Reuters Budget Highlights Feb2015

HIGHLIGHTS-Budget 2015/16 goes for growth, delays cut in
fiscal deficit
REUTERS, Sat Feb 28, 2015 4:38pm IST
Feb 28 (Reuters) - India's Finance Minister Arun Jaitley on
Saturday announced a budget aimed at high growth, saying the
pace of cutting the fiscal deficit would slow as he seeks to
boost investment and ensure that ordinary people benefit.
Here are the highlights of Jaitley's budget for the fiscal
year that begins on April 1.
FISCAL DEFICIT
* Fiscal deficit seen at 3.9 percent of GDP in 2015/16
* Will meet the challenging fiscal target of 4.1 percent of
GDP
* Remain committed to meeting medium term fiscal deficit
target of 3 percent of GDP
* Current account deficit below 1.3 percent of GDP
* Jaitley says have to keep fiscal discipline in mind
despite need for higher investment
GROWTH
* GDP growth seen at between 8 percent and 8.5 percent y/y
* Nominal economic growth seen between 11 and 12 percent
* Aiming double digit growth rate, achievable soon
INFLATION
* Expects consumer inflation to remain close to 5 percent by
March, opening room for more monetary policy easing

* Monetary policy framework agreement with the RBI clearly
states objective of keeping inflation below 6 percent
* "One of the achievements of my government has been to
conquer inflation. This decline in my view represents a
structural shift."
REVENUES
* Revenue deficit seen at 2.8 percent of GDP
* Non tax revenue seen at 2.21 trillion rupees
* Agricultural incomes are under stress
* Net receipts under market stabilisation scheme estimated
at 200 billion rupees
DISINVESTMENT
* Government targets 410 billion rupees ($6.7 billion) from
stake sales in companies in 2015/16
* Total stake sale in 2015/16 seen at 695 billion rupees

* Sets stake sale target for 2016/17 at 550 billion rupees
* Revises down stake sale target for 2014/15 to 313.5
billion rupees
MARKET REFORMS
* Propose to merge commodities regulator with SEBI
* To bring a new bankruptcy code
* Jaitley says will move to amend the RBI act this year, and
provide for a monetary policy committee
* To set up public debt management agency
* Proposes to introduce a public contract resolution of
disputes bill
* To establish an autonomous bank board bureau to improve
management of public sector banks
POLICY REFORMS
* To enact a comprehensive new law on black money
* Propose to create a universal social security system for
all Indians
* To launch a national skills mission soon to enhance
employability of rural youth
* To raise visa-on-arrival facility to 150 countries from 43
* Allocates 346.99 billion rupees for rural employment
guarantee scheme
* Raises threshold for application of transfer pricing rules
to 200 million rupees from current 50 million rupees
BORROWING
* Gross market borrowing seen at 6 trillion rupees
* Net market borrowing seen at 4.56 trillion rupees
GENERAL ANTI-AVOIDANCE RULES (GAAR)
* Government defers rollout of anti-tax avoidance rules GAAR
by two years
* GAAR to apply prospectively from April 1, 2017
* Retrospective tax provisions will be avoided
TAXATION
* To abolish wealth tax
* Replaces wealth tax with additional 2 pct surcharge on
super rich
* Proposes to cut to 25 percent corporate tax over next four
years
* Corporate tax of 30 percent is uncompetitive

* Net gain from tax proposals seen at 150.68 billion rupees
* Jaitley proposes modification of permanent establishment
norms so that the mere presence of a fund manager in India would
not constitute a permanent establishment of the offshore fund,
resulting in adverse tax consequences.
* Proposes to rationalise capital gains tax regime for real
estate investment trusts

* Extends withholding tax concession on foreign debt
purchases by two years
* Expects to implement goods and services tax by April 2016

* To reduce custom duty on 22 items
* Basic custom duty on commercial vehicle doubled to 20
percent
* Proposes to increase service tax rate and education cess
to 14 percent from 12.36 percent
* Plans to introduce direct tax regime that is
internationally competitive on rates without exemptions
* Exemptions for individual tax payers to continue

* To enact tough penalties for tax evasion in new bill
* Tax dept to clarify indirect transfer of assets and
dividend paid by foreign firms
PERSONAL INCOME TAX

* No revision of income tax brackets
* Limit of deduction of health insurance premium increased
to 25,000 rupees from 15,000 rupees; limit increased to 30,000
rupees from 20,000 rupees for the elderly
* People aged above 80 and not covered by health insurance
to be allowed deduction of 30,000 rupees for medical expenses
* Additional deduction of 25,000 rupees for the disabled
* Limit on deduction for contributions to pension fund and
new pension scheme increased to 150,000 rupees from 100,000
rupees
* Additional deduction of 50,000 rupees for contribution to

new pension scheme under section 80CCD
* Monthly transport allowance exemption doubled to 1,600
rupees
IMPORT TAX
* Import tax on iron and steel increased to 15 percent from
10 percent
* Import tax on metallurgical coke increased to 5 percent
from 2.5 percent
INFRASTRUCTURE
* Investment in infrastructure will go up by 700 bln rupees
in 2015/16 over last year

* Plans to set up national investment infrastructure fund
* Proposes tax-free infrastructure bonds for projects in
roads, rail and irrigation projects
* Proposes 5 "ultra mega" power projects for 4,000 MW each

* Second unit of Kudankulam nuclear power station to be
commissioned
* Will need to build additional 100,000 km of road
* Ports in public sector will be encouraged to corporatise
under Companies Act
EXPENDITURE
* Plan expenditure estimated at about 4.65 trillion rupees
* Non-plan expenditure seen at about 13.12 trillion rupees
* Allocates 2.46 trillion rupees for defence spending

* Allocates 331.5 billion rupees for health sector
* If revenue improves, hope to raise budgeted allocations
for rural job scheme by 50 billion rupees
INVESTMENT
* Government to provide 79.4 billion rupees capital infusion
to state-run banks
* Propose to do away with different types of foreign
investment caps and replace them with composite caps

* To allow foreign investment in alternative investment
funds
* Public investment needed to catalyse investment
GOLD
* To launch gold deposit accounts and sovereign bond
* Import duty stays at 10 percent; disappoints jewellers
* To work on Indian-made gold coin to cut imports
CIGARETTES
* Raises excise duty on cigarettes by 25 percent for
cigarettes of length not exceeding 65 mm

* Raises excise duty by 15 percent for cigarettes of other
lengths
SUBSIDIES
* Food subsidy seen at 1.24 trillion rupees
* Fertiliser subsidy seen at 729.69 billion rupees
* Fuel subsidy seen at 300 billion rupees
* Major subsidies estimated at 2.27 trillion rupees
* We are committed to subsidy rationalisation based on
cutting leakages
FINANCE MINISTER'S COMMENTS

* "We inherited a sentiment of doom and gloom. The
investment community had almost written us off. We have come a
long way since then."
* "We have turned around the economy, dramatically restoring
macroeconomic stability and creating the conditions for
sustainable poverty elimination, job creation, durable double
digit economic growth."

* "While being mindful of the challenges ... this gives us
reason to feel optimistic."
* "Domestic and international investors are seeing us with
renewed interest and hope."
MODI ON TWITTER
* 2015 Budget will further reignite our growth engine,
signalling the dawn of a prosperous future.

* Budget is investment friendly & removes all doubts on tax
issues. It assures investors that we have a stable, predictable
& fair tax system.
MARKET REACTION
* BSE index gains 0.48 percent; NSE index up 0.65 percent
* ITC slumps after budget hikes excise duty on cigarettes
($1 = 61.6489 Indian rupees)
(Compiled by Tony Tharakan and Rupam Jain Nair in NEW DELHI)

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Reuters Budget Highlights Feb2015

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HIGHLIGHTS-Budget 2015/16 goes for growth, delays cut in

Feb 28 (Reuters) - India's Finance Minister Arun Jaitley on

Saturday announced a budget aimed at high growth, saying the

pace of cutting the fiscal deficit would slow as he seeks to

boost investment and ensure that ordinary people benefit.

Here are the highlights of Jaitley's budget for the fiscal

year that begins on April 1.

target of 3 percent of GDP

* Current account deficit below 1.3 percent of GDP

* Jaitley says have to keep fiscal discipline in mind

despite need for higher investment

March, opening room for more monetary policy easing

states objective of keeping inflation below 6 percent

* "One of the achievements of my government has been to

conquer inflation. This decline in my view represents a

at 200 billion rupees

stake sales in companies in 2015/16

* Total stake sale in 2015/16 seen at 695 billion rupees

provide for a monetary policy committee

* To set up public debt management agency

* Proposes to introduce a public contract resolution of

management of public sector banks

* To launch a national skills mission soon to enhance

employability of rural youth

* To raise visa-on-arrival facility to 150 countries from 43

* Allocates 346.99 billion rupees for rural employment

to 200 million rupees from current 50 million rupees

GENERAL ANTI-AVOIDANCE RULES (GAAR)

* Government defers rollout of anti-tax avoidance rules GAAR

* Corporate tax of 30 percent is uncompetitive

norms so that the mere presence of a fund manager in India would

not constitute a permanent establishment of the offshore fund,

resulting in adverse tax consequences.

* Proposes to rationalise capital gains tax regime for real

estate investment trusts

purchases by two years

* Expects to implement goods and services tax by April 2016

to 14 percent from 12.36 percent

* Plans to introduce direct tax regime that is

internationally competitive on rates without exemptions

* Exemptions for individual tax payers to continue

* Tax dept to clarify indirect transfer of assets and

dividend paid by foreign firms

PERSONAL INCOME TAX

to 25,000 rupees from 15,000 rupees; limit increased to 30,000

rupees from 20,000 rupees for the elderly

* People aged above 80 and not covered by health insurance

to be allowed deduction of 30,000 rupees for medical expenses

* Additional deduction of 25,000 rupees for the disabled

* Limit on deduction for contributions to pension fund and

new pension scheme increased to 150,000 rupees from 100,000

* Additional deduction of 50,000 rupees for contribution to

* Import tax on metallurgical coke increased to 5 percent

from 2.5 percent

in 2015/16 over last year

* Proposes tax-free infrastructure bonds for projects in

roads, rail and irrigation projects

* Proposes 5 "ultra mega" power projects for 4,000 MW each

* Will need to build additional 100,000 km of road