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1. Budget 2016: As things stand, far as the Indian economy is concerned ahead of presentation of Union Budget 2016, Finance Minister Arun Jaitley is staring at a huge revenue shortfall as the country again misses an unrealistic target for raising cash from selling off state assets through disinvestment, while sliding commodity prices and exports have dented revenues. (Image Source: PTI)
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Budget 2016: FM Arun Jaitley will present the upcoming Union Budget on 29th February and with the country all agog about its contents, Minister of State for Finance Jayant Sinha stepped in to clear the air a little – the document itself remains a secret till presentation day. Here are the top 5 key takeaways about the Union Budget 2016-17:
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3. Budget 2016: Arun Jaitley may set an economic growth target of 7.5 to 8 percent for the fiscal year starting in April, an official said, while the asset-sale target could be halved to some 350 billion rupees ($5.17 billion). (Image Source: Reuters)
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4. Budget 2016: Arun Jaitley's boss, Prime Minister Narendra Modi, has questioned whether businesses should continue to benefit from tax 'incentives' worth Rs 624 billion ($9.2 billion) that he described as subsidies in all but name. "My aim is not to eliminate subsidies, but to rationalise and target them," Modi said in a speech. (Image Source: Reuters)
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5. Budget 2016: Those familiar with the budget process said Arun Jaitley may pare tax breaks on capital investment, research and development, and projects in under-developed regions. As of now, the government is not considering raising its deficit target. (Image Source: PTI)
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6. Budget 2016: They declined to estimate how much those measures would raise, but one said they would more than offset revenue losses from cuts in India's corporate income tax announced a year ago. (Image Source: AP)
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6. Union Budget 2016: In the meeting, the Opposition and the government also agreed to pass a bill without discussion in RS on delimitation exercise in West Bengal to grant voting rights to people who came to India from Bangladeshi enclaves. Finance Minister Arun Jaitley, who spoke first in the meeting, sought the Opposition cooperation for the same, to which West Bengal's ruling Trinamool Congress agreed. Jaitley added that the first part of the budget session should be devoted towards passing urgent bills besides the budget. (Reuters)
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8. Budget 2016: "If Mr. Modi is talking about Make in India, it has to be the foreign multinational companies setting up manufacturing facilities in India and using it as an export hub like China," said Rahul Mitra, a tax partner at KPMG. "If you want to do that you can't wish away the necessary exemptions for exports." (Image Source: AP)
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9. Budget 2016: The statutory burden of all taxes on the typical Indian company is about 34 percent. That's relatively high by international standards, but tax breaks bring the effective rate down to 23 percent. Getting the balance right will be key for Arun Jaitley. (Image Source: AP)
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10. Budget 2016: The corporate income tax breaks make up a relatively small part of $80 billion in business giveaways, the lion's share of which comes from incentives on customs and excise duties. "With unsatisfactory growth in tax receipts, the finance minister doesn't have much choice except to cut most corporate tax exemptions," said another official who, like his colleague, was not authorised to speak on the record. To give one example, the government estimates that a tax break on capital depreciation cost it 370 billion rupees ($5.47 billion) in revenues in the last fiscal year. In some cases companies, particularly those in IT, pharmaceuticals and some manufacturing sectors, get exemptions of up to 200 percent on the sum invested. That could be scaled back to 60 percent. (Image Source: Reuters)
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11. Budget 2016: Arun Jaitley could also put a "sunset clause" on tax exemptions where there is now no timeline, while allowing others to die a natural death, the sources said. A delegation of industrial chambers met Jaitley last month and asked him to balance cuts in tax exemptions with lower tax rates. (Image Source: Reuters)
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12. Budget 2016: Tax experts doubt Modi would turn hostile on business, not least because he has just launched a "Startup India" drive backed by a state fund and three-year exemptions from tax and compliance checks. "The corporate tax cut is more of a 'feel good, look good, India's open for business and we mean it' exercise," said Rohinton Sidhwa, a tax partner at Deloitte. "I'm pretty certain the finance minister will attempt to make the cut as cash-neutral as possible." (Image Source: Reuters)
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