Indian Union Budget 2016-17, Budget speech pdf
Monday, January 30, 2017     Category : Indian Budget 2016-17

 

Customs duty tariff rate changes as per Indian Budget 2017-18
Central Excise Duty changes as per Indian Budget 2017-18
Service Tax rate Changes under Indian Budget 2017-18

(Updating soon after Budget 2017-18 on 1st February,2017 under text format and pdf format)

Budget 2016-17 changes in customs import duty tariff,excise duty and service tax

Indian Union Budget 2016-2017, changes in import customs tax tariff, chapter wise

Indian Budget 2016-17, Excise duty tariff changes, chapter wise

Changes in Service Tax as per Budget 2016-17

 

Indian Union Budget 2016-17,  Budget speech pdf

 

Indian budget 2016-17 declared on 29th February, 2016-17.

 

The extract of Budget given below:  You may click here to read in pdf format  

How to import your goods?

Click here to know India Trade Classification(ITC)
Different types of Containers

How to export your product?

Click here to know HTS (Harmonized Tariff System) code of your product

What are the risks and solutions in Export Business?
Service Tax - Click here to read complete notification under Budget 2014
What is Bank post shipment credit to exporters?
Types of export containers
Measurement of export containers
Export Import Policy of India 2015-20
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

What is post shipment credit to exporters?

Bank financial benefits to Exporters

How does Letter of Credit work?

 

Procedure and Documentation for Filing Claim of Marine Insurance.

3 Mandatory documents required to import goods to India

 

www.howtoexportimport.com

CONTENTS

PART - A

Page No.

Introduction 1

Agriculture and Farmers' Welfare 4

Rural Sector 7

Social Sector including Health Care 9

Education, Skills and Job Creation 11

Infrastructure and Investment 13

Financial Sector Reforms 17

Governance and Ease of Doing Business 19

Fiscal Discipline 20

PART - B

TAX REFORMS

Relief to small tax payers 23

Measures to boost growth and employment

generation 24

Incentivising domestic value addition

to help Make in India 26

Measures for moving towards a

pensioned society 26

Measures for promoting affordable housing 27

Additional resource mobilization for agriculture,

rural economy and clean environment 27

Reducing litigation and providing certainty

in taxation 29

Simplification and rationalization of taxation 31

Use of Technology for creating accountability 32

Conclusion 33

Annexes

(ii)

Annexes to Part –A

Annex-I : Proposed Changes/Reforms

in FDI and Related Policies 34

Annex-II : Measures for Deepening

of Corporate Bond Market 35

Annex-III-A : Allocations of Important

Ministries, Sectors and Vulnerable

Sections 36

Annex-III-B : Allocations of Important

Schemes 37

Annex-III-C : Resources Transferred to

State and U.T. Governments 39

Annexes to Part – B

Direct Tax 40

Indirect Tax 49

Other Legislative Amendments 71

Budget 2016-2017

Speech of

Arun Jaitley

Minister of Finance

February 29, 2016

Madam Speaker,

I rise to present the Budget for the year 2016-17.

2. I am presenting this Budget when the global economy is in serious

crisis. Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015.

Financial markets have been battered and global trade has contracted.

Amidst all these global headwinds, the Indian economy has held its ground

firmly. Thanks to our inherent strengths and the policies of this Government,

a lot of confidence and hope continues to be built around India.

3. The International Monetary Fund has hailed India as a ‘bright spot’

amidst a slowing global economy. The World Economic Forum has said that

India’s growth is ‘extraordinarily high’. We accomplished this despite very

unfavourable conditions and despite the fact that we inherited an economy of

low growth, high inflation and zero investor confidence in Government’s

capability to govern. We converted these difficulties and challenges into

opportunities.

BÉE¶iÉÉÒ SÉãÉÉxÉä ´ÉÉãÉÉå xÉä VÉ¤É cÉ® BÉäE nÉÒ {ÉiÉ´ÉÉ® càÉå

ãÉc®-ãÉc® iÉÚ}ÉEÉxÉ ÉÊàÉãÉä +ÉÉè® àÉÉèVÉ-àÉÉèVÉ àÉÄZÉnÉ® càÉå

ÉÊ{ÉE® £ÉÉÒ ÉÊnJÉɪÉÉ cè càÉxÉä +ÉÉè® ÉÊ{ÉE® ªÉä ÉÊnJÉÉ nåMÉä ºÉ¤ÉBÉEÉä

<xÉ cÉãÉÉiÉ àÉå +ÉÉiÉÉ cè nÉÊ®ªÉÉ BÉE®xÉÉ {ÉÉ® càÉå

4. Let us look at our achievements compared to the last three years of

the previous Government when growth had decelerated to 6.3%. The growth

of GDP has now accelerated to 7.6%. This was possible notwithstanding the

contraction of global exports by 4.4% compared to 7.7% growth in world

exports during the last three years of the previous Government. CPI inflation

was at 9.4% during the last three years of the previous Government. Under

our Government, CPI inflation has come down to 5.4%, providing big relief

to the public. This was accomplished despite two consecutive years of

monsoon shortfall of 13%, compared to normal rainfall in the last three years

of the previous Government.

2

5. Our external situation is robust. The Current Account deficit has

declined from 18.4 billion US dollars in the first half of last year to 14.4

billion this year. It is projected to be 1.4% of GDP at the end of this year.

Our foreign exchange reserves are at the highest ever level of about 350

billion US dollars.

6. Our initiatives in the last 21 months have not only placed the

economy on a faster growth trajectory but have bridged the trust deficit,

created by the previous Government. We had to work in an unsupportive

global environment, adverse weather conditions and an obstructive political

atmosphere.

àÉèbàÉ, càÉå +ÉɺÉàÉÉxÉÉÒ +ÉÉè® ºÉÖãiÉÉxÉÉÒ nÉäxÉÉå {ÉÉÊ®¤ÉãÉÉå xÉä {É®ä¶ÉÉxÉ ÉÊBÉEªÉÉ cè*

7. We believe in the principle that money with the Government belongs

to the people and we have the sacred responsibility to spend it prudently and

wisely for the welfare of our people, especially the poor and the

downtrodden. We have increased our Plan expenditure at the RE stage in

2015-16 in contrast to the usual practice of reducing it. We achieved this

despite adopting the Fourteenth Finance Commission recommendations

which increased devolution to the States by 55%.

8. We must now look ahead. The risks of further global slowdown and

turbulence are mounting. This complicates the task of economic

management for India. It has three serious implications for us. First, we

must strengthen our firewalls against these risks by ensuring macro- economic stability and prudent fiscal management. Second, since foreign

markets are weak, we must rely on domestic demand and Indian markets to

ensure that India’s growth does not slow down. And third, we must continue

with the pace of economic reforms and policy initiatives to change the lives

of our people for the better.

9. We see these challenges as opportunities. The financial years

2015-16 and 2016-17 have been and will be extremely challenging for

Government expenditure. The 14th Finance Commission has reduced the

Central share of taxes to 58% from the 68%. In the financial year 2015-16,

we managed to improve upon the budgeted expenditure due to revenue

buoyancy, notwithstanding the steep reduction in the Central share of taxes. The next financial year 2016-17 will cast an additional burden on account of

the recommendations of the 7th Central Pay Commission and the

implementation of Defence OROP. The Government, therefore, has to

prioritise its expenditure. We wish to enhance expenditure in the farm and

rural sector, the social sector, the infrastructure sector and provide for

3

recapitalisation of the banks. This will address those sectors which need

immediate attention. Once the Government discharges these priority

obligations, it shall then focus on other areas which are also of utmost

priority to the Government.

10. While increasing the outlay of various social sector programmes, the

Government will undertake three major schemes to help the weaker sections

of the society. The Pradhan Mantri Fasal Bima Yojana has already been

announced to protect the farmer from the adverse consequences of nature.

The farmer will pay a nominal amount of insurance premium and get the

highest ever compensation in the event of any loss suffered. A health

insurance scheme which protects one-third of India’s population against

hospitalisation expenditure is also being announced. The Government is

also launching a new initiative to ensure that the BPL families are

provided with a cooking gas connection, supported by a Government

subsidy. This will significantly improve the health of women and those BPL

families who suffer adversely from the ill-effects of Chulha cooking.

11. The Annual Budget is also an opportunity for the Government to

outline its priorities for the year to come. The priority of our Government is

clearly to provide additional resources for vulnerable sections, rural areas

and social and physical infrastructure creation. The Government shall also

endeavour to continue with the ongoing reform programme and ensure the

passage of the Constitutional amendments to enable the implementation of

the Goods and Service Tax, the passage of Insolvency and Bankruptcy law

and other important reform measures which are pending before the

Parliament.

12. Additionally, as I will elaborate later, we will undertake significant

reforms, such as the enactment of a law to ensure that all Government

benefits are conferred upon persons who deserve it, by giving a statutory

backing to the AADHAR platform; bringing significant changes in the

legislative framework relating to the transport sector so as to free it from

constraints and restrictions; incentivising gas discovery and exploration by

providing calibrated marketing freedom; enactment of a comprehensive law

to deal with resolution of financial firms; providing legal framework for

dispute resolution in PPP projects and public utility contracts; undertaking

important banking sector reforms and public listing of general insurance

companies; and undertaking significant changes in FDI policy.

13. Our agenda for the next year is, therefore, to ‘Transform India’ in this

direction. My Budget proposals are, therefore, built on this transformative

agenda with nine distinct pillars. These include:

4

(i) Agriculture and Farmers’ Welfare: with focus on doubling

farmers’ income in five years;

(ii) Rural Sector: with emphasis on rural employment and

infrastructure;

(iii) Social Sector including Healthcare: to cover all under welfare

and health services;

(iv) Education, Skills and Job Creation: to make India a

knowledge based and productive society;

(v) Infrastructure and Investment: to enhance efficiency and

quality of life;

(vi) Financial Sector Reforms: to bring transparency and stability;

(vii) Governance and Ease of Doing Business: to enable the people

to realise their full potential;

(viii) Fiscal Discipline: prudent management of Government

finances and delivery of benefits to the needy; and

(ix) Tax Reforms: to reduce compliance burden with faith in the

citizenry.

In each of these themes, I shall outline specific policy measures and

initiatives which would have a transformative impact on our economy and

the lives of our people.

I. Agriculture and Farmers' Welfare

14. Let me first take up Agriculture and Farmers’ Welfare. We are

grateful to our farmers for being the backbone of the country’s food security.

We need to think beyond ‘food security’ and give back to our farmers a

sense of ‘income security’. Government will, therefore, reorient its

interventions in the farm and non-farm sectors to double the income of the

farmers by 2022. Our total allocation for Agriculture and Farmers’ welfare

is ` 35,984 crore.

15. We need to address issues of optimal utilisation of our water

resources; create new infrastructure for irrigation; conserve soil fertility with

balanced use of fertilizer; and provide value addition and connectivity from

farm to markets.

16. Irrigation is a critical input for increasing agriculture production and

productivity. Out of 141 million hectares of net cultivated area in the

country, only 46% is covered with irrigation.

5

17. The ‘Pradhan Mantri Krishi Sinchai Yojana’ has been strengthened

and will be implemented in mission mode. 28.5 lakh hectares will be brought

under irrigation under this Scheme. 18. Implementation of 89 irrigation projects under AIBP, which have

been languishing, will be fast tracked. This will help to irrigate 80.6 lakh

hectares. These projects require `17,000 crore next year and `86,500 crore

in the next five years. We will ensure that 23 of these projects are completed

before 31st March, 2017.

19. A dedicated Long Term Irrigation Fund will be created in

NABARD with an initial corpus of about `20,000 crore. To achieve all

these, a total provision of `12,517 crore has been made through

budgetary support and market borrowings in 2016-17.

20. Simultaneously a major programme for sustainable management

of ground water resources has been prepared with an estimated cost of

`6,000 crore and proposed for multilateral funding.

21. At least 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh

compost pits for production of organic manure will be taken up by making

productive use of the allocations under MGNREGA.

22. The Soil Health Card Scheme is now being implemented with greater

vigour. Through this, farmers get information about nutrient level of the soil

and can make judicious use of fertilizers. The target is to cover all 14 crore

farm holdings by March 2017. `368 crore has been provided for National

Project on Soil Health and Fertility. Besides, 2,000 model retail outlets of

Fertilizer companies will be provided with soil and seed testing facilities

during the next three years. Fertilizer companies will also co-market city

compost which increases the efficacy of chemical fertilizer. A policy for

conversion of city waste into compost has also been approved by the

Government under the Swachh Bharat Abhiyan. 23. To increase crop yields in rain fed areas, which account for nearly

55% of the country’s arable land, organic farming is being promoted.

Towards this end, the Government has launched two important schemes.

First, the ‘Parmparagat Krishi Vikas Yojana’ which will bring 5 lakh acres

under organic farming over a three year period. Second, the Government has

launched a value chain based organic farming scheme called “Organic Value

Chain Development in North East Region”. The emphasis is on value

addition so that organic produce grown in these parts find domestic and

export markets. A total provision of `412 crore has been made for these

schemes.

6

24. Incentives are being given for enhancement of pulses production.

`500 crores under National Food Security Mission has been assigned to

pulses. The number of districts covered has been increased to 622.

25. A national level competition will be held among 674 Krishi Vigyan

Kendras with a total prize money of `50 lakh to improve the efficiency

and performance of these Kendras. 26. Access to markets is critical for the income of farmers. The

Government is implementing the Unified Agriculture Marketing Scheme

which envisages a common e-market platform that will be deployed in

selected 585 regulated wholesale markets. Amendments to the APMC Acts

of the States are a pre-requisite to join this e-platform. I am happy to inform

that 12 States have already amended their APMC Acts and are ready to come

on board. More States are expected to join this platform in the coming year.

The Unified Agricultural Marketing E Platform will be dedicated to the

Nation on the birthday of Dr. Baba Saheb Ambedkar on 14th April this

year.

27. 97 lakh MT of storage capacity was added to the Central pool stock

during the current year.

28. We are implementing the Pradhan Mantri Gram Sadak Yojana

(PMGSY) as never before. This Scheme had suffered in the past because of

underfunding. The allocations in 2012-13 and 2013-14 were only `8,885

crore and `9,805 crore respectively. We have substantially increased the

allocation in the last two years and have now allocated `19,000 crore in

2016-17. Together with States’ share, totally about `27,000 crore will be

spent on this Yojana in 2016-17. Our goal is to advance the completion

target of the programme from 2021 to 2019 and connect the remaining

65,000 eligible habitations by constructing 2.23 lakh kms of roads.

Accordingly, the pace of construction which is currently 100 kms per day, as

compared to the average of 73.5 kms during 2011-14, will be substantially

stepped up.

29. To support farmers in the aftermath of natural calamities, Government has revised the norms of assistance under the National Disaster

Response Fund in April 2015.

30. Special focus has been given to ensure adequate and timely flow of

credit to the farmers. Against the target of `8.5 lakh crore in 2015-16, the

target for agricultural credit in 2016-17 will be an all-time high of `9 lakh

crore. To reduce the burden of loan repayment on farmers, a provision of

`15,000 crore has been made in the BE 2016-17 towards interest subvention.

7

31. Government has approved the path breaking Crop Insurance Scheme,

namely, Prime Minister Fasal Bima Yojana. For effective implementation of

this Scheme, I have provided a sum of `5,500 crore in the Budget 2016-17.

32. We have to ensure that the benefit of MSP reaches farmers in all

parts of the country. Three specific initiatives will be taken up in 2016-17

for this. First, the remaining States will be encouraged to take up

decentralized procurement. Second, an online Procurement System will

be undertaken through the Food Corporation of India. This will usher

in transparency and convenience to the farmers through prior

registration and monitoring of actual procurement. Third, effective

arrangements have been made for pulses procurement.

33. Farmers also take up other allied activities to supplement their family

income. To make dairying more remunerative to the farmers, four new

projects will be taken up: first, the ‘Pashudhan Sanjivani’, an animal

wellness programme and provision of Animal Health Cards (‘Nakul

Swasthya Patra’); second, an Advanced breeding technology; third,

Creation of ‘E-Pashudhan Haat’, an e market portal for connecting

breeders and farmers; and fourth, a National Genomic Centre for

indigenous breeds. These projects will be implemented at a cost of `850

crores over the next few years.

34. There has been a visible rise in the yield of honey, from an average of

18 to 20 kg per box per annum in the year 2013-14 to 25 kg per box per

annum by 2015-16. The total production of honey in the country has

increased from 76,150 metric tonnes in 2014-15 to 86,500 metric tonnes.

90% of the domestic honey is now exported.

II. Rural Sector

35. After agriculture, I now turn to the other segments of the rural

economy.

36. A sum of `2.87 lakh crore will be given as Grant in Aid to Gram

Panchayats and Municipalities as per the recommendations of the 14th

Finance Commission. This is a quantum jump of 228% compared to the

previous five year period. The funds now allocated, translate to an average

assistance of over `80 lakh per Gram Panchayat and over `21 crore per

Urban Local Body. These enhanced allocations are capable of transforming

villages and small towns. Ministry of Panchayati Raj will work with the

States and evolve guidelines to actualise this.

8

37. There is an urgent need to focus on areas of drought and rural

distress. Every block in these distress areas will be taken up as an intensive

Block under the Deen Dayal Antyodaya Mission. Formation of Self Help

Groups (SHGs) will be speeded up to promote multiple livelihoods. Cluster

Facilitation Teams (CFT) will be set up under MGNREGS to ensure water

conservation and natural resource management. These districts would also

be taken up on priority under Pradhan Mantri Krishi Sinchaii Yojna. 38. A sum of `38,500 crore has been allocated for MGNREGS in

2016-17.

39. 300 Rurban Clusters will be developed under the Shyama Prasad

Mukherjee Rurban Mission launched by the Honourable Prime Minister

recently. These Clusters will incubate growth centres in rural areas by

providing infrastructure amenities and market access for the farmers. They

will also expand employment opportunities for the youth.

40. As on 1st April, 2015, a total of 18,542 villages were not electrified.

The Honourable Prime Minister, in his address to the Nation on 15th August,

2015 announced that the remaining villages will be electrified within the

next 1000 days.

41. As on 23rd February, 2016, 5542 villages have been electrified. This

is more than the total combined achievement of previous three years. The

Government is committed to achieve 100% village electrification by

1

st May, 2018. ` 8,500 crore has been provided for Deendayal Upadhayaya

Gram Jyoti Yojna and Integrated Power Development Schemes.

42. Swachh Bharat Mission is India’s biggest drive to improve sanitation

and cleanliness, especially in rural India. This subject was very close to the

heart of the Father of the Nation. For the first time since independence, the

Parliament held a comprehensive debate on sanitation. This has become a

topic of discussion in almost every home. We have introduced ranking of

urban areas in sanitation which has resulted in constructive competition

among towns and cities. ` 9,000 crore has been provided for Swachh Bharat

Abhiyan.

43. In order to continue this momentum, priority allocation from

Centrally Sponsored Schemes will be made to reward villages that have

become free from open defecation. 44. We need to derive greater benefit from our demographic advantage.

We need to spread digital literacy in rural India. Of the 16.8 crore rural

households as many as 12 crore households do not have computers and are

9

unlikely to have digitally literate persons. We have already approved two

Schemes to promote digital literacy: National Digital Literacy Mission; and

Digital Saksharta Abhiyan (DISHA). We now plan to launch a new Digital

Literacy Mission Scheme for rural India to cover around 6 crore

additional households within the next 3 years. Details of this scheme will

be spelt out separately.

45. Modernisation of land records is critical for dispute free titles. The

National Land Record Modernisation Programme has been revamped under

the Digital India Initiative and will be implemented as a Central sector

scheme with effect from 1

st April, 2016. The revamped Programme will

build an integrated land information management system. `150 crore has

been provided for this purpose.

46. Panchayat Raj Institutions need to develop governance capabilities to

deliver on the Sustainable Development Goals. It is, therefore, proposed to

launch a new restructured scheme, namely, Rashtriya Gram Swaraj

Abhiyan, for which `655 crore is being set apart in 2016-17.

47. For rural development as a whole, I have allocated ` 87,765 crore in

the Budget for 2016-17.

III. Social Sector including Health Care

48. When asked what he intends doing for regeneration of India, Swami

Vivekananda had said “no amount of politics would be of any avail until the

masses in India are well educated, well fed and well cared for”. I now

proceed to present the key elements of my proposals in the Social Sector.

49. In our country, cooking gas cylinders were considered an upper

middle class luxury. Gradually it spread to the middle class. But the poor do

not have access to cooking gas. Women of India have faced the curse of

smoke during the process of cooking. According to experts having an open

fire in the kitchen is like burning 400 cigarettes an hour. The time has come

to remedy this situation.

50. We have decided to embark upon on a massive mission to

provide LPG connection in the name of women members of poor

households. I have set aside a sum of `2,000 crore in this year’s Budget

to meet the initial cost of providing these LPG connections. This will

benefit about 1 crore 50 lakh households below the poverty line in 2016-17.

The Scheme will be continued for at least two more years to cover a total of

5 crore BPL households. This will ensure universal coverage of cooking gas

10

in the country. This measure will empower women and protect their health.

It will reduce drudgery and the time spent on cooking. It will also provide

employment for rural youth in the supply chain of cooking gas.

51. I want to take this opportunity to express our gratitude and

appreciation for the 75 lakh middle class and lower middle class households

who have voluntarily given up their cooking gas subsidy, in response to the

call given by the Hon’ble Prime Minister. Their gesture is a matter of pride

for the country.

52. Catastrophic health events are the single most important cause of

unforeseen out-of-pocket expenditure which pushes lakhs of households

below the poverty line every year. Serious illness of family members cause

severe stress on the financial circumstances of poor and economically weak

families, shaking the foundation of their economic security. In order to

help such families, the Government will launch a new health protection

scheme which will provide health cover up to Rs.One lakh per family.

For senior citizens of age 60 years and above belonging to this category,

an additional top-up package up to `30,000 will be provided.

53. Making quality medicines available at affordable prices has been a

key challenge. We will reinvigorate the supply of generic drugs. 3,000

Stores under Prime Minister’s Jan Aushadhi Yojana will be opened during

2016-17.

54. About 2.2 lakh new patients of End Stage Renal Disease get added in

India every year resulting in additional demand for 3.4 crore dialysis

sessions. With approximately 4,950 dialysis centres in India, largely in the

private sector and concentrated in the major towns, the demand is only half

met. Every dialysis session costs about `2,000 – an annual expenditure of

more than `3 lakh. Besides, most families have to undertake frequent trips,

often over long distances, to access dialysis services, incurring heavy travel

costs and loss of wages.

55. To address this situation, I propose to start a ‘National Dialysis

Services Programme’. Funds will be made available through PPP mode

under the National Health Mission, to provide dialysis services in all

district hospitals. To reduce the cost, I propose to exempt certain parts

of dialysis equipment from basic customs duty, excise/CVD and SAD.

56. Scheduled Caste and Scheduled Tribe entrepreneurs are beginning to

show great promise in starting and running successful business enterprises. The Prime Minister had given a call for promoting entrepreneurship among

11

SC/ST to become job providers rather than job seekers. I am happy to

inform you that the Union Cabinet has approved the “Stand Up India

Scheme” to promote entrepreneurship among SC/ST and women. ` 500

crore has been provided for this purpose. The Scheme will facilitate at least

two such projects per bank branch, one for each category of entrepreneur.

This will benefit at least 2.5 lakh entrepreneurs.

57. We are celebrating the 125th Birth Anniversary of Dr. B.R.

Ambedkar. This must become the Year of Economic Empowerment for

SC/ST entrepreneurs. We have extensively interacted with the Dalit India

Chamber of Commerce and Industry on building an entrepreneurship eco- system. It is proposed to constitute a National Scheduled Caste and

Scheduled Tribe Hub in the MSME Ministry in partnership with industry

associations. This Hub will provide professional support to Scheduled Caste

and Scheduled Tribe entrepreneurs to fulfil the obligations under the Central

Government procurement policy 2012, adopt global best practices and

leverage the Stand Up India initiative.

58. The schemes for welfare and skill development for Minorities such as

Multi-sectoral Development Programme and USTAAD shall be

implemented effectively. IV. Education, Skills and Job Creation

59. I would now like to highlight the steps proposed to be taken under

education, skill development and job creation which is the fourth pillar of my

Budget proposals.

Education

60. After universalisation of primary education throughout the country,

we want to take the next big step forward by focusing on the quality of

education. An increasing share of allocation under Sarva Shiksha Abhiyan

will be allocated for this. Further, 62 new Navodaya Vidyalayas will be

opened in the remaining uncovered districts over the next two years.

61. It is our commitment to empower Higher Educational Institutions to

help them become world class teaching and research institutions. An

enabling regulatory architecture will be provided to ten public and ten

private institutions to emerge as world-class Teaching and Research

Institutions. This will enhance affordable access to high quality education

for ordinary Indians. A detailed scheme will be formulated.

62. We have decided to set up a Higher Education Financing Agency

(HEFA) with an initial capital base of `1,000 crores. The HEFA will be a

12

not-for-profit organisation that will leverage funds from the market and

supplement them with donations and CSR funds. These funds will be

used to finance improvement in infrastructure in our top institutions and will

be serviced through internal accruals.

63. To help Students, Higher Education Institutions and Employers to

access degree certificates of candidates, it is proposed to establish a Digital

Depository for School Leaving Certificates, College Degrees, Academic

Awards and Mark sheets, on the pattern of a Securities Depository. This

will help validate their authenticity, safe storage and easy retrieval.

Skill Development

64. “Skill India” mission seeks to capitalise our demographic advantage.

Since its launch, the National Skill Development Mission has created an

elaborate skilling eco-system and imparted training to 76 lakh youth. We

want to bring entrepreneurship to the doorsteps of youth through Pradhan

Mantri Kaushal Vikas Yojana (PMKVY). We have decided to set up 1500

Multi Skill Training Institutes across the country. I am setting aside an

amount of `1,700 crore for these initiatives.

65. We have decided to set up a National Board for Skill Development

Certification in partnership with the industry and academia. We propose to

further scale up Pradhan Mantri Kaushal Vikas Yojna to skill one crore

youth over the next three years.

66. Entrepreneurship Education and Training will be provided in

2200 colleges, 300 schools, 500 Government ITIs and 50 Vocational

Training Centres through Massive Open Online Courses. Aspiring

entrepreneurs, particularly those from remote parts of the country, will be

connected to mentors and credit markets.

Job Creation

67. In order to incentivize creation of new jobs in the formal sector,

Government of India will pay the Employee Pension Scheme

contribution of 8.33% for all new employees enrolling in EPFO for the

first three years of their employment. This will incentivize the employers

to recruit unemployed persons and also to bring into the books the informal

employees. In order to channelize this intervention towards the target group

of semi-skilled and unskilled workers, the scheme will be applicable to those

with salary up to `15,000 per month. I have made a budget provision of

`1,000 crore for this scheme.

13

68. Further, the Finance Bill, 2016 proposes to broaden and liberalize the

scope of the employment generation incentive available under Section

80JJAA of the Income Tax Act. The deduction will be available not only to

assessees deriving income from manufacture of goods in a factory but to all

assessees who are subject to statutory audit under the Act. Thus, a deduction

of 30% of the emoluments paid to such employees can be claimed for three

years. The minimum number of days for which they should be employed

during the year is proposed to be reduced from 300 to 240 days. No

deduction will, however, be admissible in respect of employees whose

monthly emoluments exceed `25,000. Also, no deduction will be admissible

in respect of employees for whom the Government is paying the entire EPS

contribution.

69. A National Career Service was launched in July, 2015. Already 35

million jobs seekers have registered on this platform. We propose to make

100 Model Career Centres operational by the end of 2016-17. We also

propose to inter-link State Employment Exchanges with the National Career

Service platform. 70. Retail Trade is the largest service sector employer in the country.

Many more jobs can be created in this sector, provided the regulations are

simplified. If Shopping Malls are kept open all seven days of the week,

why not the small and medium shops? These shops should be given the

choice to remain open on all seven days of the week on voluntary basis.

The interest of the workers in terms of mandatory weekly holiday, number of

working hours per day, etc., of course, have to be protected. We propose to

circulate a Model Shops and Establishments Bill which can be adopted by

the State Governments on voluntary basis.

V. Infrastructure and Investment

71. The fifth support pillar of the Budget theme ‘Transform India’ is

infrastructure and investment.

72. In the road sector, there were more than 70 projects that were

languishing at the beginning of the year, due to legacy factors. Aggregate

length of these projects was about 8,300 kms involving more than `1 lakh

crore investment. With exemplary and proactive interventions, nearly 85%

of these projects have been put back on track.

73. India’s highest ever kilometres of new highways were awarded in

2015. At the same time, India’s highest ever production of motor vehicles

was achieved in 2015. This is a sign of growth in the economy; but it

14

presents a challenge also. Therefore, we have speeded up the process of road

construction. I have proposed an allocation of `55,000 crore in the Budget

for Roads and Highways. This will be further topped up by additional

`15,000 crore to be raised by NHAI through bonds. Thus the total

investment in the road sector, including PMGSY allocation, would be

`97,000 crore during 2016-17.

74. Together with the capital expenditure of the Railways, the total

outlay on roads and railways will be `2,18,000 crore in 2016-17.

75. We further expect to approve nearly 10,000 kms of National

Highways in 2016-17. This will be much higher than in the two previous

years. The pace of completion of road projects will also rise to nearly 10,000

kms in 2016-17. In addition, nearly 50,000 kms of State highways will also

be taken up for up-gradation as National Highways.

76. The total outlay for infrastructure in BE 2016-17 stands at `2,21,246

crore.

77. Passenger traffic on our roads has to be made more efficient for the

benefit of the common man and the middle class. This is a totally

unreformed sector which suffers from several impediments. Abolition of

permit-raj will be our medium term goal. Government will enact necessary

amendments in the Motor Vehicles Act and open up the road transport

sector in the passenger segment. An enabling eco-system will be

provided for the States which will have the choice of adopting the new

legal framework. Entrepreneurs will be able to operate buses on various

routes, subject to certain efficiency and safety norms. The major benefits of

this game changing initiative will be provision of more efficient public

transport facilities, greater public convenience, new investment in this

moribund sector, creation of new jobs for our youth, growth of start-up

entrepreneurs and other multiplier effects. These measures will take us faster

down the road to development.

78. In 2015, India’s major ports have handled the highest ever quality of

cargo. We have also added the highest ever capacity in major ports. We

have started a series of measures for modernizing the ports and increasing

their efficiency. The Sagarmala project has already been rolled out. We are

planning to develop new greenfield ports both in the eastern and western

coasts of the country. The work on the National Waterways is also being

expedited. `800 crore has been provided for these initiatives.

79. In the civil aviation sector, the Government is drawing up an action

plan for revival of unserved and underserved airports. There are about 160

15

airports and air strips with State Governments which can be revived at an

indicative cost of `50 crore to `100 crore each. We will partner with the

State Governments to develop some of these airports for regional

connectivity. Similarly, 10 of the 25 non-functional air strips with the

Airport Authority of India will also be developed.

80. India is blessed with rich natural resources including oil and gas.

However, their discovery and exploitation has been below our potential.

Imports of hydrocarbons occupy a large share of India’s total imports. There

is a situation of rising demand, near stagnation in production and consequent

rapid increase in imports. As part of our drive towards self-sufficiency, the

Government is considering to incentivise gas production from deep-water,

ultra deep-water and high pressure-high temperature areas, which are

presently not exploited on account of higher cost and higher risks. A

proposal is under consideration for new discoveries and areas which are

yet to commence production, first, to provide calibrated marketing

freedom; and second, to do so at a pre-determined ceiling price to be

discovered on the principle of landed price of alternative fuels.

81. In the other segments of the infrastructure sector, our Government

has achieved the highest coal production growth in over two decades, highest

ever capacity addition in generation, highest ever increase in transmission

lines and in distribution of LED bulbs.

82. In the power sector, we need to diversify the sources of power

generation for long term stability. Government is drawing up a

comprehensive plan, spanning next 15 to 20 years, to augment the

investment in nuclear power generation. Budgetary allocation up to `3,000

crore per annum, together with public sector investments, will be leveraged

to facilitate the required investment for this purpose.

83. To augment infrastructure spending further, Government will permit

mobilisation of additional finances to the extent of `31,300 crore by NHAI,

PFC, REC, IREDA, NABARD and Inland Water Authority through raising

of Bonds during 2016-17. 84. Our private sector plays an important role in the development of

infrastructure, many of which are implemented in the Public Private

Partnership (PPP) mode. I would like to announce three new initiatives to

reinvigorate this sector.

(i) A Public Utility (Resolution of Disputes) Bill will be

introduced during 2016-17 to streamline institutional

16

arrangements for resolution of disputes in infrastructure

related construction contracts, PPP and public utility

contracts;

(ii) Guidelines for renegotiation of PPP Concession

Agreements will be issued, keeping in view the long term

nature of such contracts and potential uncertainties of the

real economy, without compromising transparency;

(iii) A new credit rating system for infrastructure projects

which gives emphasis to various in-built credit

enhancement structures will be developed, instead of

relying upon a standard perception of risk which often

result in mispriced loans.

85. I would like to announce further reforms in our FDI policy. The

changes proposed are in the areas of insurance and pension, Asset

Reconstruction Companies, Stock Exchanges, etc. Details of the changes are

given in Annex I of the Budget Speech.

86. The duty drawback scheme has been widened and deepened to

include more products and countries. The Government will continue to take

measures to support the export sector.

87. Our FDI policy has to address the requirements of farmers and food

processing industry. A lot of fruits and vegetables grown by our farmers

either do not fetch the right prices or fail to reach the markets. Food

processing industry and trade should be more efficient. 100% FDI will be

allowed through FIPB route in marketing of food products produced and

manufactured in India. This will benefit farmers, give impetus to food

processing industry and create vast employment opportunities.

88. A new policy for management of Government investment in

Public Sector Enterprises, including disinvestment and strategic sale,

has been approved. We have to leverage the assets of CPSEs for generation

of resources for investment in new projects. We will encourage CPSEs to

divest individual assets like land, manufacturing units, etc. to release

their asset value for making investment in new projects. The NITI Aayog

will identify the CPSEs for strategic sale.

89. We will adopt a comprehensive approach for efficient management

of Government investment in CPSEs by addressing issues such as capital

restructuring, dividend, bonus shares, etc. The Department of

Disinvestment is being re-named as the “Department of Investment and

Public Asset Management (DIPAM)”.

17

VI. Financial Sector Reforms

90. A vibrant financial sector is of critical importance to the growth of

every economy. In my last two Budgets, I had announced several measures

in this regard. I would now like to announce the following initiatives:

(i) A systemic vacuum exists with regard to bankruptcy situations

in financial firms. A comprehensive Code on Resolution of

Financial Firms will be introduced as a Bill in the Parliament

during 2016-17. This Code will provide a specialised

resolution mechanism to deal with bankruptcy situations in

banks, insurance companies and financial sector entities. This

Code, together with the Insolvency and Bankruptcy Code 2015,

when enacted, will provide a comprehensive resolution

mechanism for our economy.

(ii) The RBI Act 1934, is being amended to provide statutory basis

for a Monetary Policy Framework and a Monetary Policy

Committee through the Finance Bill 2016. A committee-based

approach will add lot of value and transparency to monetary

policy decisions.

(iii) A Financial Data Management Centre under the aegis of the

Financial Stability Development Council (FSDC) will be set up

to facilitate integrated data aggregation and analysis in the

financial sector.

(iv) To improve greater retail participation in Government

securities, RBI will facilitate their participation in the primary

and secondary markets through stock exchanges and access to

NDS-OM trading platform.

(v) New derivative products will be developed by SEBI in the

Commodity Derivatives market.

(vi) To facilitate deepening of corporate bond market, a number

of measures will be undertaken, details of which are given in

Annex II of the Budget Speech. The enactment of Insolvency

and Bankruptcy Code would provide a major boost to the

development of the corporate bond market.

(vii) To tackle the problem of stressed assets in the banking sector,

Asset Reconstruction Companies (ARCs) have a very important

role. I therefore, propose to make necessary amendments in

the SARFAESI Act 2002 to enable the sponsor of an ARC to

hold up to 100% stake in the ARC and permit non-institutional

investors to invest in Securitization Receipts.

18

(viii) In the recent past, there have been rising instances of people in

various parts of the country being defrauded by illicit deposit

taking schemes. The worst victims of these schemes are the

poor and the financially illiterate. The operation of such

schemes are often spread over many States. I, therefore,

propose to bring in comprehensive Central legislation in

2016-17 to deal with the menace of such schemes.

(ix) I also propose to amend the SEBI Act 1992 in the coming year

to provide for more members and benches of the Securities

Appellate Tribunal.

91. As the Honourable Members are well aware, the strength of the

financial sector is dependent upon a strong and well-functioning Banking

system. We already have a comprehensive ‘Plan For Revamping of Public

Sector Banks’, INDRADHANUSH, which is under implementation. We are

now confronted with the problem of stressed assets in Public Sector Banks,

which is a legacy from the past. Several steps have already been taken in

this regard. We are not interfering in lending and personnel matters of the

Banks. Structural issues have been addressed in various sectors like Power,

Coal, Highways, Sugar and Steel. The Banks are putting in special efforts to

effect recoveries, with a focus on reviving stalled projects.

92. To support the Banks in these efforts as well as to support credit

growth, I have proposed an allocation of `25,000 crore in BE 2016-17

towards recapitalisation of Public Sector Banks. If additional capital is

required by these Banks, we will find the resources for doing so. We stand

solidly behind these Banks.

93. Our Public Sector Banks will have to be strong and competitive.

The Bank Board Bureau will be operationalized during 2016-17 and a

roadmap for consolidation of Public Sector Banks will be spelt out. The

process of transformation of IDBI Bank has already started. Government will

take it forward and also consider the option of reducing its stake to below

50%.

94. For speedier resolution of stressed assets, the Debt Recovery

Tribunals will be strengthened with focus on improving the existing

infrastructure, including computerised processing of court cases, to support

reduction in the number of hearings and faster disposal of cases.

95. The Pradhan Mantri Mudra Yojana (PMMY) was launched for the

benefit of bottom of the pyramid entrepreneurs. Banks and NBFC-MFIs

19

have reported that the amount sanctioned under PMMY had reached about

Rs.One lakh crore to over 2.5 crore borrowers by early February this year. I

propose to increase the target next year to `1,80,000 crore.

96. To provide better access to financial services, especially in rural

areas, we will undertake a massive nationwide rollout of ATMs and Micro

ATMs in Post Offices over the next three years.

97. Public shareholding in Government-owned companies is a means of

ensuring higher levels of transparency and accountability. To promote this

objective, the general insurance companies owned by the Government will

be listed in the stock exchanges.

VII. Governance and Ease of Doing Business

98. Our Government is giving unparalleled emphasis to good governance

with special focus on process reforms, IT-enabled Government processes,

etc. The whole idea is to remove the irritants for the public in their

interface with Government agencies.

99. A Task Force has been constituted for rationalisation of human

resources in various Ministries. A comprehensive review and rationalisation

of autonomous bodies is also underway.

100. A critical component of minimum Government and maximum

governance is to ensure targeted disbursement of Government subsidies and

financial assistance to the actual beneficiaries. Public money should reach

the poor and the deserving without any leakage. Three specific initiatives

are proposed to achieve this objective. · First, we will introduce a bill for Targeted Delivery of Financial and

Other Subsidies, Benefits and Services by using the Aadhar

framework. The bill will be introduced in the current Budget Session

of the Parliament. The Aadhar number or authentication shall not, however, confer any right of citizenship or domicile. A social

security platform will be developed using Aadhar to accurately target

beneficiaries. This will be a transformative piece of legislation which

will benefit the poor and the vulnerable. · Second, we have already introduced Direct Benefit Transfer in LPG.

Based on this successful experience, we propose to introduce DBT on

pilot basis for fertilizer in a few districts across the country, with a

view to improving the quality of service delivery to farmers. · Third, of the 5.35 lakh Fair Price Shops in the country, automation

facilities will be provided in 3 lakh Fair Price Shops by March 2017.

20

101. We have to bring more transparency and efficiency in Government

procurement of goods and services. The Director General of Supplies and

Disposal (DGS&D) will establish a technology driven platform to facilitate

procurement of goods and services by various Ministries and agencies of the

Government.

102. To remove the difficulties and impediments to ease of doing

business, we will introduce a bill to amend the Companies Act, 2013 in the

current Budget Session of the Parliament. The Bill would also improve the

enabling environment for start-ups. The registration of companies will also

be done in one day.

103. Monitoring of prices of essential commodities is a key element of

good governance. A number of measures have been taken to deal with the

problem of abrupt increase in prices of pulses. Government has approved

creation of buffer stock of pulses through procurement at Minimum Support

Price and at market price through Price Stabilisation Fund. This Fund has

been provided with a corpus of `900 crore to support market interventions. 104. Madam Speaker, for good governance, we have to capitalise on the

country’s unity in diversity. To strengthen understanding of each other, it is

proposed to create a closer engagement between different States and Districts

in a structured manner. “Ek Bharat Shreshtha Bharat” programme will be

launched to link States and Districts in an annual programme that

connects people through exchanges in areas of language, trade, culture,

travel and tourism. We will do this through mutual agreement with

participating States and Districts.

105. In 2017, the country will celebrate 70th Anniversary of our

Independence. We will chalk out milestones for nation’s journey beyond the

70th Anniversary of Independence. Dr. Toynbee, the historian, had observed

that “a chapter which had a Western beginning will have to have an Indian

ending…..”. My belief is that the year 2017 will unfold the great historian’s

dream. Our scheme of “Ek Bharat Shreshtha Bharat” is part of this vision.

VIII. Fiscal Discipline

106. Let me now elaborate on the fiscal situation in the context of the

Budget for the year 2016-17.

107. While preparing this Budget, I have received conflicting suggestions

about the FRBM roadmap. Different schools of thought have argued either

in favour of fiscal consolidation and stability or for a less aggressive

21

consolidation and for boosting growth. I have weighed the policy options

and decided that prudence lies in adhering to the fiscal targets.

Consequently, the fiscal deficit in RE 2015-16 and BE 2016-17 have been

retained at 3.9% and 3.5% of GDP respectively. While doing so, I have

ensured that the development agenda has not been compromised.

108. The total expenditure in the Budget for 2016-17 has been projected

at `19.78 lakh crore, consisting of `5.50 lakh crore under Plan and `14.28

lakh crore under Non-Plan. The increase in Plan expenditure is in the order

of 15.3% over current year BE. Plan Allocations have given special

emphasis to sectors like agriculture, irrigation, social sector including health,

women and child development, welfare of Scheduled Castes and Scheduled

Tribes, minorities, infrastructure, etc. Continuing with the policy of higher

empowering States, the total resources being transferred to States are

`99,681 crore more over RE 2015-16 and `2,46,024 crore more over Actuals

of 2014-15. Details of allocations in certain vital sectors and schemes and

transfers to States are given in Annex III to the Speech.

109. This is the last year of the 12th Plan. Successive committees have

questioned the merit in having Plan and Non-Plan classification of

Government expenditure. A broad understanding over the years has been

that Plan expenditures are good and Non-Plan expenditures are bad. This

results in skewed allocations in the Budget. We need to correct this and give

greater focus to Revenue and Capital classification of Government

expenditure. We have, therefore, decided that the Plan-Non-Plan

classification will be done away with from fiscal 2017-18. The Finance

Ministry will closely work with the State Finance Departments to align

Central and State Budgets in this matter.

110. To improve the quality of Government expenditure, every new

scheme being sanctioned by Government will have a sunset date and

outcome review. A redeeming feature of this year’s Budget is that we

have improved upon the Revenue Deficit target from 2.8% to 2.5% of GDP

in RE 2015-16.

111. The FRBM Act has been under implementation for more than a

decade. Both Central and State Governments have made significant gains

from the implementation of this Act. There is now a school of thought

which believes that instead of fixed numbers as fiscal deficit targets, it may

be better to have a fiscal deficit range as the target, which would give

necessary policy space to the Government to deal with dynamic situations.

There is also a suggestion that fiscal expansion or contraction should be

aligned with credit contraction or expansion respectively, in the economy.

22

While remaining committed to fiscal prudence and consolidation, a time has

come to review the working of the FRBM Act, especially in the context of

the uncertainty and volatility which have become the new norms of global

economy. I, therefore, propose to constitute a Committee to review the

implementation of the FRBM Act and give its recommendations on the way

forward.

112. As the Honourable Members are aware, the Seventh Central Pay

Commission has submitted its Report. Following the past practice, a

Committee has been constituted to examine the Report and give its

recommendations. In the meantime, I have made necessary interim

provisions in the Budget.

113. We have rationalised and restructured more than 1500 Central Plan

Schemes into about 300 Central Sector and 30 Centrally Sponsored

Schemes. This will avoid overlapping of expenditure. I reiterate that I

remain committed to the financial requirements arising from economic

packages that have been announced by our Government and also

commitments emanating from reorganisation of States.

114. I have also allocated initial sums of `100 crore each for celebrating

the Birth Centenary of Pandit Deen Dayal Upadhyay and the 350th Birth

Anniversary of Guru Gobind Singh.

IX. Tax Reforms

115. I now turn to Tax Reforms which is elaborated in Part B of my

Budget Speech.

23

PART B

Madam Speaker,

116. I shall now present my tax proposals

117. The Government acknowledges the role of taxpayers in nation

building. Each rupee of tax contributes towards the Government’s efforts to

provide better infrastructure, rural revival and social well-being. Taxation is

a major tool available to Government for removing poverty and inequality

from the society. The posterity will not forgive us if we do not use this

opportunity in this perspective.

The thrust of my tax proposals this year falls in nine categories:-

(1) Relief to small tax payers. (2) Measures to boost growth and employment generation. (3) Incentivizing domestic value addition to help Make in India.

(4) Measures for moving towards a pensioned society. (5) Measures for promoting affordable housing. (6) Additional resource mobilization for agriculture, rural economy

and clean environment. (7) Reducing litigation and providing certainty in taxation. (8) Simplification and rationalization of taxation. (9) Use of Technology for creating accountability. Relief to small tax payers

118. In order to lessen tax burden on individuals with income not

exceeding `5 lakhs, I propose to raise the ceiling of tax rebate under section

87A from `2,000 to `5,000. There are 2 crore tax payers in this category

who will get a relief of `3,000 in their tax liability.

119. The people who do not have any house of their own and also do not

get any house rent allowance from any employer today get a deduction of

`24,000 per annum from their income to compensate them for the rent they

pay. I propose to increase the limit of deduction in respect of rent paid under

section 80GG from `24,000 per annum to `60,000 per annum, which should

provide relief to those who live in rented houses.

120. Presumptive taxation scheme under section 44AD of the Income Tax

Act is available for small and medium enterprises i.e non corporate

businesses with turnover or gross receipts not exceeding one crore rupees.

24

At present about 33 lakh small business people avail of this benefit, which

frees them from the burden of maintaining detailed books of account and

getting audit done. I propose to increase the turnover limit under this scheme

to Rupees two crores which will bring big relief to a large number of

assesses in the MSME category.

121. I also propose to extend the presumptive taxation scheme to

professionals with gross receipts up to `50 lakh with the presumption of

profit being 50% of the gross receipts. Measures to boost growth and employment generation

122. I had, in my last budget speech mooted the proposal to reduce the rate

of Corporate Tax from 30% to 25% over a period, accompanied by

rationalization and removal of various tax exemptions and incentives. In any

case the effective rate of tax paid by companies comes to an average of 24.67

% because of various exemptions which they are availing of. A phasing out

plan of removing these exemptions and tax incentives was placed in public

domain and we have received a large number of constructive suggestions.

The final plan of phasing out exemptions is given in Annexure. The

highlights are as follows:-

(a) The accelerated depreciation provided under IT Act will be

limited to maximum 40% from 1.4.2017. (b) The benefit of deductions for Research would be limited to

150% from 1.4.2017 and 100% from 1.4.2020. (c) The benefit of section 10AA to new SEZ units will be available

to those units which commence activity before 31.3.2020.

(d) The weighted deduction under section 35CCD for skill

development will continue up to 1.4.2020. 123. The reduction in corporate tax rate has to be calibrated with

additional revenue expected from the incentives being phased out. The

benefits from phasing out of exemptions are available to Government only

gradually. In the first phase, therefore, I propose the following two changes

in corporate income-tax rates:-

(a) The new manufacturing companies which are incorporated on

or after 1.3.2016 are proposed to be given an option to be taxed

at 25% + surcharge and cess provided they do not claim profit

linked or investment linked deductions and do not avail of

investment allowance and accelerated depreciation.

(b) I also propose to lower the corporate income tax rate for the

next financial year of relatively small enterprises i.e companies

with turnover not exceeding `5 crore (in the financial year

ending March 2015), to 29% plus surcharge and cess.

25

124. Startups generate employment, bring innovation and are expected to

be key partners in Make in India programme. I propose to assist their

propagation through 100% deduction of profits for 3 out of 5 years for

startups set up during April 2016 to March 2019. MAT will apply in such

cases. Capital gains will not be taxed if invested in regulated/notified Fund

of Funds and by individuals in notified startups, in which they hold majority

shares.

125. Research is the driver of innovation and innovation provides a thrust

to economic growth. I propose a special patent regime with 10% rate of tax

on income from worldwide exploitation of patents developed and registered

in India.

126. In order to get more investment in Asset Reconstruction Companies

(ARCs) which play a very important role in resolution of bad debts, I

propose to provide complete pass through of income-tax to securitization

trusts including trusts of ARCs. The income will be taxed in the hands of the

investors instead of the trust. However, the trust will be liable to deduct tax

at source.

127. The period for getting benefit of long term capital gain regime in case

of unlisted companies is proposed to be reduced from three to two years.

128. Non-banking financial companies shall be eligible for deduction to

the extent of 5% of its income in respect of provision for bad and doubtful

debts.

129. The determination of residency of foreign company on the basis of

Place of Effective Management (POEM) is proposed to be deferred by one

year.

130. I would like to reiterate our commitment to implement General Anti

Avoidance Rules (GAAR) from 1.4.2017.

131. In order to meet with our commitment to BEPS initiative of OECD

and G-20, the Finance Bill, 2016 includes provision for requirement of

country by country reporting for companies with a consolidated revenue of

more than Euro 750 million.

132. I propose to exempt service tax on services provided under Deen

Dayal Upadhyay Grameen Kaushalya Yojana and services provided by

Assessing Bodies empanelled by Ministry of Skill Development &

Entrepreneurship.

26

133. I propose to exempt service tax on general insurance services

provided under ‘Niramaya’ Health Insurance Scheme launched by National

Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental

Retardation and Multiple Disability.

134. To promote use of refrigerated containers, I propose to reduce the

basic custom and excise duty on them to 5% and 6% respectively.

135. A number of assistive devices, rehabilitation aids and other goods for

differently abled (Divyang) persons attract Nil basic customs duty. I propose

to extend this exemption to Braille paper.

Incentivising domestic value addition to help Make in India.

136. Customs and excise duty structure plays an important role in

incentivizing domestic value addition towards Make in India campaign of

our Government. In line with that, I propose to make suitable changes in

customs and excise duty rates on certain inputs, raw materials, intermediaries

and components and certain other goods and simplify procedures, so as to

reduce costs and improve competitiveness of domestic industry in sectors

like Information technology hardware, capital goods, defence production,

textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper,

paperboard & newsprint, Maintenance repair and overhauling [MRO] of

aircrafts and ship repair etc. Details of such changes are given in the

Annexure to Budget Speech.

Measures for moving towards a pensioned society

137. Pension schemes offer financial protection to senior citizens. I

believe that the tax treatment should be uniform for defined benefit and

defined contribution pension plans. I propose to make withdrawal up to 40%

of the corpus at the time of retirement tax exempt in the case of National

Pension Scheme.

138. In case of superannuation funds and recognized provident funds,

including EPF, the same norm of 40% of corpus to be tax free will apply in

respect of corpus created out of contributions made after 1.4.2016.

139. Further, the annuity fund which goes to the legal heir after the death

of pensioner will not be taxable in all three cases. Also, we are proposing a

monetary limit for contribution of employer in recognized Provident and

Superannuation Fund of `1.5 lakh per annum for taking tax benefit. 140. I propose to exempt from service tax the Annuity services provided

by the National Pension System (NPS) and Services provided by EPFO to

employees.

27

141. I also propose to reduce service tax on Single premium Annuity

(Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.

Measures for promoting affordable housing

142. Pradhan Mantri Awas Yojna embodies the assurance of the

Government to address the housing needs of all and more specifically the

poor, in a time bound manner. Construction of houses creates considerable

employment opportunities as well. In order to fuel activity in the housing

sector, I propose to give 100% deduction for profits to an undertaking from a

housing project for flats upto 30 sq. metres in four metro cities and 60 sq.

metres in other cities, approved during June 2016 to March 2019, and is

completed within three years of the approval. Minimum Alternate Tax will,

however, apply to these undertakings.

143. For the ‘first – home buyers’, I propose to give deduction for

additional interest of `50,000 per annum for loans up to `35 lakh sanctioned

during the next financial year, provided the value of the house does not

exceed `50 lakh.

144. Another proposal to stimulate housing activity is to facilitate

investments in Real Estate Investment Trusts. I propose that any distribution

made out of income of SPV to the REITs and INVITs having specified

shareholding will not be subjected to Dividend Distribution Tax.

145. It is proposed to exempt service tax on construction of affordable

houses up to 60 square metres under any scheme of the Central or State

Government including PPP Schemes.

146. I also propose to extend excise duty exemption, presently available to

Concrete Mix manufactured at site for use in construction work at such site

to Ready Mix Concrete. Additional resource mobilization for agriculture, rural economy and

clean environment

147. Dividend Distribution Tax (DDT) uniformly applies to all investors

irrespective of their income slabs. This is perceived to distort the fairness and

progressive nature of taxes. Persons with relatively higher income can bear a

higher tax cost. I, therefore, propose that in addition to DDT paid by the

companies, tax at the rate of 10% of gross amount of dividend will be

payable by the recipients, that is, individuals, HUFs and firms receiving

dividend in excess of `10 lakh per annum.

28

148. I also propose to raise the surcharge from 12% to 15% on persons,

other than companies, firms and cooperative societies having income above

`1 crore.

149. I also propose to collect tax at source at the rate of 1% on purchase of

luxury cars exceeding value of Rs.ten lakh and purchase of goods and

services in cash exceeding Rs.two lakh. For compliant tax payers with

resources, this levy not only advances collection of tax when the expenditure

is incurred, but it provides data to the tax authorities to identify the persons

who incur such expenditure, but may be missing from the tax base. Farmers

and notified class of persons will have an option of giving a form by which

TCS will not be charged.

150. Rate of Securities Transaction tax in case of ‘Options’ is proposed to

be increased from .017% to .05%.

151. In order to tap tax on income accruing to foreign e-commerce

companies from India, it is proposed that a person making payment to a nonresident,

who does not have a permanent establishment, exceeding in

aggregate `1 lakh in a year, as consideration for online advertisement, will

withhold tax at 6% of gross amount paid, as Equalization levy. The levy will

only apply to B2B transactions.

152. I propose to impose a Cess, called the Krishi Kalyan Cess, @ 0.5%

on all taxable services, proceeds of which would be exclusively used for

financing initiatives relating to improvement of agriculture and welfare of

farmers. The Cess will come into force with effect from 1st June 2016. Input

Tax credit of this cess will be available for payment of this cess.

153. The pollution and traffic situation in Indian cities is a matter of

concern. I propose to levy an infrastructure cess, of 1% on small petrol,

LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other

higher engine capacity vehicles and SUVs.

154. I also propose to impose an excise duty of ‘1% without input tax

credit or 12.5% with input tax credit’ on articles of jewellery [excluding

silver jewellery, other than studded with diamonds and some other precious

stones], with a higher exemption and eligibility limits of ` 6 crores and ` 12

crores respectively. Necessary steps will also be taken to enable the new

taxpayers to comply with this levy without any difficulty.

155. I propose to change the excise duty on branded readymade garments

and made up articles of textiles with a retail sale price of `1,000 and above

from ‘Nil without input tax credit or 6%/12.5% with input tax credit’ to ‘2%

without input tax credit or 12.5% with input tax credit’.

29

156. I propose to rename the ‘Clean Energy Cess’ levied on coal, lignite

and peat as ‘Clean Environment Cess’ and simultaneously increase its rate

from `200 per tonne to `400 per tonne.

157. To discourage consumption of tobacco and tobacco products, I

propose to increase the excise duties on various tobacco products other than

beedi by about 10 to 15%.

158. I propose to amend the Finance Act, 1994 so as to declare assignment

by the Government of the right to use the radio-frequency spectrum and its

subsequent transfers a service, to make it clear that assignment of right to use

the spectrum is a service leviable to service tax and not sale of intangible

goods.

Reducing litigation and providing certainty in taxation

159. We are moving towards a lower tax regime with non-litigious

approach. Thus, while compliant taxpayers can expect a supportive interface

with the department, tax evasion will be countered strongly. Capability of

the tax department to detect tax evasion has improved because of enhanced

access to information and availability of technology driven analytical tools

to process such information. I want to give an opportunity to the earlier non- compliant to move to the category of compliant.

160. I propose a limited period Compliance Window for domestic

taxpayers to declare undisclosed income or income represented in the form

of any asset and clear up their past tax transgressions by paying tax at 30%,

and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the

undisclosed income. There will be no scrutiny or enquiry regarding income

declared in these declarations under the Income Tax Act or the Wealth Tax

Act and the declarants will have immunity from prosecution. Immunity from

Benami Transaction (Prohibition) Act, 1988 is also proposed subject to

certain conditions. The surcharge levied at 7.5% of undisclosed income will

be called Krishi Kalyan surcharge to be used for agriculture and rural

economy. We plan to open the window under this Income Disclosure

Scheme from 1st June to 30th September, 2016 with an option to pay amount

due within two months of declaration.

161. Our Government is fully committed to remove black money from the

economy. Having given one opportunity for evaded income to be declared

once, we would then like to focus all our resources for bringing people with

black money to books.

162. Litigation is a scourge for a tax friendly regime and creates an

environment of distrust in addition to increasing the compliance cost of the

tax payers and administrative cost for the Government. There are about 3

lakh tax cases pending with the 1st Appellate Authority with disputed amount

30

being 5.5 lakh crores. In order to reduce this number, I propose a new

Dispute Resolution Scheme (DRS).

163. A taxpayer who has an appeal pending as of today before the

Commissioner (Appeals) can settle his case by paying the disputed tax and

interest up to the date of assessment. No penalty in respect of Income-tax

cases with disputed tax up to ` 10 lakh will be levied. Cases with disputed

tax exceeding ` 10 lakh will be subjected to only 25% of the minimum of the

imposable penalty for both direct and indirect taxes. Any pending appeal

against a penalty order can also be settled by paying 25% of the minimum of

the imposable penalty. Certain categories of persons including those who are

charged with criminal offences under specific Acts are proposed to be barred

from availing this scheme.

164. I had in my Budget speech of July, 2014 assured that this

Government would not retrospectively create a fresh tax liability. I had also

hoped then that the cases pending in various courts and other legal fora

relating to certain retrospective amendments undertaken to the Income-tax

Act, 1961, through the Finance Act, 2012 will soon reach their logical

conclusion. I would like to reiterate that we are committed to provide a

stable and predictable taxation regime. We will not resort to such

amendments in future. I had also announced constitution of a High Level

Committee which would oversee any fresh case where the assessing officer

proposes to assess or reassess the income in respect of indirect transfers by

applying the retrospective amendment. In order to allay any fears of tax

adventurism, this Committee will now be chaired by the Revenue Secretary

and consist of Chairman, CBDT and an expert from outside. This

Committee will effectively oversee the implementation of the assurances.

165. In order to give an opportunity to the past cases which are ongoing

under the retrospective amendment, I propose a one-time scheme of Dispute

Resolution for them, in which, subject to their agreeing to withdraw any

pending case lying in any Court or Tribunal or any proceeding for

arbitration, mediation etc. under BIPA, they can settle the case by paying

only the tax arrears in which case liability of the interest and penalty shall be

waived.

166. Levy of heavy penalty for concealment of income has over the years

resulted in large number of disputes despite a number of decisions of the

Apex court on interpretation of statutory provisions and principles guiding

imposition of penalty. At present the Income-tax Officer has discretion to

levy penalty at the rate of 100% to 300% of tax sought to be evaded. I

propose to modify the entire scheme of penalty by providing different

categories of misdemeanor with graded penalty and thereby substantially

reducing the discretionary power of the tax officers. The penalty rates will

now be 50% of tax in case of underreporting of income and 200% of tax

31

where there is misreporting of facts. Remission of penalty is also proposed

in certain circumstances where taxes are paid and appeal is not filed.

167. Another issue which has led to considerable number of disputes is

quantification of disallowance of expenditure relatable to exempt income in

terms of Section 14A of the Income Tax Act. I propose to rationalize the

formula in Rule 8D governing such quantification. The said Rule is being

amended to provide that disallowance will be limited to 1% of the average

monthly value of investments yielding exempt income, but not exceeding the

actual expenditure claimed.

168. As another tax payer friendly measure, I propose to provide a time

limit of one year for disposing petitions of the tax payers seeking waiver of

interest and penalty.

169. The Income-tax Department is also issuing instruction making it

mandatory for the assessing officer to grant stay of demand once the assesse

pays 15% of the disputed demand, while the appeal is pending before

Commissioner of Income-tax (Appeals). In case of deviation, assessing

officer has to get orders of his superiors. The tax payer also has an option to

go to superior officer in case he does not agree with conditions of stay order

passed by the subordinate officer. 170. In order to remove backlog of cases we are creating 11 new benches

of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

171. The monetary limit for deciding an appeal by a single member Bench

of ITAT is proposed to be enhanced from `15 lakhs to `50 lakhs.

172. I also propose to amend the CENVAT Credit Rules, 2004, so as to

improve credit flow, reduce the compliance burden and associated litigation,

particularly those relating to apportionment of credit between exempted and

non exempted final products/services. The amendments in these rules will

also enable manufacturers with multiple manufacturing units to maintain a

common warehouse for inputs and distribute inputs with credits to the

individual manufacturing units.

Simplification and rationalization of taxation

173. The Government has already accepted many recommendations of

Tax Administration Reform Committee and I propose to accept a number of

recommendations of Justice Easwar Committee in this Budget.

174. To reduce multiplicity of taxes, associated cascading and to reduce

cost of collection, I propose to abolish 13 cesses, levied by various Ministries

in which revenue collection is less than `50 crore in a year.

32

175. To improve the cash flow position of small tax payers who get their

funds blocked due to current TDS provision, I propose to rationalize TDS

provisions for Income Tax as per Annexure.

176. Non-residents without PAN are currently subjected to a higher rate of

TDS. It is proposed to amend the relevant provision to provide that on

furnishing of alternative documents, the higher rate will not apply.

177. The facility for revision of return, hitherto available to a service tax

assessee only, is being extended to Central Excise assessees also.

178. I propose to provide additional options to banking companies and

financial institutions, including non-banking financial companies, for

reversal of input tax credits with respect to non-taxable services provided by

them by way of extending deposits, loans and advances.

179. Our Government has taken a number of steps to reduce the cargo

release time and the transaction costs of EXIM trade. I propose to amend the

Customs Act to provide for deferred payment of customs duties for importers

and exporters with proven track record.

180. In 2014-15 Budget, I had announced the intent to implement Indian

Customs Single Window Project. We have made significant progress in this

and it would be implemented at major ports and airports starting from

beginning of next financial year.

181. The customs Baggage Rules for international passengers are being

simplified so as to increase the free baggage allowance. The filing of

baggage declaration will be required only for those passengers who carry

dutiable goods.

Use of Technology for creating accountability

182. Technology is a boon for mankind. We plan to use technology in

taxation Department in a big way to make life simpler for a law abiding

citizen, and also for data mining to track tax evaders. 183. A pilot was run in 2015-16 for e-assessment to obviate the

requirement for tax payers to visit the Income-tax offices. I propose to

expand the scope of e-assessments to all assessees in 7 mega cities in the

coming years. The cases selected for scrutiny will be scrutinized in

e-environment whereby unless the assessee himself wants to be heard, or for

special reasons to be recorded, the assessing officer wants to hear the party,

there will be no face to face contact of IT Department with assessee. 184. Income-tax Department (ITD) will fully expand the pilot initiative of

‘e-Sahyog’ with a view to reduce compliance cost, especially for small

33

taxpayers. The objective of the ‘e-Sahyog’ pilot project is to provide an

online mechanism to resolve mismatches in Income-tax returns without

requiring taxpayers to attend the Income-tax office.

185. I propose that in matters pertaining to Income-tax Act, Government

will pay interest at the rate of 9% p.a against normal rate of 6% p.a in case

there is delay in giving effect to Appellate order beyond ninety days. The

officers who delay it, will be accountable for this loss to Government.

186. I also propose to change the procedure to provide for a shift from

physical control to record based control for customs bonded warehouses,

supported by sophisticated IT systems.

187. Madam Speaker, my direct tax proposals would result in revenue loss

of ` 1,060 crore and my indirect proposals are expected to yield `20,670

crores. Thus the net impact of all tax proposals would be revenue gain of

`19,610 crores.

CONCLUSION

Madam Speaker,

188. This Budget is being presented amidst global and domestic

headwinds. There are several challenges. We see them as opportunities. I

have outlined the agenda of our Government to ‘Transform India’ for the

benefit of the farmers, the poor and the vulnerable. 189. Madam Speaker, it is said that “Champions are made from something

they have deep inside of them - a desire, a dream, a vision”. We have a

desire to provide socio-economic security to every Indian, especially the

farmers, the poor and the vulnerable; we have a dream to see a more

prosperous India; and a vision to ‘Transform India’.

190. With these words, Madam Speaker, I commend the Budget to the

House.

34

Annex No. I to Part A

PROPOSED CHANGES/REFORMS IN FDI AND

RELATED POLICIES

(i) Foreign investment will be allowed in the insurance and pension

sectors in the automatic route up to 49% subject to the extant

guidelines on Indian management and control to be verified by the

Regulators.

(ii) 100% FDI in Asset Reconstruction Companies (ARCs) will be

permitted through automatic route. Foreign Portfolio Investors (FPIs)

will be allowed up to 100% of each tranche in securities receipts issued

by ARCs subject to sectoral caps.

(iii) Investment limit for foreign entities in Indian stock exchanges will be

enhanced from 5 to 15% on par with domestic institutions. This will

enhance global competitiveness of Indian stock exchanges and

accelerate adoption of best-in-class technology and global market

practices.

(iv) The existing 24% limit for investment by FPIs in Central Public Sector

Enterprises, other than Banks, listed in stock exchanges, will be

increased to 49% to obviate the need for prior approval of Government

for increasing the FPI investment.

(v) The basket of eligible FDI instruments will be expanded to include

hybrid instruments subject to certain conditions.

(vi) FDI will be allowed beyond the 18 specified NBFC activities in the

automatic route in other activities which are regulated by financial

sector regulators.

(vii) With a view to promote Make in India and following the practices in

advanced countries, foreign investors will be accorded Residency

Status subject to certain conditions. Currently, these investors are

granted business visa only up to 5 years at a time.

(viii) In order to ensure effective implementation of Bilateral Investment

Treaties signed by India with other countries, I propose to introduce a

Centre State Investment Agreement. This will ensure fulfilment of the

obligations of the State Governments under these Treaties. States

which opt to sign these Agreements will be seen as more attractive

destinations by foreign investors.

All these decisions will facilitate ease of doing business for foreign investors

and their domestic recipients.

35

Annex No. II to Part A

MEASURES FOR DEEPENING OF CORPORATE BOND MARKET

(a) LIC of India will set up a dedicated fund to provide credit enhancement

to infrastructure projects. The fund will help in raising the credit rating

of bonds floated by infrastructure companies and facilitate investment

from long term investors.

(b) RBI will issue guidelines to encourage large borrowers to access a

certain portion of their financing needs through market mechanism

instead of the banks. (c) Investment basket of foreign portfolio

investors will be expanded to include unlisted debt securities and pass

through securities issued by securitisation SPVs.

(d) For developing an enabling eco system for the private placement

market in corporate bonds, an electronic auction platform will be

introduced by SEBI for primary debt offer.

(e) A complete information repository for corporate bonds, covering both

primary and secondary market segments will be developed jointly by

RBI and SEBI.

(f) A framework for an electronic platform for repo market in corporate

bonds will be developed by RBI.

36

Annex No. III-A to Part A

ALLOCATIONS OF IMPORTANT MINISTRIES, SECTORS and

VULNERABLE SECTIONS

Rs in crore

MINISTRY/DEPARTMENT Actual

14-15 RE 15-16 BE 16-17

Ministry Of Agriculture And Farmers Welfare 25917 22958 44485

Ministry Of Drinking Water And Sanitation 12091 10907 14010

Ministry Of Health And Family Welfare 32154 34957 39533

Ministry Of Housing And Urban Poverty

Alleviation 2728 1961 5411

Ministry Of Human Resource Development 68875 67586 72394

Ministry Of Micro Small And Medium

Enterprises 2767 3021 3465

Ministry Of Minority Affairs 3089 3736 3827

Ministry Of New And Renewable Energy 515 262 5036

Ministry Of Road Transport And Highways 33048 47107 57976

Ministry Of Rural Development 69817 79279 87765

Ministry Of Skill Development And

Entrepreneurship 0 1038 1804

Ministry Of Social Justice And Empowerment 5784 6580 7350

Ministry Of Urban Development 13254 18340 24523

Ministry Of Water Resources, River

Development And Ganga Rejuvenation 5480 7032 6201

Ministry Of Women And Child Development 18539 17352 17408

SECTOR TOTALS Actual

2014-15

RE

2015-16

BE

2016-17 IEBR Total for

2016-17

Agriculture and Irrigation 31497 25988 47912 6300 54212.33

Social Sectors including

Education and Health 136431 139619 151581 … …

Rural Development and

Drinking Water 81908 90185 101775 … …

Infrastructure & Energy 185139 180610 221246 25000 246246.39

ALLOCATION FOR WELFARE OF VULNERABLE SECTIONS ACROSS

ALL MINISTRIES

Actual 14-15 RE 2015-16 BE 2016-17

Schemes for welfare of Women … 81249 90625

Allocation for welfare of Children … 64635 65758

SC sub Plan 19921 20963 24005

ST SubPlan 30035 34675 38833

37

Annex No. III-B to Part A

ALLOCATIONS OF IMPORTANT SCHEMES

Rs. In crore

BE 2016-17

1 Mahatma Gandhi National Rural Employment

Guarantee Scheme 38500

2 National Social Assistance Programme 9500

3 Schemes under Tribal Sub-Plan- across all Ministries 24005

4 Schemes under Scheduled Castes Sub-Plan- across

all Ministries 38833

5 Allocation for North Eastern Region-across all

Ministries 33097

6 Umbrella Scheme for Development of Minorities. 1245

a

Multi-Sectoral Development Programme for

Minorities 1125

b Education Scheme for Madrasas and Minorities 120

7 Green Revolution 12980

a Krishonnati Yojna 7580

b Rashtriya Krishi Vikas Yojna 5400

8 White Revolution 1273

9 Blue Revolution 575

10 Pradhan Mantri Krishi Sinchai Yojna (PMKSY) 5717

a Har Khet ko Pani 500

b Accelerated Irrigation Benefit Programme and other

schemes under PMKSY in Water Resources Ministry 1377

c Per Drop More Crop 2340

d Integrated Watershed Management Programme 1500

11 Pradhan Mantri Gram Sadak Yojna 19000

12 National Rural Drinking Water Programme 5000

13 Swachh Bharat Abhiyan (SBA) 11300

14 National Health Mission (NHM) 20037

15 Rashtriya Swastha Suraksha Yojna (RSSY) 1500

16 National Education Mission (NEM) 28010

of

which

NEM : Sarva Shiksha Abhiyan 22500

38

17 National Programme of Mid-day Meals in Schools 9700

18 Integrated Child Development Scheme (Umbrella

ICDS) 16120

19 Pradhan Mantri Awas Yojna (PMAY) 20075

20 Urban Rejuvenation Mission (AMRUT and Mission

for Development of 100 Smart Cities) 7296

21

Make in India: Scheme for Investment Promotion

and Amended Technology Upgradation Fund

Scheme 1804

22 National Industrial Corridors 1448

23 Digital India Programme and E-learning,

E-panchayat, Land Records Modernisation 2059

24 Central Pool of Resources for North Eastern Region

and Sikkim 900

25 Schemes of North Eastern Council 795

26 National Investment and Infastructure Fund 4000

27 Equity Capital to Mudra and Credit Guarantee Fund

under Pradhan Mantri Mudra Yojana 2400

28 Start up and stand up 1100

29 Schemes for employment generation 1155

30 Scheme for LPG connection to poor households 2000

31 Deendayal Upadhyaya Gram Jyoti Yojana and

Integrated Power Development Scheme(IPDS) 8500

32 Sagarmala 450

33 Pradhan Mantri Kaushal Vikas Yojana 1771

34 Metro Projects 10000

35 Namame Gange- National Ganga Plan 2250

36 Rashtriya Yuva Sashakthikaran Karyakram 397

37 Khelo India 216

38 Recapitilization of Public Sector Banks 25000

This Annex provides total allocations (Plan and Non-Plan) under 38

important Schemes. Rationalization of Schemes was undertaken to avoid

too thin spread of resources. The allocation for BE 2016-17 only is provided

as it is not immediately feasible to draw a one-to-one correspondence

between the newly rationlised schemes with the earlier subsumed

component schemes.

Source : Expenditure Budget 2016-17 Volume1 & 2

39

Annex No. III-C to Part A

Resources Transferred to State and U.T.Governments

(In crore of Rupees)

S.No. Actual

2014-15

RE

2015-16

BE

2016-17

1 Devolution of State's share in taxes 337808 506193 570337

2 Non-Plan Grants and Loans 77198 108312 118437

Grants 77125 108233 118356

Loans 73 79 81

State Governments 76286 105353 115655

UT 912 2959 2782

3 Central Assistance to State

Plan/UT Plan

270829 216108 241900

Grants 258890 203608 229400

Loans 11939 12500 12500

State Governments 264725 208587 234366

UT 6104 7521 7534

4 Total (Grant & Loans) 348027 324420 360337

Grants 336015 311841 347756

Loans 12012 12579 12581

4 Total Assistance 685835 830613 930674

State Governments 678819 820133 920358

UT 7016 10480 10316

5 Less - Recovery of Loans &

Advances

10658 9093 9473

State Governments 10582 8649 9028

UT 76 444 445

6 Net Resources transferred to State

& UT Governments (1+4-5)

675177 821520 921201

State Governments 668237 811484 911330

UT 6940 10036 9871

Increase in RE 15-16 over

Actual 14-15 … 146343 …

Increase in BE16-17 over RE 15-16 … … 99681

Increase in BE 16-17 over

Actual 14-15 … … 246024

40

ANNEXURE TO PART-B OF THE BUDGET SPEECH

DIRECT TAX

1. Measures to boost the Financial Sector

1.1 It is proposed to provide that redemption by an individual of

Sovereign Gold Bond issued by Reserve Bank of India under

Sovereign Gold Bond Scheme, 2015 shall not be charged to capital

gains tax. It is also proposed to provide that long terms capital gains

arising to any person on transfer of Sovereign Gold Bond shall be

eligible for indexation benefits.

1.2 It is proposed to provide that any gains arising on account of

appreciation of rupee against a foreign currency at the time of

redemption of rupee denominated bond of an Indian company

subscribed by a non-resident shall be exempt from capital gains tax.

1.3 It is proposed to provide that any transfer of units in merger or

consolidation of plans of a mutual fund scheme shall be exempt from

capital gains tax.

1.4 It is proposed to provide that interest earned on Deposit Certificates

issued under Gold Monetisation Scheme, 2015 and capital gains

arising from them shall be exempt from tax.

1.5 It is proposed to modify the conditions of special taxation regime for

off shore funds under section 9A of the Income-tax Act so as to

provide that a fund registered or set up in a country notified by the

Central Government will also be eligible for the said regime. It is

also proposed to provide that the condition of not having control and

management of any business or not carrying on any business by the

fund will be applicable only to activities in India and not from India.

1.6 The determination of residency of foreign company on the basis of

Place of Effective Management is proposed to be deferred by one

year. It shall now apply with effect from1.04.2017. It is also proposed

to make necessary provision for adaptation, modification and

exception in the provisions of the Act for determination of income

and applicability of other provisions in case a foreign company

becomes resident in India for the first time.

1.7 Taking into account the recommendations of A.P. Shah Committee

and the decision of the Hon’ble Supreme Court in the case of

Castleton, it is proposed to amend the provisions of section 115JB of

the Income-tax Act so as to provide that Minimum Alternate Tax

(MAT) shall not be applicable to a foreign company, w.e.f.

01.04.2001 if the foreign company does not have as a permanent

establishment under relevant Double Taxation Avoidance Agreement

(DTAA) or a place of business in India.

41

1.8 With a view to facilitate setting up of international financial centre in

India, it is proposed to provide for the following tax benefits:- v The companies located in international financial services centre

shall not be liable to dividend distribution tax. v Minimum Alternate Tax shall be charged at the rate of nine per

cent from units located in international financial services centre. v The transaction in foreign currency of sale of equity share or

units of equity oriented funds or units of a business trust taking

place on a recognised stock exchange established in international

financial services centre shall not be liable to securities

transaction tax. It is also proposed that the gains arising from

transfer of such long term capital asset shall be exempt from tax.

v The transaction in foreign currency of sale of commodity

derivatives taking place on a recognised association established

in international financial services centre shall not be liable to

commodity transaction tax.

1.9 It is proposed to provide that the subsidy granted by the Central

Government and credited directly to the corpus of fund established

for specific purposes laid down by Government shall not be treated as

income of such fund.

1.10 Consequent upon the judgement of various Courts in the context of

the definition of ‘securities’ under Securities Contracts Regulation

Act, 1956, it is proposed to clarify that the capital gain arising from

transfer of a long term asset being share of a private limited company

shall be chargeable to tax at the rate of ten per cent.

1.11 It is proposed to provide that acquisition of shares by an individual or

HUF as a consequence of demerger or amalgamation of a company

shall not attract tax liability under section 56(2)(vii) of the Incometax

Act.

2. Measures to rationalize the Pension Sector

2.1 It is proposed to provide a uniform tax treatment to the recognised

provident fund, national pension system and superannuation fund.

Accordingly, the following are proposed:- v Exemption limit is proposed to be increased from `1 lakh to `1.5

lakh for annual contribution by an employer to a superannuation

fund.

42

v A monetary limit of `1.5 lakh is proposed to be provided for

annual contribution by an employer to a recognised provident

fund.

v Any amount received by the nominee, on the death of the

employee at the time of closure of account under National

Pension System referred to in section 80CCD of the Income-tax

Act is proposed to be exempt.

v Exemption is proposed to be provided for one-time portability

from a recognised provident fund or superannuation fund to

National Pension System.

v It is proposed that 40% of the pension wealth received by an

employee from the National Pension System Trust shall be

exempt.

v It is also proposed that the exemption under the recognised

provident fund and superannuation fund will be limited to 40%

of the accumulated amount arising out of contributions made in

such funds on or after 01.04.2016. However, this restriction shall

not be applicable to an employee participating in a recognised

provident fund and whose monthly salary does not exceed

`15,000/-. 3. Measures to promote the Housing and Real Estate Sector

3.1 It is proposed to provide that deduction of interest payable on capital

borrowed for acquisition or construction of a self-occupied house

property shall be allowed if such acquisition or construction is

completed within five years.

3.2 It is proposed to provide that standard deduction of 30% shall be

allowed against the amount received on account of unrealised rent

while computing the house property income.

3.3 It is proposed to provide that the date of agreement fixing the amount

of consideration for the transfer of immovable property and not the

date of registration shall be taken for the purposes of computing

capital gains in case of transfer of immovable property if any

payment in consequence of such agreement has been made by the

purchaser of the property through any mode other than cash.

4. Measures to Phase Out Deductions

4.1 It proposed to phase out the following deductions available in the

Income-tax Act:-

43

(i) Section 10AA of the Income-tax Act : Deduction for units

established in SEZ

It is proposed to amend section 10AA of the Income-tax Act to

provide for a sunset date of 31.03.2020 for commencement of activity

of manufacture or production of any article or thing or providing

services by a unit located in a Special Economic Zone for availing the

deduction under said section.

(ii) Depreciation.

It is proposed to amend Rule 5 of Income-tax Rules, 1962 to restrict

the highest rate of depreciation under the Income-tax Act to 40% for

all the assets (whether old or new) falling in the relevant block of

assets with effect from 01.4.2017

(iii) Section 35 of the Income-tax Act : Deduction for Expenditure on

Scientific Research.

It is proposed to amend section 35 of the Income-tax Act so as to

reduce the weighted deduction under section 35(1)(ii), 35 (2AA) and

35 (2AB) to 150% from the financial year 2017-18 to financial year

2019-20 and from the financial year 2020-21 onwards the deduction

shall be restricted to 100%. It is also proposed that deduction under

section 35(1) (iia) and (iii) of the Income-tax Act shall be reduced

from 125% to 100% with effect from 01.04.2017.

(iv) Section 35AD of the Income-tax Act : Investment linked

deduction for specified business.

It is proposed to amend section 35AD of the Income-tax Act so as to

reduce the deduction from 150% to 100% in the case of a cold chain

facility, warehousing facility for storage of agricultural produce, an

affordable housing project, production of fertilizer and building and

operating hospitals with effect from 01.04.2017. (v) Section 35AC of the Income-tax Act : Deduction for Expenditure

on social projects.

It is proposed to amend section 35AC of the Income-tax Act so as to

provide that no deduction under the said section shall be available

from financial year 2017-18 (Assessment Year 2018-19).

(vi) Section 35CCC of the Income-tax Act : Deduction for

expenditure on agricultural extensions project.

It is proposed to amend section 35CCC of the Income-tax Act to

restrict the deduction to 100% from financial year 2017-18

(Assessment Year 2018-19).

44

(vii) Section 35 CCD of the Income-tax Act : Deduction for

expenditure on skill development project.

It is proposed to amend section 35CCD of the Income-tax Act so as

to provide that the weighted deduction of 150% shall be available

upto financial year 2019-20 (assessment year 2020-21). However, the

deduction under the said section shall be restricted to 100% from

financial year 2020-21 (Assessment Year 2021-22).

(viii) Section 80-IA of the Income-tax Act : Deduction for development

of infrastructure facility.

It is proposed to amend section 80IA of the Income-tax Act so as to

provide that no deduction shall be available to enterprise which starts

development, operation and maintenance of any infrastructure facility

on or after 1st April, 2017. It is further proposed to provide that the

development, operation and maintenance of an infrastructure facility

beginning on or after 1st April, 2017 shall be eligible for investment

linked deduction under section 35AD of the Income-tax Act.

(ix) Section 80-IAB of the Income-tax Act : Deduction for

development of Special Economic Zone.

It is proposed to amend section 80IAB of the Income-tax Act so as to

provide that no deduction shall be available under this section where

the development of Special Economic Zone begins on or after 1st

April, 2017.

(x) Section 80-IB of the Income-tax Act : Deduction for production

of mineral oil and natural gas.

It is proposed to amend section 80-IB(9)(ii), (iv) & (v) of the Incometax

Act so as to provide that no deduction shall be available to an

undertaking engaged in production of mineral oil or natural gas if the

production commences on or after 1st April, 2017.

5. Measures for TDS / TCS Rationalisation

Present

Section

Heads Existing

Threshold

Limit (`)

Proposed

Threshold

Limit (`)

192A Payment of accumulated

balance due to an employee

in EPF

30,000 50,000

194BB Winnings from Horse

Race

5,000 10,000

194C Payments to Contractors Aggregate

annual limit

of 75,000

Aggregate

annual limit

of 1,00,000

45

194LA Payment of Compensation on

acquisition of certain

Immovable Property

2,00,000 2,50,000

194D Insurance commission 20,000 15,000

194G Commission on sale of lottery

tickets

1,000 15,000

194H Commission or brokerage 5,000 15,000

Present

Section

Heads Existing

Rate of

TDS (%)

Proposed

Rate of

TDS (%)

194DA Payment in respect of Life

Insurance

Policy

2% 1%

194EE Payments in respect of NSS

Deposits

20% 10%

194D Insurance commission 10% 5%

194G Commission on sale of lottery

tickets

10% 5%

194H Commission or brokerage 10% 5%

194K Income in respect of Units To be

omitted w.e.f

01.06.2016

194L Payment of Compensation on

acquisition of Capital Asset

To be

omitted w.e.f

01.06.2016

5.2 It is proposed to amend section 206AA of the Income-tax Act so as

to provide that TDS shall not be deducted at a higher rate in case of

non-residents not having PAN, subject to prescribed condition.

5.3 It is proposed to extend DTAA benefits by allowing for rate in force

being applicable for withholding tax purposes in respect of

distribution by Category-I and II Alternate Investment Funds to the

non-resident investors. It is also proposed to provide that the

investors may seek certificate of lower deduction or nil deduction of

tax.

5.4 The regime for taxation of Securitisation Trusts and their investors is

proposed to be modified. It is proposed to provide complete pass

through to securitisation trust and the income is to be taxed in the

hands of investor in same manner and to the same extent as it would

have been taxed, if the investor had made underlying investments

directly and not through trust. It is also proposed to provide that the

income of securitisation trust shall be exempt and that the

securitisation trust shall effect tax deduction at source.

46

5.5 It is also proposed to provide that upon self-certification, no tax will

be deducted on rental payments if the income of the payee does not

exceed the maximum amount not chargeable to tax.

6. Measures for promoting Economic Growth

6.1 It is proposed to provide that in case of foreign company, mere

storage of crude oil in India would not constitute Business

Connection and the income arising or accruing on storage and sale of

the crude oil, subject to fulfilment of certain conditions, shall not be

liable to tax in India.

6.2 It is proposed to provide that in case of a foreign company engaged in

business of mining of diamonds, no income shall be deemed to

accrue or arise in India to it through or from the activities which are

confined to display of uncut and unassorted diamonds in a notified

Special Zone.

6.3 It is proposed to provide that the plant & machinery acquired and

installed for transmission activity would also be eligible for

additional depreciation under section 32(1)(iia) of the Income-tax

Act.

6.4 It is proposed to amend sub-section (1A) of section 32AC of the

Income-tax Act to provide that the acquisition of the plant &

machinery of the specified value has to be made in the previous year.

However, installation may be made by 31.03.2017 in order to avail

the benefit of additional depreciation of 15%.

6.5 It is proposed to expand the scope of section 43B of the Income-tax

Act so as to provide that certain specified payments payable to

Railways shall be allowed as deduction as business income only if

the same has been paid on or before the due date of filing of return

for the relevant year.

6.6 It is proposed to provide that the non-compete fee received/

receivable in relation to not carrying out any profession will be

chargeable to tax as an income from business or profession. 6.7 It is proposed to amend the provisions of the Income-tax Act so as to

provide that the fees paid for obtaining right to use the spectrum is to

be amortized over the period for which the right to use the spectrum

has been granted.

7. Measures for prevention of abuse of Law

7.1 It is proposed to provide that where a trust or institution registered

u/s 12AA of the Income-tax Act ceases to be charitable organisation, the amount of net asset as on date of such conversion which

represents the income accreted to the trust over a period of time shall

47

be charged to additional income-tax at the maximum marginal rate.

Similarly, if on dissolution a charitable trust or institution does not

transfer all its assets within one year of dissolution to another

charitable organization, the amount of accreted income to the extent

not transferred shall be subject to this levy of additional income-tax.

7.2 For implementing the country by country (CbC) reporting and master

file submission in relation to OECD report on BEPS action plan

Action 13, which is the minimum standard to be followed by every

member/partner country, it is proposed to provide for furnishing of

documents by the specified person. It is also proposed to provide for

penal consequence in case of non-compliance by such person.

7.3 It is proposed to provide that no set off of losses shall be allowed

against deemed undisclosed income u/s 68 to 69D of the Income-tax

Act.

7.4 It is proposed to provide a tax neutral treatment to conversion of a

company into Limited Liability Partnership (LLP), if, among the

other existing conditions, the total value of the assets in the books of

account of the company in any of the three preceding years from the

year in which conversion takes place does not exceed five crore

rupees.

7.5 It is proposed to provide that the buyback of shares by a company

shall mean purchase of its own shares in accordance with relevant

provisions of the Companies Act and that the distributed income shall

mean, the consideration paid on buyback of shares as reduced by the

amount received by the company for issue of such shares to be

determined in the prescribed manner.

8. Measures for Simplification of Procedures

8.1 It is proposed to amend the provision of section 44AB of the Incometax

Act to enhance the threshold limit for audit of accounts from ` 25

lakh to ` 50 lakh for persons having income from profession.

8.2 It is proposed to amend the provisions of section 44AD of the

Income-tax Act so as to increase the threshold limit of presumptive

taxation from ` 1 crore to Rs 2 crore. It is also proposed to provide

that if the taxpayer opts for the presumptive taxation scheme, he

has to remain in that scheme for 5 years. Further, if he does not offer

the income as per the said scheme in any of the five years, he shall

not be eligible to claim the benefit under the scheme for next 5 years.

8.3 It is proposed to amend section 139 of the Income-tax Act so as to

provide that,- v a person shall be required to furnish his return of income if

this total income during the previous year without claiming

exemption under section 10(38) exceeds the maximum

amount which is not chargeable to tax.

48

v a person, who has not furnished a return for any previous year

by the due date, may furnish the same before the end of the

relevant assessment year or before the completion of the

assessment, whichever is earlier. He may also revise such

return before the expiry of one year from the end of the

relevant assessment year or before the completion of the

assessment, whichever is earlier.

v a return furnished in response to a notice issued under section

142 (1) of the Income-tax Act cannot be revised.

v a return which is otherwise valid would not be treated

defective merely because self-assessment tax and interest

payable in accordance with the provisions of section 140A,

has not been paid on or before the date of furnishing of the

return.

8.4 It is proposed to amend the provisions of section 211 of the Incometax

Act to provide that the number of instalments and due dates for

payment of advance tax in the case of individuals, HUFs, firms, etc.

shall be the same as is applicable to companies. It is also proposed

that the taxpayer eligible for presumptive taxation scheme under

section 44AD of the Income-tax Act shall pay whole amount of

advance tax in one instalment on or before the 15th March of the

financial year.

8.5 It is proposed to amend section 253 of the Income-tax Act to provide

that no appeal shall be filed by the Income-tax Department against

the direction of the Dispute Resolution Panel.

8.6 It is proposed to amend section 254 of the Income-tax Act to reduce

the time limit for rectifying an order passed by Appellate Tribunal

from 4 years to 6 months.

8.7 It is proposed to amend section 281B of the Income-tax Act to

provide for revocation of attachment of property in cases where

assessee furnishes a Bank Guarantee from a scheduled bank of an

amount not less than the fair market value of such property or of an

amount sufficient to protect the interest of revenue.

8.8 As a step forward in digitisation of processes of the Income-tax

Department, it is proposed to provide that notices and documents

may be issued by the income tax authorities in electronic form also.

8.9 It is proposed to amend section 147 of the Income-tax Act to provide

that a case may be reopened by the Assessing Officer on the basis of

information culled out from the data base by the Directorate of

Systems indicating that income has escaped assessment.

49

8.10 With a view to reduce litigation and to collect taxes at the earliest

point of time it is proposed to expand the scope of adjustment that

can be done at the time of processing of return under sub-section

143(1) of the Income-tax Act. It is also proposed that before making

an assessment u/s 143(3) of the Act, a return shall be processed u/s

143(1) of the Act.

INDIRECT TAX

The Table below summarises the changes in Customs, Central Excise

and Service Tax rate structures and law and procedure.

Sl.No. Changes Existing Proposed

I Promoting Agriculture and food processing

1. Krishi Kalyan Cess proposed to be levied

on all taxable services to finance and

promote initiatives to improve agriculture, with effect from 01.06.2016.

- 0.5%

2. Services provided by National Centre for

Cold Chain Development under

Department of Agriculture, Cooperation

and Farmer’s welfare, Government of

India, by way of knowledge

dissemination, being exempted from

service tax, with effect from 01.04.2016.

14% Nil

3. Excise duty on electric motor, shafts,

sleeve, chamber, impeller, washer

required for the manufacture of

centrifugal pump being reduced. More

than 50% of such pumps are used in

agriculture.

12.5% 6%

4. Concessional 5% Basic Customs Duty as

presently available under project imports

for cold storage, cold room (including for

farm level pre-cooling) being extended for

‘cold chain including pre-cooling unit,

pack houses, sorting and grading lines and

ripening chambers’ also.

10% 5%

5. BCD on refrigerated containers being

reduced

10% 5%

6. Excise duty on refrigerated containers

being reduced

12.5% 6%

50

7. Excise duty on micronutrients [covered

under S. No. 1(f) of Schedule 1 Part (A)

of the Fertilizer Control Order, 1985 and

manufactured by the manufacturers which

are registered under the FCO, 1985] being

reduced.

12.5% 6%

8. Excise duty on physical mixture of

fertilizers, made out of chemical fertilizers

on which duty of excise has been paid, by

Co-operative Societies, holding certificate

of manufacture for mixture of fertilizers

under the Fertilizer Control Order 1985,

for supply to the members of such Co- operative Societies, being exempted.

1%

(without

ITC or

6% (with

ITC)

Nil

II Broadening of Tax base Existing Proposed

1. Exemption on services provided by,-

(i) a senior advocate to an advocate or

partnership firm of advocates

providing legal service; and

(ii) a person represented on an arbitral

tribunal to an arbitral tribunal,

being withdrawn and service tax being

levied under forward charge, with effect

from 01.04.2016.

Nil 14%

2. Exemption to construction, erection,

commissioning or installation of original

works pertaining to monorail or metro, in

respect of contracts entered into on or

after 1st March 2016 being withdrawn, with effect from 01.03.2016.

Nil 5.6%

3. Exemption to the services of transport of

passengers, by ropeway, cable car or

aerial tramway being withdrawn, with

effect from 01.04.2016.

Nil 14%

4. Negative List entry that covers ‘service of

transportation of passengers, with or

without accompanied belongings, by a

stage carriage’ being omitted and tax

Nil 5.6%

51

proposed to be levied on service of

transportation of passengers by air

conditioned stage carriage, at the

abatement of 60% without input tax

credit, with effect from 01.06.2016.

5. Abatement on shifting of used household

goods by a Goods Transport Agency is

being rationalized at the rate of 60%,

without input tax credit, with effect from

01.04.2016.

4.2% 5.6%

III Measures to boost construction sector and promote affordable

housing

Existing Proposed

1. Service Tax on services in respect of-

(i) construction services under Housing

For All (HFA) (Urban) Mission/

Pradhan Mantri Awas Yojana

(PMAY);

(ii) construction projects under

“Affordable housing in partnership”

component of PMAY, subject to

carpet area of dwelling units of such

projects not exceeding 60 square

metres;

(iii) low cost houses up to a carpet area of

60 square metres per house in a

housing project under any housing

scheme of the State Government.

being exempted, with effect from

01.03.2016.

5.6% Nil

2. Excise duty exemption, presently

available to Concrete Mix manufactured

at site for use in construction work at such

site being extended to Ready Mix

Concrete manufactured at the site of

construction for use in construction work

at such site.

12.5% Nil

IV Promoting social security and moving towards a pensioned

society

1. Service Tax on service of life insurance

business provided by way of annuity under

the National Pension System regulated by

Pension Fund Regulatory and

3.5% Nil

52

Development Authority (PFRDA) being

exempted, with effect from 01.04.2016.

2. Service tax on services provided by

Employees’ Provident Fund Organization

(EPFO) to employees, being exempted, with effect from 01.04.2016.

14% Nil

3. Composition rate of service tax on single

premium annuity (insurance) policies

being reduced from 3.5% to 1.4% of the

premium charged, with effect from

01.04.2016.

3.5% 1.4%

4. Service Tax on the services of general

insurance business provided under

‘Niramaya’ Health Insurance scheme

launched by National Trust for the

Welfare of Persons with Autism, Cerebral

Palsy, Mental Retardation and Multiple

Disability being exempted, with effect

from 01.04.2016.

14% Nil

V Financial, Banking & Insurance Sector

Existing Proposed

1. The services provided by mutual fund

agent/distributor to a mutual fund or asset

management company being taxed under

forward charge, with effect from

01.04.2016.

14% 14%

2. Service tax on the regulatory services

provided by Securities and Exchange

Board of India and Insurance Regulatory

Development Authority being exempted, with effect from 01.04.2016.

14% NIL

3. Additional options being provided for reversal of actual input tax

credits with respect to non-taxable services provided by them by

way of extending deposits, loans, and advances to banking

companies and financial institutions, including non banking

financial companies. This will come into effect from 01.04.2016.

4. Service tax on services provided by

Insurance Regulatory and Development

Authority of India (IRDA), being

exempted, with effect from 01.04.2016.

14% Nil

53

VI Incentivizing domestic value addition, ‘Make in India’

Existing Proposed

1. Balloons

BCD on Natural latex rubber made

balloons being increased.

10% 20%

2. Jewellery

BCD on Imitation jewellery being

increased.

10% 15%

3. Metals

BCD being increased on

a) Primary aluminium 5% 7.5%

b) Other aluminium products 7.5% 10%

c) Zinc alloys 5% 7.5%

4. Renewable Energy

(i) BCD on Industrial solar water heater

being increased.

7.5% 10%

(ii) BCD exemption on solar tempered glass /

solar tempered (anti-reflective coated)

glass being withdrawn and 5%

concessional BCD being imposed, subject

to actual user conditions.

Nil 5%

(iii) Solar lamp being exempt from excise duty 12.5% Nil

5. Capital Goods

Tariff rate of BCD being increased on

goods falling under 211 specified tariff

lines in Chapter 84, 85 and 90. Out of

which:

(i) The effective rate of BCD on goods

falling under 115 specified tariff lines in

being maintained at 7.5%.

(ii) The effective rate of BCD on goods

falling under remaining 96 tariff lines is

being increased to 10%.

7.5%

7.5%

7.5%

10%

7.5%

10%

6. Mineral fuels and Mineral oils

(i) Rate of Oil Industries Development Cess,

on domestically produced crude oil

[OIDB Cess under the Oil Industry

(Development) Act, 1974], being reduced.

` 4500

PMT

20% ad

valorem

54

(ii) BCD being rationalized on:

a) Coal; briquettes, ovoids and

similar solid fuels manufactured

from coal

2.5% /

10%

2.5%

b) Lignite, whether or not

agglomerated, excluding jet

10% 2.5%

c) Peat (including peat litter),

whether or not agglomerated

10% 2.5%

d) Coke and semi-coke of coal, of

lignite or of peat, whether or not

agglomerated; retort carbon

5% /

10%

5%

e) Coal gas, water gas, producer gas

and similar gases, other than

petroleum gases and other gaseous

hydrocarbons

10% 5%

f) Tar distilled from coal, from

lignite or from peat and other

mineral tars, whether or not

dehydrated or partially distilled,

including reconstituted tars

10% 5%

g) Oils and other products of the

distillation of high temperature

coal tar similar products in which

the weight of the aromatic

constituents exceeds that of the

non-aromatic constituents

2.5% / 5

%/ 10%

2.5%

h) Pitch and pitch coke, obtained

from coal tar or from other mineral

tars

5% /

10%

5%

7. Chemicals & Petrochemicals

(i) BCD on all acyclic hydrocarbons and all

cyclic hydrocarbons [other than para- xylene which attracts Nil BCD and

styrene which attracts 2% BCD] being

rationalized.

5% /

2.5%

2.5%

(ii) BCD on denatured ethyl alcohol (Ethanol)

being reduced, subject to actual user

condition.

5% 2.5%

(iii) SAD on Orthoxylene, being reduced, for

the manufacture of phthalic anhydride

subject to actual user condition.

4% 2%

55

(iv) BCD on electrolysers, membranes and

their parts required by caustic soda/

potash unit using membrane cell

technology being exempted.

2.5% Nil

8. Paper, Paperboard and newsprint

(i) Basic customs duty on wood in chips or

particles for manufacture of paper,

paperboard and news print being reduced.

5% Nil

(ii) BCD on Plans, drawings and designs

being increased.

Nil 10%

9. Textiles

(i) Basic Customs Duty on specified fibres

and yarns being reduced.

5% 2.5%

(ii) Basic customs duty on import of specified

fabrics [for manufacture of textile

garments for export] of value equivalent

to 1% of FOB value of exports in the

preceding financial year being exempted

subject to the specified conditions.

Applicab

le rate

Nil

10. Electronics / Hardware

(i) BCD on polypropylene granules / resins

for the manufacture of capacitor grade

plastic films being reduced.

7.5% Nil

(ii) BCD on E-Readers being increased. Nil 7.5%

(iii) BCD on parts of E-readers being reduced. Applicable

rate

5%

(iv) Nil Basic Customs Duty being extended

on magnetron of capacity of 1 KW to 1.5

KW for use in manufacture of domestic

microwave ovens, subject to actual user

condition.

10% Nil

(v) Machinery, electrical equipment, instrument and parts thereof (except

populated PCBs) for semiconductor wafer

fabrication/LCD fabrication units being

exempted.

Applicable

BCD

SAD – 4%

Nil BCD

Nil SAD

(vi) Machinery, electrical equipment, instrument and parts thereof (except

populated PCBs) imported for Assembly,

Test, Marking and Packaging of

semiconductor chips (ATMP) being

exempted.

Applicable

BCD

SAD – 4%

Nil BCD

Nil SAD

56

(vii) The exemption from basic customs duty,

CV duty, SAD on charger/adapter, battery

and wired headsets/speakers for

manufacture of mobile phone being

withdrawn.

BCD – Nil

CVD – Nil

SAD - Nil

Applicable

BCD

CVD –

12.5%

SAD – 4%

(viii) Inputs, parts and components, subparts for

manufacture of charger / adapter, battery

and wired headsets /speakers, of mobile

phone, subject to actual user condition

being exempted.

Applicab

le BCD,

CVD

SAD

Nil BCD

Nil CVD

Nil SAD

(ix) Parts and components, subparts for

manufacture of Routers, broadband

Modems, Set-top boxes for gaining access

to internet, set top boxes for TV, digital

video recorder (DVR)/network video

recorder (NVR), CCTV camera/IP

camera, lithium ion battery [other than

those for mobile handsets] being

exempted.

Applicable

BCD, CVD

SAD

Nil BCD

Nil CVD

Nil SAD

(x) Basic Customs Duty exemption on

Magnetic - Heads (all types), Ceramic/

Magnetic cartridges and stylus, Antennas,

EHT cables, Level meters/level

indicators/ tuning indicators/ peak level

meters/ battery meter/VC meters/Tape

counters, Tone arms, Electron guns being

withdrawn.

Nil Applicab

le BCD

(xi) Specified telecommunication equipment

[Soft switches and Voice over Internet

Protocol (VoIP) equipment namely VoIP

phones, media gateways, gateway

Product/Switch (POTP/POTS), Optical

controllers and session border controllers,

Optical Transport equipment;

combination of one / more of Packet

Optical Transport Network(OTN)

products, and IP Radios, Carrier Ethernet

Switch, Packet Transport Node (PTN)

products, Multiprotocol Label Switching- Transport Profile (MPLS-TP) products,

Multiple Input / Multiple Output (MIMO)

and Long Term Evolution (LTE) Products

on which 10% BCD was imposed in

2014-15 Budget] being excluded from the

purview of the other exemption also.

Nil 10%

57

(xii) Basic Customs Duty exemption on

preform of silica for manufacture of

telecom grade optical fibre /cables being

withdrawn.

Nil 10%

(xiii) Basic Customs Duty on specified capital

goods and inputs for use in manufacture

of Micro fuses, Sub-miniature fuses,

Resettable fuses and Thermal fuses being

exempted.

Applicabl

e rate

Nil

(xiv) Concessional Basic Customs Duty on

Neodymium Magnet (before

Magnetization) and Magnet Resin

(Strontium Ferrite compound/before

formed, before magnetization) for

manufacture of BLDC motors, being

prescribed subject to actual user

condition.

Applicabl

e rate

2.5%

(xv) Exemption from SAD on populated PCBs

for manufacture of personal computers

(laptop or desktop) being withdrawn.

Nil 4%

(xvi) Exemption from SAD on populated PCBs

of mobile phone/tablet computer being

withdrawn. Concessional SAD on

populated PCBs for manufacture of

mobile phone/tablet computer imposed.

Nil 2%

(xvii) Excise duty structure on domestically

manufactured charger/adapter, battery and

wired headsets/speakers for supply to

mobile phone manufacturers as original

equipment manufacturer being changed.

Nil 2%

[without

ITC]

or 12.5%

[with ITC]

(xviii) Excise duty on inputs, parts and

components, subparts for manufacture of

charger/adapter, battery and wired

headsets/speakers of mobile phone, subject to actual user condition being

exempted.

12.5% /

Nil

Nil

(xix) Excise duty structure on Routers,

broadband Modems, Set-top boxes for

gaining access to internet, set top boxes

for TV, digital video recorder (DVR) /

network video recorder (NVR), CCTV

camera / IP camera, lithium ion battery

[other than those for mobile handsets]

being changed.

12.5% 4%

[without

ITC]

or 12.5%

[with ITC]

58

(xx) Excise duty on parts and components,

subparts for manufacture of Routers,

broadband Modems, Set-top boxes for

gaining access to internet, set top boxes

for TV, digital video recorder (DVR) /

network video recorder (NVR), CCTV

camera / IP camera, lithium ion battery

[other than those for mobile handsets]

being exempted.

12.5% Nil

11. Metals, glass and ceramics

(i) BCD on Silica sand being reduced. 5% 2.5%

(ii) Basic Customs Duty on brass scrap being

reduced.

5% 2.5%

(iii) Excise duty structure on disposable

containers made of aluminium foils being

changed.

2%

[without

ITC] or 6%

[with ITC]

2%

[without

ITC]

or 12.5%

[with ITC]

12. Automobiles

(i) BCD on Golf cars being increased. 10% 60%

(ii) Nil BCD and 6% excise/CVD being

extended on parts of electric vehicles and

hybrid vehicles, presently.

Available

upto

31.03.2016

Without

any time

limit

(iii) BCD on aluminium Oxide for

manufacture of Wash Coats, which are

used in the manufacture of catalytic

converters, being reduced subject to actual

user condition

7.5% 5%

(iv) Description of “Engine for HV (Atkinson

cycle)” to “Engine for xEV (hybrid

electric vehicle)” for the purposes of Nil

Basic Customs Duty and 6% CVD being

changed.

Applicabl

e BCD

and CVD

Nil BCD

6% CVD

(v) Description of “Engine for HV (Atkinson

cycle)” to “Engine for xEV(hybrid

electric vehicle)” being changed for the

purposes of concessional 6% excise duty

12.5% 6%

13. Capital Goods

(i) CVD exemption on specified machinery

required for construction of roads being

withdrawn.

Nil 12.5%

59

14. Defence Production

(i) Customs duties exemption on direct

imports of specified goods for defence

purposes by Government of India or State

Governments being withdrawn, with

effect from 01.04.2016.

BCD- Nil

CVD – Nil

SAD – Nil

BCD – 5%

to 10%

CVD –

12.5%

SAD – 4%

(ii) BCD exemption on specified goods

imported by contractors of Government of

India PSUs or sub-contractors of such

PSUs for defence purposes being

withdrawn, with effect from 01.04.2016.

Nil 7.5% to

10%

15. Maintenance, repair and overhaul [MRO] of aircrafts

(i) Tools and tool kits being exempted from

Basic Customs duty, CVD and SAD when

imported by MROs for maintenance,

repair, and overhauling [MRO] of aircraft

subject to certification by the Directorate

General of Civil Aviation.

Applicable

BCD,

CVD and

SAD

Nil BCD

Nil CVD

Nil SAD

(ii) Exemption from excise duty being

extended to tools and tool kits when

procured by MROs for maintenance,

repair, and overhauling [MRO] of aircraft

subject to a certification by the

Directorate General of Civil Aviation

Applicable

excise

duty

Nil

(iii) Procedure for availment of exemption

from customs duties on parts, testing

equipment, tools and tool-kits for

maintenance, repair and overhaul of

aircraft being simplified based on records

and subject to actual user condition.

(iv) The restriction of one year for utilization

of duty free parts for maintenance, repair

and overhaul of aircraft being removed.

(v) The existing conditions of stay [60 days]

being further relaxed, so as to provide for

stay up to 6 months of the foreign aircraft

for maintenance, repair or overhauling,

with further extension of such period by

DGCAs as deemed fit.

(vi) The procedure for availment of exemption

from excise duty on parts, testing

equipment, tools and tool-kits for

maintenance, repair and overhaul of

aircraft being simplified based on records.

60

16. Ship Repair /Units

(i) Excise duty on capital goods and spares

thereof, raw materials, parts, material

handling equipment and consumable for

repairs of ocean-going vessels by a ship

repair unit subject to actual user condition

being exempted.

Applicable

excise

duty

Nil

(ii) The procedure for availment of exemption

from Basic Customs Duty, CVD and SAD

by ship repair units being simplified based

on records and subject to actual user

condition.

17. Miscellaneous

(i) Basic customs duty on import of Medical

Use Fission Molybdenum-99 by Board of

Radiation and Isotope Technology (BRIT)

for manufacture of radio pharmaceuticals

being exempted.

7.5% Nil

(ii) Concessional BCD on Pulp of wood for

manufacture of sanitary pads, napkins &

tampons being provided.

5% 2.5%

(iii) Concessional BCD on Super Absorbent

Polymer when used for manufacture of

sanitary pads, napkins & tampons being

extended.

7.5% 5%

(iv) Excise duty on parts of railway or

tramway locomotives or rolling stock and

railway or tramway track fixtures and

fittings, railway safety or traffic control

equipment, etc. being reduced.

12.5% 6%

(v) “Foreign Satellite data” on storage media

when imported by National Remote

Sensing Centre (NRSC), Hyderabad being

exempted.

Applicable

BCD,

CVD,

SAD

Nil BCD

Nil CVD

Nil SAD

(vi) Clean Energy Cess / Clean Environment

Cess on coal, lignite or peat, produced or

extracted as per traditional and customary

rights enjoyed by local tribals without any

license or lease in the State of Nagaland

being exempted.

`200 per

tonne

Nil

(vii) Excise duty on improved cookstoves

including smokeless chulhas for burning

wood, agrowaste, cowdung, briquettes,

and coal being exempted unconditionally.

12.5% Nil

61

18. Ores, concentrates

Export duty reduced on:

a) Iron ore fines with Fe content below

58%

10% Nil

b) Iron ore lumps with Fe content below

58%

30% Nil

c) Chromium ores and concentrates, all

sorts

30% Nil

d) Bauxite 20% 15%

19. Textiles

(i) Excise duty on branded readymade

garments and made up articles of textiles

of retail sale price of `1000 or more being

changed.

Nil

(without

ITC)

or

6%/12.5%

(with ITC)

2%

(without

ITC) or

12.5%

(with

ITC)

(ii) The Tariff value for excise /CVD

purposes on readymade garments and

made up articles of textiles being

changed.

30% of

retail sale

price

60% of

retail

sale price

(iii) Excise duty on PSF / PFY, manufactured

from plastic scrap or plastic waste

including waste PET bottles, being

changed.

2%

(without

ITC)

or

6%

(with ITC)

2%

(without

ITC)

or

12.5%

(with

ITC)

20. Renewable Energy

(i) Excise duty on carbon pultrusions used

for manufacture of rotor blades, and

intermediates, parts and sub-parts of rotor

blades for wind operated electricity

generators being reduced.

12.5% 6%

(ii) Excise duty on Unsaturated Polyester

Resin (polyester based infusion resin and

hand layup resin), Hardeners/Hardener for

adhesive resin, Vinyl Easter Adhesive

(VEA) and Epoxy Resin used for

manufacture of rotor blades, and

intermediates, parts and sub-parts of rotor

blades for wind operated electricity

generators being increased.

Nil 6%

62

(iii) “Valid agreement between importer /

producer of power with urban local body

for processing of municipal solid waste

for not less than ten years from the date of

commissioning of project” being provided

as an alternative condition for availing

concessional customs/excise duty benefits

in case of power generation project based

on municipal and urban waste.

21. Jewellery

Excise duty exemption on Articles of

Jewellery [excluding silver jewellery,

other than studded with diamonds or other

precious stones namely, ruby, emerald

and sapphire] being withdrawn with a

higher threshold exemption upto `6 crore

in a year and eligibility limit of `12 crore, along with simplified compliance

procedure.

Nil 1%

(without

ITC)

or

12.5%

(ITC)

22. Footwear

(i) Excise duty on rubber sheets & resin

rubber sheets for soles and heels being

reduced.

12.5% 6%

(ii) The abatement rate from retail sale price

(RSP) for the purposes of RSP based

assessment of excise duty, for all

categories of footwear being revised.

25% 30%

23. Service tax

(i) a) Services provided by Indian Shipping

lines by way of transportation of

goods by a vessel to outside India

being zero rated with effect from 1st

March, 2016; and

b) Service tax on services provided by

them by way of transportation of

goods by a vessel from outside India

up to the customs station in India

being imposed, with effect from 1st

June, 2016.

No credit

Nil

Input tax

credit

allowed

14%

(ii) Service tax on services provided by

Biotechnology Industry Research

Assistance Council (BIRAC) approved

biotechnology incubators to incubatees

being exempted, with effect from

01.04.2016.

14% Nil

63

(iii) Service tax on the services provided by

way of skill/vocational training by training

partners under Deen Dayal Upadhyay

Grameen Kaushalya Yojana being

exempted, with effect from 01.04.2016.

14% NIL

(iv) Service tax on services of assessing bodies

empanelled centrally by Directorate

General of Training, Ministry of Skill

Development & Entrepreneurship being

exempted, with effect from 01.04.2016.

14% NIL

(v) Notification No. 41/2012-ST, was amended by notification

No.1/2016-ST so as to, inter alia, allow refund of service tax on

services used beyond the factory etc. for the export. This

amendment is being made effective from 1st July 2012. This will

come into effect from the date of enforcement of Finance Bill

2016.

(vi) Quarterly payment of service tax being extended to ‘One Person

Company’ (OPC) and HUF also, with effect from 01.04.2016.

(vii) Facility of payment of service tax being extended on receipt basis

to ‘One Person Company’ (OPC) also, with effect from

01.04.2016.

VI Ease of doing business

1. 13 cesses levied by other Ministries/Departments and

administered by the Department of Revenue, where the revenue

collection from each of them is less than `50 crore in a year being

abolished.

2. Interest rates on delayed payment of

duty/tax across all indirect taxes being

rationalized at 15%, except in case of

service tax collected but not deposited to

the exchequer, in which case the rate of

interest will be 24% from the date on

which the service tax payment became

due.

For assesses with taxable value during

preceding year/years covered by the

notice is less than ` 60 Lakh, the rate of

interest on delayed payment of service tax

will be 12%.

This will come into effect from date of

enforcement of Finance Bill, 2016.

Customs

18%

Excise

18%

Service tax

18%

24%

30%

Customs

Excise

Service tax

15%.

24%

in case of

tax

collected

but not

deposited

64

3. The exemptions from customs duties on specified goods imported

for petroleum exploration under various types of licenses or mining

leases, pre-NELP contracts, NELP contracts, Marginal Fields

Policy and the Coal Bed Methane Policy being merged into a single

exemption with a unified list of specified goods and conditions

4. Nil Basic Customs Duty and Nil CVD on imports of goods

required for exploration & production of hydrocarbon activities

being extended to such operations undertaken under Petroleum

Exploration Licenses (PEL) or Mining Leases (ML) issued or

renewed before 1st April 1999.

5. CENVAT Credit Rules, 2004 being amended, to improve credit

flow, reduce the compliance cost and litigation, particularly those

relating to apportionment of credit between exempted and non- exempted final products / services. Changes are also being made

in the provisions relating to input service distributor, including

extension of this facility to transfer input services credit to

outsourced manufacturers, under certain circumstances.

Amendments will also enable manufacturers with multiple

manufacturing units to maintain a common warehouse for inputs

and distribute inputs with credits to the individual manufacturing

units. This will come into effect from 01.04.2016.

6. Amendments being made to Central Excise and Service Tax laws

so as to provide for closure of proceedings against co-noticees,

once the proceedings against the main noticee have been closed,

with effect from date of enforcement of Finance Bill, 2016.

7. Rules prescribing procedure for import or domestic procurement

of goods at concessional rates of customs and excise duties for

certain specified purposes being simplified.

8. Number of returns for central excise assessee, above a certain

threshold, is being reduced, from 27 to 13, one annual and 12

monthly returns. The annual return will also have to be filed by

service tax assessees, above a certain threshold, taking total

number of returns to three in a year for them. This will come into

effect from 01.04.2016.

9. The facility for revision of return, hitherto available to a service

tax assessee only, being extended to manufacturers also.

10. The monetary limit for launching prosecution being increased to `

2 crore of service tax evasion and the power to arrest being

restricted only to situations where the tax payer has collected the

tax but not deposited it to the exchequer above a certain threshold

of ` 2 crore. This will come into effect from date of enforcement

of Finance Bill, 2016.

65

11. The Customs Act being amended to provide for deferred payment

of customs duties for certain class of importers and exporters. In

consultations with Ministry of Shipping, the facility of direct port

delivery is being extended to more importers.

12. In 2014-15 Budget, the intent to implement Indian Customs Single

Window Project was announced. Significant progress has been

made in that direction to implement this facility at major ports and

airports starting from next financial year.

13. The duty free import allowance for bona

fide gifts imported by post or air or by

courier service being increased.

`10,000 `20,000

14. Chief Commissioners of Central Excise are being instructed to file

application for withdrawing prosecution in cases involving duty

less than rupees five lakh and pending for more than fifteen years.

VII Clean Environment Initiatives Existing Proposed

1. The name of ‘Clean Energy Cess’ levied

on coal, lignite and peat being changed to

‘Clean Environment Cess’ and its rate

being increased.

` 200

PMT

` 400

PMT

2. Credit of input services on transport of

passengers by rail at the existing rate of

abatement of 70% being allowed, with

effect from 01.04.2016.

4.2%

Without

credit

4.2%

With

input

service

credit

3. Credit of input services on transport of

goods in containers by rail at a reduced

abatement rate of 60% being allowed, with effect from 01.04.2016.

4.2%

Without

credit

5.6%

With

input

service

credit

4. Credit of input services on transport of

goods, other than in containers by rail at

the existing rate of abatement of 70%

being allowed, with effect from

01.04.2016.

4.2%

Without

credit

4.2%

With

input

service

credit

5. Credit of input services on transport of

goods by vessel at the existing rate of

abatement of 70% being allowed, with

effect from 01.04.2016.

4.2%

Without

credit

4.2%

With

input

service

credit

66

6. The customs and excise duty concessions

on specified parts of electric vehicles /

hybrid vehicles being extended.

Upto

31.03.2016

Without

time

limit

7. Excise duty on sacks and bags of any

plastic being rationalized.

12.5% or

15%

15%

VIII Reduce litigation and providing certainty in taxation

1. An Indirect tax Dispute Resolution Scheme, 2016, being

introduced wherein in respect of cases pending before

Commissioner (Appeals), the assesse, after paying the duty,

interest and penalty equivalent to 25% of penalty imposed, can file

a declaration. The proceedings against the assessee will be closed

and he will also get immunity from prosecution. However, this

scheme will not apply in certain cases.

2. Retail Sale Price [RSP] based assessment of excise duty being

extended to all goods falling under heading 3401 and 3402 with

the abatement rate of 30%.

3. Retail Sale Price [RSP] based assessment of excise duty being

extended to:

a) aluminium foils of a thickness not exceeding 0.2 mm [with

abatement of 25%];

b) wrist wearable devices (commonly known as ‘smart watches’)

[with abatement of 35%]; and

c) accessories of motor vehicle and certain other specified goods

[with abatement of 30%]. 4. Exemptions being restored , with effect

from 01.04.2015, in relation to contracts

which had been entered into prior to

01.03.2015 for services of:

a) construction provided to the

Government, a local authority or a

governmental authority, in respect of

construction of govt. schools,

hospitals etc.

b) construction of ports, airports.

5.6% of

total

amount

Nil

5. Exemption from service tax being

extended to services provided by way of

construction, maintenance etc. of canal,

dam or other irrigation works provided to

bodies set up by Government, during the

period from the 1st July, 2012 to 29th

January, 2014.

5.6% of

total

amount

Nil

67

6. Section 67A being amended to obtain rule making powers in

respect of the Point of Taxation Rules, 2011. Point of Taxation

Rules, 2011 being amended accordingly, with effect from date of

enforcement of Finance Bill, 2016.

7. Section 93A of the Finance Act, 1994 being amended so as to

allow rebate by way of notification also, with effect from date of

enforcement of Finance Bill, 2016.

8. Explanation 2 in section 65B(44) of the Finance Act, 1994 being

amended so as to clarify that any activity carried out by a lottery

distributor or selling agent are liable to service tax, with effect

from date of enforcement of Finance Bill, 2016.

9. Being clarified that service provided by

the Indian Railways to Container Train

Operators (CTOs) of haulage of their

container train is a service of ‘Transport

of Goods by Rail’.

14% 4.2%

10. Services provided by the Indian Institutes

of Management (IIM) by way of 2 year

full time Post Graduate Programme in

Management (PGPM), Integrated

Programme in Management and

Fellowship Programme in Management

(FPM) being exempted, with effect from

01.03.2016.

14% Nil

11. Cenvat Credit Rules, 2004 being amended so as to provide for

reversal of Cenvat Credit of inputs/input services which have been

commonly used in providing taxable output service and an activity

which is not a ‘service’, with effect from 01.04.2016.

12. Notification No. 27/2012 – C.E. (N.T.) being amended so as to

provide that time limit for filing application for refund of Cenvat

Credit, in case of export of services, is 1 year from the specified

date, with effect from 01.03.2016.

13. Assignment by the Government of the

right to use the radio-frequency spectrum

and its subsequent transfers being

declared as a service so as to make it clear

that assignment of right to use the

spectrum is a service leviable to service

tax and not sale of intangible goods, with

effect from date of enforcement of

Finance Bill, 2016.

14% 14%

14. A condition mandating inclusion of cost of fuel in the

consideration for the services of renting of motor-cab services for

availing abatement from service tax, being introduced with effect

from 01.04.2016.

68

15. Service tax on the services of Information

Technology software on media bearing

RSP, being exempted, provided

appropriate Central Excise duty is paid, with effect from 01.03.2016.

Nil Nil

16. Mutual exclusiveness of levy of excise

duty and service tax on information

technology software [in respect of

Software recorded on media “NOT FOR

RETAIL SALE”] being ensured by

exempting from excise duty only that

portion of the transaction value on which

service tax is paid, with effect from

01.03.2016.

14% 14%

IX Rationalization/anti avoidance Existing Proposed

1. The abatement rate at 70% in respect of

services by way of construction of

residential complex etc. being

rationalized, with effect from 01.04.2016.

3.5%/

4.2% 4.2%

2. Concessional CVD on Gold dore bar

being increased and concessional excise

duty on refined gold bars manufactured

from such gold dore or gold

ore/concentrate, silver dore bar and copper

ore or concentrate being increased. Excise

duty exemption under the existing area

based exemptions on refined gold being

prospectively withdrawn.

Concessional CVD on silver dore bar and

excise duty on refined silver being

increased.

CVD

8%

Excise

duty 9%

CVD

7%

Excise

duty 8%

CVD

8.75%

Excise

duty

9.5%

CVD

7.75%

Excise

duty

8.5%

3. Actual user condition for the imports of Phosphoric Acid and

Anhydrous Ammonia at concessional BCD/CVD for manufacture

of Fertilizers being prescribed.

4. Actual user condition on imports of LCD/LED/OLED Panels at

Nil BCD for manufacture of LCD/LED/OLED TVs being

prescribed.

5. Excise duty payable per machine per month on chewing tobacco

without lime tube / lime pouches and jarda scented tobacco being

aligned by providing the same speed slabs for both the products.

69

6. Abatement rate being rationalized at 70%

in respect of services by a tour operator

subject to certain conditions, with effect

from 01.04.2016.

3.5%/

5.6% of

amount

charged

4.2% of

amount

charged

7. The rate of service tax on the services of a

foreman to a chit fund being rationalized

with an abatement of 30%, without input

tax credit, with effect from 01.04.2016.

14% of

amount

9.8% of

amount

8. Cenvat credit rules being amended so as to allow credit of service

tax paid on upfront charges for assignment of natural resources by

Government to a business entity, over such period of time as the

period for which the rights have been assigned. This comes into

effect from 01.04.2016.

9. Exemption limit on services provided by a

performing artist in certain folk or

classical art forms of music, dance or

theatre, being enhanced to Rs.1.5 lakh per

event, with effect from 01.04.2016.

14% Nil

X Additional Resource Mobilization Existing Proposed

1. BCD on Cashew nuts in shell being

increased.

Nil 5%

2. Excise duty on waters including mineral

waters and aerated waters, containing

added sugar or other sweetening matter or

flavored being increased.

18% 21%

3. Excise duty on Aviation Turbine Fuel

[ATF], other than for supply to Scheduled

Commuter Airlines (SCA) from the

Regional Connectivity Scheme Airports,

being increased. ATF for supply to aircraft

under the Regional Connectivity Scheme

will continue to attract 8% excise duty.

8% 14%

4. Infrastructure Cess being levied on motor

vehicles, of heading 8703, as under:

a) Petrol/LPG/CNG driven motor

vehicles of length not exceeding 4m

and engine capacity not exceeding

1200cc;

b) Diesel driven motor vehicles of length

not exceeding 4m and engine capacity

not exceeding 1500cc;

-

-

1%

2.5%

70

c) Other higher engine capacity and

SUVs and bigger sedans.

Three wheeled vehicles, Electrically

operated vehicles, Hybrid vehicles,

Hydrogen vehicles based on fuel cell

technology, Motor vehicles which after

clearance have been registered for use

solely as taxi, Cars for physically

handicapped persons and Motor vehicles

cleared as ambulances or registered for

use solely as ambulance will be exempt

from this Cess.

No credit of this cess will be allowed, and

credit of no other duty can be allowed to

pay this Cess.

- 4%

XI Miscellaneous Existing Proposed

Tobacco and Tobacco Products

1. Excise duty on Cigar and cheroots being

increased

12.5% or

`3375 per

thousand,

whichever

is higher

12.5% or

`3755 per

thousand,

whichever

is higher

2. Excise duty on Cigarillos being increased 12.5% or

`3375 per

thousand,

whichever

is higher

12.5% or

`3755 per

thousand,

whichever

is higher

3. Excise duty on Cigarettes of tobacco

substitutes being increased

`3375 per

thousand

`3755

per

thousand

4. Excise duty on Cigarillos of tobacco

substitutes being increased

12.5% or

`3375 per

thousand,

whichever

is higher

12.5% or

`3755

per

thousand,

whicheve

r is

higher

5. Excise duty on other forms of tobacco

substitutes being increased

12.5% or

`3375 per

thousand,

whichever

is higher

12.5% or

`3755 per

thousand,

whichever

is higher

71

6. Excise duty on Gutkha, chewing tobacco

(including filter khaini) and jarda scented

tobacco being increased

70% 81%

7. Excise duty on Unmanufactured tobacco

being increased 55% 64%

8. Tariff rate of excise duty on paper rolled

biris [whether handmade or machine

made] and other biris [other than

handmade biris] being increased.

The effective rates, will, however, remain

unchanged.

Tariff rate

`30 per

thousand.

Effective

rate

`21 per

thousand

Tariff rate

`80 per

thousand

Effective

rate `21

per

thousand

9. Additional Duty of Excise on cigarettes

being increased

` Per

thousand

` Per

thousand

(i) Non filter not exceeding 65 mm. 70 215

(ii) Non-filter exceeding 65 mm but not

exceeding 70 mm.

110 370

(iii) Filter not exceeding 65 mm. 70 215

(iv) Filter exceeding 65 mm but not exceeding

70 mm.

70 260

(v) Filter exceeding 70 mm but not exceeding

75 mm.

110 370

(vi) Other 180 560

10. Other products

(i) A number of assistive devices,

rehabilitation aids and other goods for

disabled persons attract Nil BCD. This

exemption being extended to Braille

paper.

BCD - 10%

BCD - Nil

(ii) Disposable sterilized dialyzer and micro

barrier of artificial kidney being exempted

from Basic Customs Duty, excise duty /

CVD and SAD

Applicable

BCD,

excise /

CVD, SAD

Nil BCD

Nil

excise/

CVD

Nil SAD

XII OTHER LEGISLATIVE AMENDMENTS

THE CUSTOMS ACT, 1962

Warehousing provisions are being simplified so as to move from

physical control to record based control in most of cases.

Several other consequential changes are also being made.

72

Section 25 of the Customs Act, 1962 being amended 80 also omit

the requirement of publishing and offering for sale on the date of

its issue, by the Directorate of Publicity and Public Relations of

CBEC, of notification issued for publication in the official gazette.

Sections 28, 47, 51 and 156 of the Customs Act, 1962 being

amended so as provide for deferred payment of customs duties to

certain class of importers and exporters and to increase the

limitation period from one year to two year in cases not involving

fraud, suppression of facts, wilful mis-statement, etc. New section 58A being inserted to provide for a new class of

warehouses which require continued physical control and will be

licensed for storing revenue sensitive goods.

New section 58B being inserted so as to regulate the process of

cancellation of licences which is a necessary concomitant of

licencing.

Section 65 being amended to delete the payment of fees to

Customs for supervision of manufacturing facilities under Bond;

and empower Principal Commissioner or Commissioner of

Customs to licence such facilities.

THE CUSTOMS TARIFF ACT, 1975

The First Schedule to the Customs Tariff Act, 1975 being

amended so as to include editorial changes in the Harmonized

System of Nomenclature (HSN) in certain chapters to be effective

from 01.01.2017.

The First Schedule to the Customs Tariff Act, 1975 being

amended so as to:

a) prescribe separate tariff lines for laboratory created or

laboratory grown or manmade or cultured or synthetic

diamonds;

b) substitute Tariff line 5801 39 10 with description “Warp pile

fabrics, uncut” in place of tariff line 5801 37 11 [with

description Warp pile fabrics ‘epingle’ uncut velvet] and 5801

37 19 [with description Warp pile fabrics ‘epingle’ uncut

other];

c) delete Tariff line 8525 50 50, relating to Wireless microphone;

d) to amend supplementary notes (e) and (f) of Chapter 27 so as

to change the reference: from IS:1460:2000 to IS:1460:2005

for high speed diesel (HSD) and from IS:1460 to IS:

15770:2008 for light diesel oil (LDO)

73

THE CENTRAL EXCISE ACT, 1944

Section 5A being amended, so as to omit the requirement of

publishing and offering for sale on the date of issue, by the

Directorate of Publicity and Public Relations of CBEC, of

notifications issued for publication in the Official Gazette.

Section 11A of the Central Excise Act, 1944 being amended so as

to increase the limitation period from one to two years in cases not

involving fraud, suppression, etc.

Section 37B of the Central Excise Act, 1944 being amended so as

to empower the Board for implementation of any other provision

of the said Act in addition to the power to issue orders,

instructions and directions.

The Third Schedule to the Central Excise Act, 1944 being

amended so as to include therein:

1) All goods falling under heading 3401 and 3402;

2) Aluminium foils of a thickness not exceeding 0.2 mm;

3) Wrist wearable devices (commonly known as ‘smart

watches’); and

4) Accessories of motor vehicle and certain other

specified goods.

THE CENTRAL EXCISE TARIFF ACT, 1985

The First and Second Schedules to the Central Excise Tariff Act,

1985 being amended so as to include editorial changes in the

Harmonized System of Nomenclature (HSN) in certain chapters to

be effective from 01.01.2017.

the First Schedule to the Central Excise Tariff Act, 1985 being

amended so as:

a) to prescribe separate tariff lines for laboratory created or

laboratory grown or manmade or cultured or synthetic

diamonds;

b) to substitute Tariff line 5801 39 10 with description “Warp

pile fabrics, uncut” in place of tariff line 5801 37 11 [with

description Warp pile fabrics ‘epingle’ uncut velvet] and

5801 37 19 [with description Warp pile fabrics ‘epingle’

uncut other];

c) to delete Tariff line 8525 50 50, relating to Wireless

microphone;

d) to amend supplementary notes (e) and (f) of Chapter 27 so

as to change the reference from IS:1460:2000 to

IS:1460:2005 for high speed diesel (HSD) and from

IS:1460 to IS: 15770:2008 for light diesel oil (LDO).

74

THE FINANCE ACT, 1994 [SERVICE TAX]

Section 73, being amended so as to increase the limitation period

from 18 months to 30 months for short levy/non levy/short

payment/non-payment/erroneous refund of service tax, with effect

from date of enforcement of Finance Bill, 2016.

THE CENTRAL SALES ACT, 1956

Section 3 of the Central Sales Tax Act, 1956 being amended so as

to insert an explanation:

Explanation.- Where the gas sold or purchased and transported

through a common carrier pipeline or any other common transport

distribution systems becomes co-mingled and fungible with other

gas in the pipeline or system and such gas is introduced into the

pipeline or system in one State and is taken out from the pipeline

in another State, such sale or purchase of gas shall be deemed to

be a movement of goods from one state to another.

THE CENTRAL ROAD FUND ACT, 2000

Section 10 of the Central Road Fund Act, 2000, being amended so

as to substitute clause (viii) of subsection (1) to provide a formula

for redistribution of the cess for different purposes. THE PREVENTION OF MONEY LAUNDERING ACT,

2002, THE SMUGGLERS AND FOREIGN EXCHANGE

MANIPULATORS (FORFEITURE OF PROPERTY ACT,

1976 and NARCOTICS DRUGS AND PSYCHOTROPIC

SUBSTANCES ACT, 1985

The three Tribunals established under these Acts being merged

and being provided that Appellate Tribunal established under the

Smugglers and Foreign Exchange Manipulators (Forfeiture of

Property) Act, 1976 shall be the appellate Tribunal for hearing the

appeals against the orders made under all these three Acts. THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999

Section 14A in the Foreign Exchange Management Act [FEMA],

1999 being inserted to incorporate provisions contained under the

Second Schedule appended to the Income-tax Act, 1961, so as to

empower an officer not below the rank of Assistant Director to

recover arrears of penalty under the FEMA 1999 by exercising the

powers conferred under the Income-tax Act, 1961.

MISCELLANEOUS

Various notifications pertaining to Advance Licence and Duty

Free Import Authorization Schemes being amended to

retrospectively correct the reference to “section 8” of the Customs

Tariff Act, 1975 in such notifications to “section 8B” so as to

75

clearly provide that exemption from safeguard duty under section

8B is available under these notifications on imports under

Advance Licence and Duty Free Import Authorization Schemes.

RULES & NOTIFICATIONS UNDER THE CUSTOMS ACT,

1962

Existing Baggage Rules, 1998 being substituted with Baggage

Rules, 2016 so as to simplify and rationalize multiple slabs of duty

free allowance available to various categories of passengers.

Customs (Import of Goods at Concessional Rate of Duty for

Manufacture of Excisable Goods) Rules, 1996 being simplified.

REGULATIONS MADE UNDER THE CUSTOMS ACT,

1962

The Customs Baggage Declaration Regulations, 2013 being

amended to provide that baggage declaration will have to be filed

only by passengers who carry dutiable or prohibited goods.

 

 

Exemption of Excise duty of BCD and CVD on power project

No refund of SAD under notification No.102/2007-Customs dated 14.09.2007

Tax changes for specified goods imported for petroleum exploration under Indian Budget 2016-17

Direct imports by Government will attract customs duties

Exemption for disposable sterilized dialyzer and micro barrier of artificial kidney

Excise duty CENVAT is being levied on articles of jewellery under Indian Budget 2016-17

Excise duty CENVAT for readymade garments and made up articles of textiles

Tax changes in sectors of Agriculture, rural economy and environment under Indian Budget 2016-17

Indian Budget 2016-17 Tax proposals for Pensioners

Domestic incentives in addition to Make In India campaign, Indian Budget 2016-17

Nil duty for Braille paper as per Budget 2016-17

Reduces rate of refrigerated containers, Indian Budget 2016-17

Exemption of ST for General Insurance services, Indian Budget 2016-17

Service Tax changes for DUGKY as per Indian Budget 2016-17

Income tax benefits to securitization trusts including trusts of ARCs as per Budget 2016-17

Indian Budget 2016-17, benefits to researchers for patent

Import duty changes for electrical machinery, television, telecommunication equipment under HS code 85 as per Indian Budget 2016-17

Government tax tariff changes for import of machinery, mechanical appliances, boilers under Indian Budget 2016-17

Latest Indian budget changes for import of miscellaneous articles of base metal under HS code 83

Latest Indian budget changes for import of miscellaneous articles of base metal under HS code 83

Import tax tariff changes for spoon, tools, implements, cutlery forks as per Indian Union Budget 2016-17

Import tariff changes for carnet articles and other base metals under HS code 81 as per new Indian budget

Latest Indian budget changes for import of tin and tin articles under HS code 80

Duty tariff changes for import of zinc and zinc articles as per latest Indian Budget 2016-17

Import tax tariff changes for lead and lead articles as per Indian Union Budget 2016-17

Import duty changes for aluminum and aluminum articles under HS code 76 as per Indian Budget 2016-17

Comments

 

Discussion Forum


You can also share your thoughts about this article.
Any one can answer on question posted by Readers



  Your Name - required  
  Email ID will not be published - Required  
   
(Enter above code)  


 

   
Track Your Air Shipment Here 
Track Your Sea Shipment Here 
   
   
   
   
   
 
Most Recent Articles
» Service Tax changes, Government notification,Indian Budget 2017-18
» Notification on excise tax tariff rate changes under Budget 2017-18 India
» Notification on Import Customs duty rate changes India Budget 2017-18
» Hike in rate of duty for cigarettes, Indian Budget 2017-18
» Difference between Personal Income Tax rates 2016-17 and 2017-18 in India
» Income Tax Act Section 56 as per Budget 2017-18
» Goods And Services Tax, Indian Budget 2017-18
» Personal Income-Tax, Indian Budget 2017-18
» Scheme for Ease Of Doing Business, Indian Budget 2017-18
» Scheme for Transparency In Electoral Funding, Indian Budget 2017-18
  Import  |
  Export  |
  For Beginners  |
  Track Your Shipment  |
  Abbreviations  |
  Inco Terms  |
  Export India  |
  Import India  |
  Import US  |
  Export Import Terms  |
  Export incentives and benefits  |
  FAQ  |
  Bill of Lading  |
  Foreign Trade Policy 2015-20  |
  Start your own Export Import Business  |
  HS code  |
  Indian Budget 2014-15  |
  Banking (India)  |
  India Trade Classification (ITC)  |
  How to Import  |
  Containers  |
  Indian Budget 2015-16  |
  Income Tax  |
  Forms  |
  How to export  |
  Foreign Trade Policy 2014-19  |
  Freight forwarding Terms  |
  Business Terms  |
  Terms in Banking  |
  Shipping Terms  |
  Import Terms  |
  Export Terms  |
  Customs Terms  |
  Excise Terms  |
  International Business Terms  |
  Notifications  |
  GST  |
  SVB  |
  Indian Budget 2016-17  |
  Income Tax  |
  HS Codes  |
  GST Law  |
  GST,FAQ  |
  HSN Codes for GST  |
  SAC for GST  |
  Indian Budget 2017-18  |
  Service Tax 2017  |
  Me  |  Privacy policy  |  Terms and conditions  
Designed and Hosted by Adsin Media