Budget 2015: Finance Minister Arun Jaitley today announced a 5 per cent reduction in corporate tax over next 4 years, abolished wealth tax and replaced it with an additional 2 per cent surcharge on super rich individuals, while increasing service tax that will result in higher cost on a variety of services.
In his first full Budget, Arun Jaitley announced plans for a new law to tackle black money with tough measures. Jaitley announced a stiff 10-year jail term for hiding foreign assets, along with a host of other tough measures including dis-incentivising of cash dealings in real estate and other transactions. (Tax deduction limit to Rs 4.44 lakh for Income Tax payers)
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Besides framing new legislation, the government will also take steps to incentivise use of credit and debit cards and putting a cap on cash transactions, FM said.
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Also, quoting PAN will be mandatory for all sale and purchases of over Rs 1 lakh, Finance Minister Arun Jaitley said in his Budget speech. (Read Full text of Budget 2015 speech)
To give growth a fillip and create more jobs, the finance minister walked the tightrope and deftly increasing infrastructure spends without really letting the fiscal go awry. Arun Jaitley said, “to ensure that our young get proper jobs, we have to aim to make India the manufacturing hub of the world.” The job creation initiative in the Union Budget can help in creating millions of employment opportunities in the coming years, the FM added. The setting up of AIIMS, IIT’s and IT hubs across several states will help address the huge demand for IT jobs in India.
“The budget allocation for startups should be used to promote startups in Tier 2 cities and beyond. This can lead to significant generation of quality employment at par with city counterparts for youngsters in these regions. Areas to be focused should be technology, commerce and training,” technology hiring platform Talview.com CEO Sanjoe Jose said.
Jaitley also provided more money for public investment in 2015-16 from his Budget, created new avenues for unlocking funds such as schemes to monetise unproductive gold assets, set up a National Investment and Infrastructure Fund with annual flows of Rs 20,000 crore, and allowed infra bonds for investing in rail, road and irrigation projects.
For the corporate sector, the tax rate cut by 5 percentage points over the next four years to 25% will be accompanied by phased elimination of exemptions. No sooner did Jaitley announce this cut, the 30-scrip Bombay Stock Exchange Sensex shot up by 250 points. He deferred GAAR (General Anti Avoidance Rules) that aims to minimise tax avoidance, by two years. While he cut customs duty for 22 items and special additional duty has been done away with, he rounded off the excise duty rate to 12.5% from 12.36%, hiked service tax rate to 14% from 12.36%.
While he imposed a 2 per cent additional surcharge on the super rich with annual income of Rs 1 crore-plus, he announced a string of sops for the poor: an insurance scheme with Rs 2 lakh cover for accidental death at a premium of just Rs 12 a year, a pension scheme where the government will contribute half the premium (up to Rs 1,000 a year) for five years, and another Rs 2 lakh cover for both natural and accidental death with a premium of Rs 330 a year.
The highlight of the Budget – perhaps influenced by public pressure and the BJP’s own political narrative ahead of 2014 Lok Sabha – was Jaitley’s plan to introduce a new and comprehensive Benami Transactions (Prohibition) Bill in this session itself. The tough measures proposed under this law include jail up to 10 years for concealment of income and assets and evasion of tax in relation to foreign assets, and penalty at the rate of 300% of tax. He made these offences non-compoundable, with offenders not being permitted to approach the Settlement Commission.
Video: Union Budget 2015: Insight by Financial Express Managing Editor Sunil Jain
For the Aam Admi, he announced a slew of tax concessions. He hiked the deduction on health cover premiums to Rs 25,000 from Rs 15,000 now, increased deduction towards pension contribution to Rs 1.5 lakh from Rs 1 lakh now, allowed extra deduction of Rs 50,000 towards New Pension Scheme and doubled transport allowance to Rs 1,600 a month. “An individual taxpayer will get tax benefit of Rs 4,44,200,” he said.
The government will reduce tax on businesses to 25 per cent over four years from a current 30 per cent, with a view to boosting spending and job creation, Finance Minister Arun Jaitley said on Saturday, when presenting the government’s budget 2015. Corporate tax of 33.99 per cent, including various surcharges over the base rate, was higher than Asia’s average corporate tax rate of 21.91 percent in 2014, and a global average of 23.64 per cent, according to KPMG.
The Finance Minister also seems keen on cashing in on the gold in India, quite literally. He announced a gold monetisation scheme, including a soverign gold bond wiht a fixed rate of interest. Interstingly, those investing in this bond will be able to redeem their investment at face value of gold on the day. This means a more liquid option for people who look at gold only as a means of investment.
Post Budget reactions:
9.40: Narendra Modi government’s first full budget today encountered opposition from an RSS-affiliate Bharatiya Mazdoor Sangh(BMS) which said it facilitated corporates and neglected the working class and that ‘achche din’ have not come for them. Expressing resentment over the budget, the Sangh has decided to hold a protest on March 2 at Jantar Mantar in Delhi.
9.30: Directors like Hansal Mehta and Sudhir Mishra voiced their disappointment over this year’s budget which was presented today by Union Finance Minister Arun Jaitley. ‘Shahid’ helmer Mehta criticised the budget saying, “Entertainment tax makes tickets expensive and service tax makes budgets higher. Films aren’t making money. The govt obviously doesn’t care. “They want to control what we say or show in our films. But do nothing for us with the money they collect from us. Achche din aa gaye!”
9.15: “Overall the Budget’s direction is positive with several macro factors making way for a better economic regime. However, with three consecutive bad years for real estate that left developers and other stakeholders gasping for fresh air, the expectations were high. Unfortunately, the Budget has not given them anything to cheer about,” Knight Frank India Chairman and Managing Director Shishir Baijal said.
9.10: Industrialist Harsh Goenka had a humorous take on the Budget. The Budget “pleases plain and plane-owning people, the have-nots and the have-yachts people,” he said on the micro-blogging site Twitter.
9.00: Welcoming the Budget, SBI chief Arundhati Bhattacharya said the Finance Minister has laid out a clear and tangible road-map for the future. “The decision to incentivise credit and debit card transactions coupled with the proposed new law on black money will bring down the social cost of unaccounted money, apart from adding to the bank bottom-line,” Bhattacharya said.
8.45: The Bharatiya Mazdoor Sangh (BMS) has decided to stage protest against this ‘anti-worker’ budget across the nation and at Jantar Mantar (Delhi) on March 2, said a BMS statement. According to the statement, the budget has disappointed the working class because government has given no income tax relief in them even as it decided to do away with wealth tax and unveiled a roadmap to lower corporate tax rate.
8.30: “The fiscal target of 3 per cent by FY18 is prudent while at the same time it balances the current growth needs of the economy,” Chanda Kochhar, CMD of ICICI Bank, said. She said there is a clear and sharp focus on the four key areas of growth, inclusion, fiscal prudence and tax rationalisation.
8.10: “The Budget 2015 is a very socially inclusive one. With higher transfer of tax revenues to states, they have been made equal partners with the centre to ensure balanced growth across regions marked by equity and social justice,” SP Hinduja said in a statement.
7.50: “Budget does a fine balance between fiscal prudence and has number of levers to enable growth. Fiscal deficit of 3.9% was bit disappointing after fiscal prudence path that was spelt out last year. There are number of steps/projects announced to encourage investment in infrastructure/made in India. This augurs well to encourage and kick-start investment cycle,” said Sanjay Chawla, Chief Investment Officer at Baroda Pioneer Mutual Fund.
7.30: Terming the budget as “pro-rich and anti-poor”, he said “the entire tax structure has been so well organised to give benefits to the rich and burden the common man. The total direct taxes have been reduced by Rs 8,050 crore and indirect taxes, paid by the people, raised by Rs 23,383 crore.” CPI(M) leader Sitaram Yechury said today.
7.15: Accusing Finance Minister Arun Jaitley of pleasing just the corporates and the income-tax payers, his predecessor in the UPA regime P Chidambaram today said the Modi government’s first full Budget has failed the fiscal test, the test of equity, and the test of rising inequality.
7.00: Godrej Group Chairman, Adi Godrej said, “The announcement to reduce the corporate tax over the next four years to 25 per cent is a very welcome one.”
6.30: Describing the budget as a balanced one, Dabur India CEO Sunil Duggal said, “The minister has presented an inclusive and balanced Budget that seeks to put Indian Economy on a faster growth trajectory. With a plethora of announcements, this government seems all set to take forward the reforms agenda.”
6.00: “The focus on agriculture, infrastructure, health and education will enhance the social fabric and contribute to equitable growth,” ITC Ltd chairman, Y C Deveshwar said.
5.45: Deleoitte India, Senior Director Kumar Kandaswam, said, “The budget looked very competent and appropriate for the circumstances that we are in. The focus on MSMEs and the proposal to address the working capital issues are welcome. This will significantly improve the ancillary sector that are so critical to any large manufacturing sector.”
5.30: Essar Oil, MD & CEO LK Gupta said, “The finance minister has not addressed many of our genuine expectations. We wanted the government to remove basic custom duty on imported natural gas, currently at 5 per cent as it is an inverted duty.
4.50: Gartner, Country Manager (Research), Partha Iyengar said, “the short term impact arising out of increase in surcharge and service tax are matter of concern.”
4.30: Wockhardt Chairman Habil Khorakiwala said, “It envelops every section of society and commits to initiate social security network for all.”
Post-Budget 2015 press conference: Arun Jaitley’s address to media
4.15: The post Budget 2015 presser by FM Arun Jaitley comes to a close
4.10 PM: Have always believed that what was always euphemistically known as tax foregone is incentive for growth: FM
4.05 PM: Need to phase out corporate tax exemptions; shall do gradually in conjunction with 5% reduction in corporate tax, says FM
4.02 PM: We are trying to exhort the middle class to save. This saving eventually takes form of investment, says FM
4.00 PM: If development happens in a nation,it affects all sectors, including the middle class: FM Arun Jaitley
3.57 PM: We are going to implement ‘one rank one pension’ as said in last budget: FM
3.56 PM: Those who evade the law, we have a tough message for them: FM Arun Jaitley
3.55 PM: UnionBudget2015 has appealed to the affluent to voluntarily relinquish subsidies since they are not entitled to them: FM in Q&A session
3.52 PM: We want more money in the hands of the taxpayer, we want to incentivize them to save: FM
3.51 PM: We brought a paradigm shift in the thinking to the extent that we need to introduce ideas of social security in the system: FM
3.50 PM: We then had to concentrate on manufacturing and on correcting inverted duty structures: FM
3.48 PM: Public spending on infra has been increased, notwithstanding the squeezing on fiscal space: FM
3.47 PM: FM outlines the thought process and considerations which went behind formulating the balancing acts of Budget 2015
3.46 PM: We anticipate that our growth rates will be reasonably better than what they were this year: FM
3.45 PM: I am sure that the states will spend this amount wisely: FM
3.44 PM: The increased devolution to states entails greater responsibility on their part: FM
3.43 PM: The redefined fiscal architecture between the Centre and the states is one such facet: FM
3.43 PM: We gladly welcome this recommenation of th 14th Finance Commission: FM
3.42 PM: FM thanks MoS Jayant Sinha, Secretaries and CEA Arvind Subramanian
3.40 PM: FM Arun Jaitley now making his opening remarks.
Budget 2015 Math:
Non-Plan expenditure: Rs 13,12,200 crore.
Plan expenditure: Rs Rs 4,65,277 crore.
Total expenditure: Rs 17,77,477 crore.
Gross Tax receipts: Rs 14,49,490 crore.
Devolution to the States: Rs 5,23,958 crore.
Share of Central Government: Rs 9,19,842 crore.
Non Tax Revenues: Rs 2,21,733 crore.
Fiscal deficit: 3.9% of GDP and Revenue Deficit: 2.8% of GDP
Post Budget 2015 reactions:
1.40 PM: Budget 2015 has disappointed people of Uttar Pradesh, increase in custom excise service tax will lead to inflation, SP supremo Mulayam Yadav
1.30 PM: This is not a practical budget, not as per the aspirations of poor and common man: BSE supremo Mayawati
1.25 PM: Budget 2015 is in interest of people of nation, steps have been taken to control inflation and increase investment: Rail Minister Suresh Prabhu
1.22 PM: NCP expresses disappointment over the Union Budget 2015-16
1.20 PM: BJD gives 2 out of 10 to Finance Minister Arun Jaitley’s budget; says it’s very disappointing.
1.17 PM: PM says Budget is investment-friendly, removes all doubts on tax issues and assures investors we have a stable, predictable tax system
1.15 PM: Budget 2015 is progressive, positive, practical, pragmatic and prudent, says PM Narendra Modi.
1.00 PM: Arun Jaitley’s presented a very balanced budget, relaxation has been given for job creation and job creators: Siddharth Birla, FICCI
Union Budget 2015 service tax hike: What got dearer? Your restaurant and mobile bills:
In what will increase the restaurant and mobile bills among others for the common man, the government today increased the service tax to 14 per cent from the current 12.36 per cent.
The revised rate shall come into effect from a date to be notified.
Also, the negative list of services has also been pruned by bringing more services under tax net. This will pave way for levying service tax on services being provided by amusement facility such as rides, bowling alleys, amusement arcades, water parks; services provided for admission to entertainment event of concerts, non-recognized sporting events, pageants, music concerts and award functions, if the amount charged for admission is more than Rs 500; service for carrying out any processes as job work for production or manufacture of alcoholic liquor; all service provided by the government to business entities; exemption to transportation of food stuff by rail, or vessels or road will be limited to transportation of food grains including rice and pulses, flours, milk and salt only, among others.
Budget 2015 highlights: (click for details)
12.35 PM: Finance Minister Arun Jaitley concludes Union Budget 2015 speech
12.33 PM: We have been consistent in what we have said and what we are doing: Arun Jaitley
12.33 PM: Direct tax proposals will lead to loss of Rs 8,315 cr; Indirect proposal will yield Rs 23,383 cr
12.30 PM: Individual tax payer will benefit to the extent Rs 4,44,200 from the exemptions announced
12.27 PM: For middle class, exemption for health insurance increased from Rs 15,000 to Rs 25,000; Rs. 30,000 for senior citizens: FM
12.25 PM: Consolidated Service tax increased to 14%, says Arun Jaitley
12.25 PM: Direct Taxes Code (DTC) dropped
12.23 PM: Rs 50,000 deduction for contribution to New Pension Scheme
12.22 PM: 100% tax exemption in CSR activities for Clean Ganga Fund and Swachh Bharat Kosh
12.20 PM: Excise duty on footwear having retail price of more than Rs 1000 per pair reduced by 6 %: Jaitley
12.20 PM: Transport allowance exemption hiked to Rs 1,600, from Rs 800 per month
12.20 PM: Excise duty on cigarettes by 25 pc for cigarettes of length not exceeding 65 mm, and by 15 pc for cigarettes of other lengths.
12.19 PM: Abolish wealth tax and replace it an additional 2% surcharge on the super rich with above Rs 1 cr annual income: FM
12.19 PM: Rich and wealthy must pay more tax; FM proposes to abolish wealth tax on the super rich
12.17 PM: Defer the applicability of GAAR for 2 years; will only apply prospectively after Apr 2017: FM
12.16 PM: Govt earmarks Rs 75 crore for electric vehicles in 2015-16
12.16 PM: Customs duty on certain raw materials to be reduced
12.15 PM: Benami property transaction bill to tackle black money transaction in real estate soon
12.14 PM: Nonfiling of returns, or filing of returns with inadequate information will attract RI, says FM
12.14 PM: Concealment of income wiil be prosecutable with rigourous imprisonment
12.12 PM: Black money: new structure including efiling, tracking down is our abiding commitment
12.11 PM: This will enable seamless integration of data and effective enforcement: Arun Jaitley
12.10 PM: Propose to enact a comprehensive new law on black money to bring back black money stashed abroad: Jaitley
12.10 PM: Budget Estimates of Expenditure: 17 .77 lakh cr, of which Non Plan is 13.12 lakh cr, and Plan is 4.65 lakh crore: Arun Jaitley
12.09 PM: This will lead to higher level of growth, accompanied by elimination of exemptions, which lead to disputes, says FM
12.08 PM: GST is expected to play trans-formative role by creating a common market; have already introduced bill for same
12.05 PM: High corporate tax with too many exceptions gives us worst of both worlds,we neither get revenues nor investments
12.05 PM: It has been our endeavour in last 9 months to foster a stable taxation policy: Jaitley
12.05 PM: Corporate tax reduced to 25% from 30%
12.05 PM: Fiscal deficit of 3.9% targeted for current financial year
12.00 PM: Defence budget enhanced to Rs 2,46,727 crore in Union Budget 2015
11.56 AM: Govt pursuing policy of Make In India in defense not only to cater our needs but also for export: FM
11.55 AM: Special Assistance to be given to Bihar and West Bengal, says FM
11.53 AM: Propose to set-up an IT based student financial aid system under the PM Vidya Laxmi scheme
11.53 AM: National Skill Mission to be launched, to develop employability of youth, especially below 25 years of age
11.52 AM: IIT in Karnataka and IIM in J&K and Andhra Pradesh to be set up; ISM Dhanabad will be upgraded to full IIT; AIIMS to be set up in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam
11.50 AM: EPF & ESI has hostage rather than client ; ESI should be made optional to employees
11.49 AM: We’re putting scam,scandal and corruption behind us,Parliament needs to look into a procurement law and how it will shape: FM
11.48 AM: For boosting Global Heritage Sites at Goa, Gujarat, J&K, Mumbai
11.47 AM: Arun Jaitley #Budget2015 : Government proposes to bring in a regulatory reform law
11.47 AM: After success of visas on arrival in 43 countries, FM propose to increase the countries covered under this scheme to 150
11.46 AM: Govt to do away with distinctions between FII and FDI and replace it with Composite Caps
11.45 AM: In order to support security of women, FM have decided to provide another RS 1000 cr to Nirbhaya fund
11.44 AM: FM Jaitley proposes to work on developing Indian gold coin which will help recycle gold available in country
11.43 AM: FM propose to introduce a gold monetisation scheme
Take a poll:
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11.43 AM:Arun Jaitley: Will deepen Indian Bond Market at par with the World standards
11.42 AM: Internationally competitive Direct Tax regime to be put in place: FM
11.42 AM: FMC to be strengthened by merging with SEBI
11.41 AM: Deepening of bond market to complement our world class equity; Public Debt Management agency towards this end
11.40 AM: Initial sum of Rs 150 Cr to create world class IT hub to take advantage of our competitiveness: FM
11.39 AM: Will enhance the allocations to MNREGA by Rs 5000 crore: Jaitley
11.38 AM: FM announces 5 Ultra Mega power projects, of 4000 MW
11.38 AM: Expert committee to examine need for multiple prior clearances for projects: FM
11.37 AM: Govt proposes to set up 5 ultra mega power projects, each of 4000 MW, will be plug and play projects:Jaitley
11.35 AM: Arun Jaitley: PPP model of Infrastructure to be revitalized and realigned; setting aside Rs 1000 cr for this purpose
11.35 AM: Tax free Infrastructure bonds for projects in railways and roads: FM
11.34: Govt intends to establish a national investment and infrastructure fund: Finance Minister Arun Jaitley
11.33 AM: FM proposes new scheme called Nayi Manzil to enable minority youth without school-leaving certificates to get employment
11.33 AM: FM proposes a new scheme of providing physical aids for senior citizens living below poverty line
11.33 AM: These social sec schemes reflect our intention that no person suffers from avoidable pain due to illness, old age
11.32 AM: Atal Pension Yojana to provide defined pension according to contribution; 50% contribution to be from Govt: FM
11.32 AM: PM Surakhsha Bhima Yojana to increase the access to insurance; it will be linked with Jan Dhan Yojana: FM
11.32 AM: Govt to launch PM Suraksha Bhima Yojana, offering coverage of Rs 2 lakh for just premium of Rs 12
11.30 AM: FM propose to work towards Universal Social Security for all Indians
11.29 AM: Proposes a Mudra Bank of corpus of 20000 crores to refinance the MFI’s. Will fund the unfunded.
11.28 AM: A large portion of population is without insurance of any kind, I propose to work towards universal social security system for all: A Jaitley
11.28 AM: Arun Jaitley: will bring a bankruptcy code in the year 2015-16 that will meet global standards & provide for judicial capacity
11.27 AM: FM: Rural Infrastructure Development Fund to be Rs 25000 crore
11.27 AM: Just like banking the unbanked, we are funding the unfunded: FM
11.26 AM: MUDRA bank to refinance micro finance institution under PMs MUDRA scheme: Fm
11.26 AM: Target of 8.5 lakh crores credit to be given to farmers in 2015-16
11.25 AM: Providing medical facilities to each one of village and city is essential: Arun Jailtey
11.25 AM: FM allocates Rs 5300 crore for micro irrigation
11.13 AM: Roof for each family, to fulfill housing by 2022; must build 2 crore houses in rural India, 4 cr in urban areas: FM
11.23 AM: Roadmap to achieve Fiscal deficit of 3% of GDP in 3 years: Target is 3.9% in 2015-16, 3.5% in 2016-17, 3% in 2017-18.
11.22 AM: GST to be put in place by April 1, 2016, says Arun Jaitley
11.20 AM: Govt will finish the journey to 3% fiscal deficit in two years, says FM Jaitley
11.18 AM: Govt is still firm on achieving fiscal deficit target of 3 % of GDP eventually: FM
11.17 AM: Jan Dhan, Aadhar, mobile trinity will allow us to target benefits in leakage proof manner
11.16 AM: Key challenges agricultural incomes falling , decline in share of manufacturing , need for fiscal discipline
11.15 AM: Govt to ensure employment to our youth, we have to make india the manufacturing hub of the world: FM
11.15 AM: In swach bharat 50 lakh toilet already built, 6 crore toilet targeted
11.13 AM: Incremental change is not going to take us anywhere we have to think in terms of quantum jumps: FM
11.13 AM: all our schemes have to centre around the poor: Jaitley
11.13 AM: All our schemes should focus and center around on removing absolute poverty: Jaitley
11.13 AM: We have to think in terms of a quantum jump: Arun Jaitley
11.12 AM: Estimated GDP is 7.4% in 2014-15: FM
11.10 AM: GST will put in place state of art indirect tax system by April 1st 2016: FM
11.10 AM: Our achievement is to conquer inflation; will be only 5 percent by end of year: FM
11.10 AM: We expect the CPI inflation to remain close to 5% towards the end of year: Arun Jaitley speaking in LS
11.11 AM: Our objective is to keep inflation below 6 per cent: FM
11.07 AM: Jan Dhan Adhaar Mobile & GST are two Game changing Reforms: FM
11.07 AM: The people of India have voted for quick change, faster growth and higher standards of transparency: Arun Jaitley
11.05 AM: World is predicting it is India’s chance to fly: Arun Jaitley Finance Minister
11.04 AM: Objective is to improve quality of life and to pass benefits to common man: FM
11.03 AM: We are round the clock, round the year Government: FM
11.03 AM: We inherited a sentiment of Doom and gloom and have come a long way by pour actions
11.01 AM: I present the Budget 2015 at a time Economic Environment is far more positive: FM Arun Jaitley
11.00 AM: FM Arun Jaitley presents Union Budget 2015
10.47 AM: Author Chetan Bhagat to anchor I&B Ministry talkathon with FM Arun Jaitley on Union Budget
Happy to be anchoring @MIB_India Talkathon with Fin Min @arunjaitley at 6pm today, on the budget. Watch Live at 6pm:http://t.co/RZTatFjnLr
— Chetan Bhagat (@chetan_bhagat) February 28, 2015
10.45 AM: Reaction: Govt wants to ridicule or change the schemes introduced by UPA Govt, says Cong
10.40: Modi govt sees itself in a sweet spot on low global prices for oil, India’s main import 10.30 AM: Sensex trading over 230 points up to 29450.94 ahead of Union Budget 2015
9.50 AM: Finance Minister Arun Jaitley arrives at Parliament to present Budget 2015
9.45 AM: BSE Sensex up 200 points ahead on Union Budget 2015; Nifty gains 60 points
9.40 AM: Finance Minister Arun Jaitley leaves from President’s House for Parliament to present Budget 2015 9.20 AM: Finance Minister Arun Jaitley reaches President House
#Budget2015: FM giving final touches to the budget last evening, along with Mos Jayant Sinha & the full budget team. pic.twitter.com/YbqfMgvYIA — PIB India (@PIB_India) February 28, 2015
9.20 AM: FM Arun Jaitley to present Union Budget 2015 at 11 AM today
FM @arunjaitley with MoS @jayantsinha left North Block to present Union Budget in the Parliament. #SabkaBudget #Budget2015 — Ministry of Finance (@FinMinIndia) February 28, 2015
9.15 AM: Union Budget 2015 expected to draw a strategy for curtailing subsidies and boost investment 9.10 AM: Union Budget FAQs
Union Budget FAQs: Types of budget presented #बजट2015 #Budget2015 #SabkaBudget pic.twitter.com/wZEkAlIDk2 — MIB India (@MIB_India) February 28, 2015
9.10 AM: Finance Minister Arun Jaitley arrives at Finance Ministry ahead of Union Budget 2015 9.05 AM: Prime Minister Narendra Modi’s stomach for free-market economics faces a major test 9.05 AM: Finance Ministry is pushing for increase in public expenditure for raising growth in next fiscal
9.00 AM: Check out Budget is prepared
Union Budget FAQs: How is budget prepared? #बजट2015 #Budget2015 pic.twitter.com/WqYDO0bANe — MIB India (@MIB_India) February 28, 2015
9.00 AM: Finance Minister Arun Jaitley to present Narendra Modi-led govt’s maiden full Union Budget 2015-16 today
Watch: Finance Minister Arun Jaitley’s Union Budget Speech in Lok Sabha
Finance Minister Arun Jaitley has proposed increasing the service tax rate and education cess to 14 per cent from the current 12.36 per cent, when presenting the government’s full-year budget on Saturday.
Aiming to improve the ease of doing business in the country, Finance Minister Arun Jaitley also proposed appointing an expert committee to prepare a draft legislation for obtaining regulatory clearances expeditiously. He observed it took years to get permissions to start a project.
“I intend to appoint an expert committee for the purpose to examine the possibility and prepare a draft legislation where the need for multiple prior permissions can be replaced with a pre-existing regulatory mechanism,” he said while presenting the Budget.
Jaitley said that investors spent a large amount of time and resources in getting multiple permissions. The government aims towards ease of doing business, he said adding he has recently launched an E-biz portal which integrates 14 regulatory permissions at one source.
Jaitley said it was time for a “quantum leap” on reforms and that incremental change “is not going to take us anywhere”, building on expectations that the 2015/16 budget would deliver big-bang reforms.
The minister said the government would seek to boost the efficiency of a rural job creation scheme that is India’s costliest welfare programme. It would also boost direct welfare payments into bank accounts, gradually replacing benefits in kind.
An overhaul of economic data has propelled India to the top of the league of fast-growing major economies, and the current account deficit is projected to fall below 1 percent next year, which would help stabilize the rupee and build up reserves.
But expectations for a further shift in expenditure from subsidies to infrastructure are sky high among investors who made India the best performing stock market in Asia after China last year on hopes Modi’s government brings sweeping reforms to labour, tax and land laws.
The Economic Survey released on Friday on the eve of the Budget said that it should aim at creating a competitive, predictable, clean and exemption-light tax policy regime that will lower the cost of capital, incentivise savings and facilitate tax payer compliance.
It has also underlined the need for ‘Big Bang’ reforms to boost growth to 8-10 per cent in the coming years. Besides, it has pitched for raising public investments to drive economic growth and improving business environment by making regulation and taxes less onerous.
Post-Budget 2015 reactions
GROWTH, FISCAL DEFICIT
SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI
“We are positive on the market borrowing program, the net borrowing is in alignment with market expectations. The government is looking to raise revenue through additional resources, which could be gold bonds.
“I think, overall, there are significant amount of growth multipliers embedded in the budget announcements through a sharper focus on expenditure.
“(On fiscal deficit) I think this is more tenable particularly when the government is wanting to reinvigorate public investments. I think this is more in alignment with government re-igniting investment led by its own programs. We believe to the extent that the government implements its investment program, it will be a positive.
“I think institutional strengths are getting more clarity here, with the announcement of the debt management office, the monetary policy framework, and GST.”
ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, NEW DELHI
“I think this (higher fiscal deficit) was on the cards because the government had been making a case for public investment.
“I think this is a very sensible policy, given the fact that a lot of things are crimping the fiscal space available to the centre. And I hope and wish the rating agencies and the investor community in general, understand the rationale behind this.
“I think trying to stick to a 3.6 percent (fiscal deficit) target would be far riskier, in terms of ultimately ending up with low growth and having to slash expenditure further and getting into this vicious downward cycle that we have been in for the last couple of years, partly because of this fetishisation of a particular number of the fiscal deficit.
RADHIKA RAO, ECONOMIST, DBS, SINGAPORE:
“Today’s budget was pragmatic, wide-ranging and inclusive given the emphasis on social safety nets. On the fiscal math, the deficit target has been set at -3.9 percent of GDP, deviating modestly from the roadmap’s target of -3.6 percent.
“But the government reiterated its commitment to medium-term consolidation by maintaining the -3 percent target, but delayed the timeline.
“We had flagged risks of a higher deficit target to accommodate realistic economic assumptions, higher public expenditure and increased devolution to states. The higher target is unlikely to attract the immediate ire of rating agencies and the markets, but will need the higher-frequency fiscal performance to back that faith.
“Rightfully, public investments have been given precedence to kick start the capex cycle, picking (up) the slack from the stressed private/corporate and banking sectors.
“Overall, the budget was positive, but we are uncertain if there will be any imminent rate reaction from the central bank.”
A PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI
“This budget will be a good test case whether fiscal stimulus works or not.
“If growth picks up more than what is being anticipated by the government, then we can conclude that investment-led growth helps growth. But it is disappointing that fiscal deficit targets have been reworked, and it remains to be seen how successful the government will be in implementing that.”
UPASNA BHARDWAJ, ECONOMIST, ING VYSYA BANK, MUMBAI
“The Budget seems to be more credible, with a higher fiscal deficit target and higher allocation for infrastructure.
“Clarity in taxation structure will provide more stability ahead. The expenditure switching towards more productive areas is a big boost for growth.”
NILAYA VAR, HEAD OF GOVERNMENT SERVICES, KPMG INDIA
“Although possibly controversial and against economist expectations, the pushing out of meeting the fiscal deficit target by a year shows pragmatism in bringing in additional public investments for infrastructure development, compensating (for) lack
of private investment and showing seriousness on improving overall infrastructure.”
ANANTH NARAYAN, REGIONAL HEAD OF GLOBAL MARKETS – SOUTH ASIA, STANDARD CHARTERED, MUMBAI
“Markets were expecting a fiscal deficit target of 3.6 percent to be met in 2015/16, so the 3.9 percent number will be negative for the markets as an initial reaction on Monday.
“Also markets were not expecting the government to extend the fiscal consolidation roadmap by one year, and we were expecting fiscal deficit target of 3 percent of GDP to be met in 2016/17. But we have to see how this additional money coming out of the higher fiscal deficit will be spent.”
IMPACT ON COMPANIES, TAXATION
NITIN JAIN, CEO OF RETAIL CAPITAL MARKETS AND GLOBAL ASSET MANAGEMENT, EDELWEISS, MUMBAI
“I would rate the budget a 7 and a half on a scale of 10! Though it is a fairly well balance budget, the market expectations were really sky rocketing before this day. So I would not be surprised to see a market correction of maybe 5-6 percent.
“It is not close to the ‘Visionary document’ that people have been talking about. Overall, I would still say it is well balanced one.
“The levy on corporate taxation, rationalization of wealth tax, incentives by more expenditure towards infrastructure are all positives. But nowhere close to what markets were expecting.
“For NBFCs (non-banking financial companies) the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) law is a huge positive.
“For some infrastructure companies, especially in roads, the EPC (engineering, procurement and construction) companies should do very well.
“But that is where I would stop. There were much more expectations on infrastructure spending. And more than all of this, the expectation on announcements for banks, as banks are in massive need for recapitalization. The budget fell short on those expectations, but maybe those may follow soon.”
SACHIN MENON, COO – TAX & HEAD OF INDIRECT TAX, KPMG INDIA, MUMBAI
“The announcement that the much awaited GST will be introduced on 1st April 2016, will definitely rejuvenate the industry.
“The GST will make manufacturing more competitive and thereby support the ‘Make in India’ Campaign. How fast the Finance Minister will move the wheels of change to usher in GST will be keenly watched in the coming days”
SANTOSH DALVI, PARTNER – INDIRECT TAX, KPMG IN INDIA
The government has walked the talk for Make In India by simplifying indirect tax registrations, easing credit availment, rationalizing the penalty provisions and announcing GST implementation date. While the finance minister proposed changes such as increasing Service Tax rates, rationalizing Excise and Customs duties by correcting inverted duty structure, pruning Service Tax negative list and exemptions to bring the current indirect tax regime in line with proposed GST, it did not provide any definite road map for GST implementation. The B-day could have been a perfect day for the businesses if the expectation in terms of removal of Cenvat credit restrictions and anomaly of dual levy of taxes etc. was met.
FOREIGN INVESTMENTS
ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, NEW DELHI
“I think there’s been endless controversy for corporates over the absence of a consolidated FII (foreign institutional investor) limit.
“I think it’s just making the process of investing in India and Indian companies that much easier. It is still very much a part of the larger scheme of making India an attractive destination and introducing transparency.
“The gold monetisation scheme has helped other countries like Turkey. I think it will work. It certainly will help foster one step to a more active gold market in India.
ANEESH SRIVASTAVA, CHIEF INVESTMENT OFFICER IDBI FEDERAL LIFE INSURANCE, MUMBAI
“GAAR postponement is a big positive and will bring fresh inflows.
“More importantly, they have clarified that when GAAR comes into force, it will not be applicable retroactively, and that clears a big uncertainty for investors.”
U.R. BHAT, MANAGING DIRECTOR, DALTON CAPITAL, MUMBAI
“GAAR deferral is a positive relief. Government wants to be sure that foreign investors don’t run away from India. There should be no confusion prevailing on this now.
“It should provide some stability on perception of India’s tax policies. I think there would be a comprehensive review of everything before government actually plans to move to GAAR.”
NIRAKAR PRADHAN, CHIEF INVESTMENT OFFICER, FUTURE GENERALI INDIA LIFE INSURANCE, MUMBAI
“Having no distinction between foreign direct investments and foreign portfolio investments would provide more confidence to portfolio investors.
“Both investments would be treated same in the eyes of government and regulators. This should attract more portfolio flows in near to medium term in debt as well as equities.”
Other industry reactions
RAMESH BAWA, MD & CEO, IL&FS FINANCIAL SERVICES
“This year’s Budget had built up a lot of expectations over the last few months across all the sectors of the industry awaiting for the announcement of impressive reforms.. I personally feel that we do not need a Grand Plan, rather India needs a solid and continuing plan. Although, this budget provides a good direction towards simplifying the procedures for achieving this goal there seems to be a substantial scope available to explore much more measures for the remarkable reforms.
The vision to achieve a progressive double digit growth and maintain a graded fiscal deficit target of 3% by FY 17-18 is laudable. This sets a clear path for combining the twin challenges of containing fiscal deficit and manning the existing challenges in the business environment. The provision of access to enforcement rights under SARFAESI Act establishes a long awaited parity for NBFCs with Banks and will improve their ability for enforcement actions and result in revival of stalled projects. On the changes relating to pass through status for REITs and Infra Investment Funds, I think this should give a impetus in helping Infrastructure and Real Estate sectors to raise funds from the capital markets.
With respect to the Infrastructure sector, the Budget has laid a clear road map for development of various infrastructure initiatives. The infrastructure development agenda also seems to be complemented by several innovative financial initiatives including a National Investment & Infra Fund, Tax free Infra Bonds, Bank Bureau Boards, cess to fund renewable energies and ideas to channelize savings. Overall, I feel it is a balanced budget. I think the budget’s theme is to provide long term clarity from an Investor and Business confidence perspective. This Budget seems to be a good start towards the economic development agenda of the Government.”
M G GEORGE MUTHOOT, CHAIRMAN, THE MUTHOOT GROUP
“The budget presented by the Honourable Finance Minster Mr. Arun Jaitley is progressive and lays special emphasis on uplifting the people at the bottom of the pyramid. The Government has reiterated its commitment to increasing access of people to formal financial system. By ‘funding the unfunded’ and with schemes that promote social security, the Government is reaching out to the vast majority who remain untouched by financial security or insurance.
“ We welcome the decision to consider NBFCs as ‘financial institutions’ under the SARFAESI Act and besides spreading financial inclusion, it is also important to empower our youth through training and skills development. I specially welcome the Government’s move to increase employability of the rural youth through appropriate training and higher education assistance.”
AMIT MODI, WHOLE TIME DIRECTOR ABA CORP
“The Union Budget 2015, by the government is continuing to strengthen on its developmental agenda by doing. a balancing act on the Infrastructure sector, with the announcement of investments to go up by Rs. 70,000 crores. Also the introduction of Regulatory body for Infrastructure which should provide the Single window clearance should include Real Estate sector under its ambit as this will definitely give the much needed fillip to the mission ‘Housing for All by 2022’. We also welcome the additional announcement of 2 crore houses in the rural and 5 crore houses in the urban areas. We further welcome the jurisprudence initiatives by the Finance Minister in giving due credibility to the real estate sector by the introduction of the Benami Property Transaction Bill Act that would largely help tackle black money transactions in the real estate sector.
“But at the same time we also feel that with no action on reintroduction of Tax Sops, under section 80-1B(10) to provide tax benefits for the housing sector up to a basic selling price of 60 lakhs and the larger issue of not according the much required ‘industry status’ to the real estate sector could eventually slow down the overall growth agenda.On the personal taxation front the government should have raised exemption limit on home loans by at least another Rs 50,000- Rs 100,000 from presently 1.5 Lacs per annum, which would have had a positive impact on encouraging purchase of homes, especially by the millions and millions of first time buyes across the nation.”
EBERHARD KERN, MD AND CEO, MERCEDES-BENZ INDIA:
“The commitment to infrastructure, announcement of GST with a specific timeline and a simplified tax structure greatly enhances ease of doing business in India. These positive steps will simulate growth and should indirectly help the automotive market. It is crucial now that these measures are implemented within the next 12 – 18 months to accrue desired results. Mercedes-Benz has already committed to the “Make in India” campaign investing a total of 1,000 crores in its manufacturing facility and has the largest installed capacity in the luxury car segment.”
SANJAY KAPOOR, CHAIRMAN, MICROMAX INFORMATICS
The Union Budget 2015-16 was very critical as it outlines new government’s commitment to reinvigorate the economy, kick-start investment cycle and also maintain fiscal prudence. They have the advantage of a stable political regime & lower inflation, courtesy oil prices! In the light of this two things that I expected from the budget were growth & infrastructure enhancement, including the Digital infrastructure like access, backhaul & storage. My first reaction after hearing the budget speech of Finance Minister is that government is making a concerted effort to ‘listen’ to the stakeholders. It’s a sincere approach to problem solving with growth, competitiveness, inclusiveness, realism & long term transformation at the core.
I see this to be a competitive & growth driven budget for which I congratulate our FM. Budget is not just a one day event but a continuous process with clearly defined objectives and predictability. The delivery however is contingent to flawless implementation. Union budget 2015-16 is true to Mr. Jaitley statement, which said, “It is India’s turn to fly”.