By Niharika Ghoshal
Arun Jaitley’s third Budget had a lot for the common man to chew on – some in his favour, some not quite. It incentivises you to buy a dream home, to save a bit more, but if you’re planning to buy a car, eat out and smoke a ciggy or two, Jaitley just put a spanner and tape on that. He formulated his budget planning for India in 9 pillars!
Finance Minister Mr. Jaitley’s Budget is built on 9 pillars, the Navratna.
- Agriculture/Farm and welfare
- Rural Focus
- Social Healthcare
- Education and Job creation
- Investments to improve quality of Life
- Infrastructure Focus
- Ease of Business
- Fiscal Discipline
- Tax Reforms
Mitti Di khusbhoo
The Budget for 2016-17 offered a fine blueprint of several small steps to lift India’s villages and encourage small entrepreneurs but failed to impress on NDA-government’s big challenge of taking ahead the reforms process and aggressive infrastructure spending needed to lift the economy to a high growth path. It instead offered sops for small and marginal income tax payers, hiked the surcharge by three percent on earnings above Rs 1 crore, levied a pollution cess on petrol, diesel cars and SUVs and offered a one-time compliance window for domestic black money holders slapping a tax and penalty of 45 percent. Presenting the third Budget, Finance Minister Arun Jaitley also proposed a ‘Krishi Kalyan’ cess of 0.5 per cent on all taxable services to improve agriculture and reduction of duties on project imports for cold room for cold chain, refrigerated containers and a number of other items.
No more Latte, Sutta and Dal Makhani
Cigarette and tobacco products will become costlier with the hike in excise duty by 10 to 15 per cent. The industry and market was expecting a softer excise hike of 8-10 percent. Led by ITC, cigarette stocks came under selling pressure, falling by up to 8 per cent, in early afternoon trading. Also the finance minister has proposed the levy of an infrastructure cess of up to 4 percent on various kinds of vehicles. Diesel vehicles will see the highest increase in prices. The finance minister proposed a cess of 1 percent on small petrol, LPG and CNG cars, 2.5 percent on diesel cars of a given capacity and 4 percent on other high-powered vehicles and SUVs.
While the revenue loss on direct taxes will be Rs 1060 crore, his indirect tax proposal will mobilise an additional Rs 20,670 crore. Net revenue gain will be Rs 19,610 crore. Air tickets, branded readymade garments and eating out are set to cost a lot more. Jaitley backs it all up with this statement of his- “I am presenting the budget when the global economy is in crisis,” How easy it is to think and just kill all our plans to impress girls and get that SWAG!
TAX ki aisi ki taisi
For India’s salaried class, there is one key expectation from finance minister Arun Jaitley’s third budget today: tax relief. Although businessmen and professionals are entitled to various deductions while computing their taxable incomes, the salaried class hardly has any such avenues, other than investment-linked reliefs.
For an individual with the highest tax slab, over 40% of the income is diverted towards income tax and provident fund contributions. As a result, most are left with less than 60% as net take-home. Although the NDA government has exceeded its target in indirect tax revenues significantly in the current fiscal, there is a shortfall in direct tax collections, leaving the government with limited elbow room to provide tax breaks.
What shall burn a hole in your pocket now?-
- Cars- Rohit Shetty’s downfall as a director!
- Cigarettes- Bhaiyaa! Yeh lo 15 rupaye, 2 rupay ki mint de dena chute nahin hai!
- Cigar- Lucky! Lagaan was shot before
- Tobacco- Ab dhumrapaan sacch main haanikarak hai!
- All services like bill payments, eating out, air travel- NDA Govt ka Aiyaashi pe ban!
- Ready-made garments and branded apparel of more than Rs 1,000
- Gold and Silver; jewellery articles excluding silver- Na Sona Na Chaandi, Sirf Chyawanprash!
- Water including mineral water, aerated water containing added sugar or sweetening matter- Paani Paani re Paani Paani re!
- Goods and services above Rs 2 lakh- Two is the unlucky number now!
Yeh saare Maal Saste main-
- Footwear- Buy all the Paragon, Khadims, Bata, Vans and Street Style Store in your wishlist!
- Solar lamp- Burn the midnight oil now!
- Router, broadband modems and set top boxes, Digital video recorder and CCTV cameras- Secured India, tab badhega India!
- Hybrid electric vehicles- Bijli ka bill badhega!
- Sterilised dialyser- Sehat ki salaamati!
- Low cost houses with less than 60 sq mt carpet area- Naya Ghar,Puraani Gadi! Badhiyaa hai
- Hiring of folk artists for performance- Yeh industry ek hi cheez se chalti hai.. Entertainment Entertainment Entertainment!
- Refrigerated containers- Barfiii!
- Pension plans- Umar ke baad bhi Azaadi!
- Microwave ovens- Garam Maamla hai!
- Sanitary pads- Now don’t hesitate to touch the pickle!
The aam aadmi’s expectation with the Budget 2016:
Enhancement of basic exemption
Currently, an individual has a basic exemption of Rs 2.5 lakh. If this could be increased to Rs 3.5 lakh, it would effectively generate annual tax savings of around Rs 10,000 (assuming the assessee has a taxable income of over Rs 3.5 lakh).
A salaried employee is entitled to a tax break for medical reimbursements from the employer to the extent of Rs 15,000 per annum. This limit has remained unchanged since 1999. Considering the cost inflation index (CII) notified under the tax laws, this limit must be increased to at least Rs 40,000 per year. This would be in line with the inflation (actual) cost of medical care in India currently.
Children’s education/hostel allowance
Currently, children’s education allowance of Rs 100 per month and hostel allowance of Rs 300 per month are exempt from taxes. These limits have been unchanged for a long time now and are nowhere close to the actual costs incurred. One would expect these limits to be increased to at least Rs 1,000 and Rs 3,500 per month, respectively, in order to be meaningful.
Deduction towards investments (Section 80-C)
The deduction available towards specified investments—contribution to provident fund, payment of insurance premiums, tuition fees, etc.—is currently Rs 1.5 lakh, with a further deduction of Rs 50,000 available for contribution towards the National Pension Scheme (NPS). Since the investments covered under section 80-C are numerous, the limit of Rs 1.5 lakh often does not suffice. Accordingly, the 80-C limit could be increased to Rs 2.5 lakh without any insistence on specific investment such as the NPS.
The deduction allowed towards interest repayment on housing loan is only up to Rs 2 lakh for a self-occupied house. The initial limit of Rs 1.5 lakh was set in 2004 fiscal year and was increased by a meagre Rs 50,000 in last year’s budget. Considering the increase in real estate costs, and if one were to use the CII, the interest deduction limit must be increased to at least Rs 3.5 lakh.
*ED hopes the 2016-17 Union Budget will be good in terms of People friendly and Economy friendly and make India an affordable place to live in!*
All images have been taken from Google.