Integrated GangaConservation MissionNAMAMI GANGE 2037 crore

Ghat development andbeautification atKedarnath, Haridwar,Kanpur, Varanasi,Allahabad, Patna and Delhi

100 crore

NRI Fund for Ganga will beset up

Sports

Upgrading the indoor andoutdoor sports stadiums in

Jammu and Kashmir Valleyto international standards200 crore

Sports university in Manipur100 crore

Promote Unique sportstraditions in the Himalayanregion games

Training of sports womenand men for forthcoming

Asian games100 crore Young Leaders

Programme 100 crore

2014 15


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2014-15

Direct Tax

2014 15


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Commoner reprieved

Basic slab increased by 50000 Up to 250000 - NIL 250001 to 50000010% 500001 to 100000020%

Above 100000030 %

Slab up

Investment limit under section 80C of the Income-tax Act raisedfrom 1 lakh to 1.5 lakh

Investmenthelp

Deduction limit on account of interest on loan in respect of selfoccupied house property raised from 1.5 lakh to 2 lakh

Propertyloan saves

Senior citizen

Up to 300000 - NIL

300001 to 50000010%

500001 to 100000020%

Above 100000030 %

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2014-15

Investment propelled

Investment allowance at the rate of 15 % to a manufacturingcompany that invests more than 25 crore in any year in newplant and machinery. The benefit to be available for three yearsi.e. for investments upto 31.03.2017

New

Machinery

Investment linked deduction extended to two new sectors, namely,

slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing units

Manufacturing force

10 year tax holiday extended to the undertakings which begingeneration, distribution and transmission of power by 31.03.2017

Powered up

Concessional rate of 15 % on foreign dividends without any sunsetdate to be continued

Get the

dividends

The eligible date of borrowing in foreign currency extended from30.06.2015 to 30.06.2017 for a concessional tax rate of 5 % oninterest payments. Tax incentive extended to all types of bondsinstead of only infrastructure bonds

Borrowdollars

2014-15


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2014-15

Major change in Transfer pricing

Transfer pricing

Introduction of a RollBack provision in theAdvanced PricingAgreement (APA) schemeso that an APA enteredinto for future

transactions is alsoapplicable tointernational transactionsundertaken in previousfour years in specifiedcircumstances

Introduction of rangeconcept for determinationof arms length price in

transfer pricingregulations. To allow use of multiple

year data forcomparability analysisunder transfer pricingregulations

Capital gains

Income arising to foreignportfolio investors fromtransaction in securities to betreated as capital gains

To remove tax arbitrage,rate of tax on long termcapital gains increased from10 % to 20 % on transfer ofunits of Mutual Funds, otherthan equity oriented funds

Others

Income and dividenddistribution tax to belevied on gross amountinstead of amount paidnet of taxes

In case of non deduction

of tax on payments, 30%of such payments will bedisallowed instead of100 %

Government to reviewthe Direct Tax Code in itspresent shape and take aview in the whole matter

60 more Ayakar Seva

Kendras to be openedduring the currentfinancial year to promoteexcellence in servicedelivery

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2014-15

Indirect Tax

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2014 15

Customs duty: More TV and renewable

power

Idiot box sale

Colour picture tubesexempted from basiccustoms duty

Basic customs duty onLCD and LED TVpanels of below 19inches reduced from

10 % to Nil

We got steel

Increase in basiccustoms duty onimported flat-rolledproducts of stainlesssteel from 5 % to 7.5%

Sun shining

Concessional basiccustoms duty of 5 %extended tomachinery andequipment requiredfor setting up of aproject for solar

energy production

Gas power

Concessional basiccustoms duty of 5 %on machinery andequipment requiredfor setting up ofcompressed biogasplants (Bio-CNG)

Wind power

Reduction in basiccustoms duty from 10 %to 5 % on forged steelrings used in the

manufacture of bearingsof wind operatedelectricity generators.

Exemption from SAD of4 % on parts and rawmaterials required forthe manufacture of windoperated generators

Coal cool

Anthracite coal,bituminous coal,coking coal, steamcoal and other coal

to attract 2.5 %basic customs dutyand 2 % CVD toeliminate allassessment disputesand transaction costsassociated withtesting of variousparameters of coal

Coke

Basic customs duty onmetallurgical cokeincreased from Nil to2.5 % in line with the

duty on coking coal

Ship breaking push

Duty on shipbreaking scrap andmelting scrap of ironor steel rationalized

by reducing the basiccustoms duty on shipsimported forbreaking up from 5% to 2.5 %

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2014 15

Excise: Play more; stop smoking

Foreign saleattractive

For passengerfacilitation, freebaggageallowanceincreased from35,000 to45,000

Juice on sale

Excise duty onspecified foodprocessing andpackagingmachinery from10 % to 6 %

Footwear cheaper

Reduction in theexcise duty from12 % to 6 % onfootwear of retailprice exceeding500 per pair butnot exceeding1,000 per pair

Lets play

Concessionalexcise duty of 2% without Cenvatbenefit and 6 %with Cenvatbenefit on sportsgloves

Smoke no more

Specific rates ofexcise duty increasedon cigarettes in therange of 11 % to 72%

Drink no cola

Levy of an additionalduty of excise at 5 %on aerated waterscontaining addedsugar.

Chew no more

Excise duty increasedfrom 12% to 16 %on pan masala, from50 % to 55 % onunmanufacturedtobacco and from 60% to 70 % on gutkhaand chewing tobacco

Recycle PET

Exemption to PSFand PFYmanufactured fromplastic waste andscrap including PETbottles from exciseduty with effect from29th June, 2010 to7th May, 2012

2014-15


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2014 15

Service tax: Ads and AC coach expensive

Online ads taxed

Sale of space or time foradvertisements inbroadcast media,extended to cover suchsales on other segments

like online and mobileadvertising

AC coach and clinical testingexpensive

Services by air-conditioned contractcarriages, technical testingof newly developed drugson human participants

Cargo shipping cheaper

Tax incidence to bereduced on transport ofgoods through coastalvessels to promote IndianShipping industry

Cotton transportationcheaper

Service taxexempted onloading, unloading,storage,warehousing andtransportation ofcotton, whetherginned or baled

ESIC exempt

Services providedby the EmployeesState InsuranceCorporation for theperiod prior to 1stJuly 2012exempted, fromservice tax

Tourism push

Indian touroperators to foreigntourists (outsideIndia) tax free

Cenvat credit forservices of rent-a-cab and touroperators

Micro-insurance

All life micro-insurance schemeswhere the sumassured does notexceed 50, 000exempted

2014-15


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2014 15

Overall Budget

5,75,000 crore Plan expenditureincrease of 26.9 % over actuals of 2013-14

Non-plan Expenditure of 12,19,892 crore with additional provision for fertilizer subsidy

and Capital expenditure for Armed forces

Plan increase targeted towards Agriculture, capacity creation in Health and Education,

Rural Roads and National Highways Infrastructure, Railways network expansion, clean

energy initiatives, development of water resources and river conservation plans

Total expenditure of 17,94,892 crore estimated

Gross Tax receipts of 13,64,524 crore estimated

Net to centre of 9,77,258 crore estimated

Fiscal deficit of 4.1% of GDP and Revenue deficit of 2.9% estimated

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Disclaimer


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Thank You

Chartered AccountantsAddress: 223, Goyal Trade Centre, Shantivan, Near National Park, Borivali E, Mumbai-66

Mobile: +91-9819025531 / 9699911890 Office: +91-22-28961770
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India Budget Highlights_D N Sharma & Associates_FY14-15

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