Union Budget 2015-16: Paving the way for sustainable growth

Finance Minister Arun Jaitley on Feb 28 proposed no changes in personal income-tax rates for 2015-16 but extended benefits to middle-class by increasing the limit of deduction on health insurance premium from Rs 15,000 to Rs 20,000, while presenting the Budget 2015-16.

For senior citizens, it will go up from Rs 20,000 to Rs 30,000 and for those above 80 years, not covered by health insurance, deduction of Rs 30,000 towards expenditure on medical treatment will be allowed.

Also Read: Budget 2015 Overview: No change in rate of personal tax; mediclaim, pension exemption limits hiked

Combining these incentives with others including an enhanced deduction of Rs 1.5 lakh on account of contribution to pension fund as against Rs 1 lakh now, the relief of tax deductions under various sections, including 80C and 80CCD, go up to Rs 4.42 lakh.

The transport allowance exemption has been doubled to Rs 1,600.

In the first full-year Budget of the NDA government that shunned populism, he announced a 5 percent reduction in corporate tax over next four years, abolished wealth tax and replaced it with an additional 2 percent surcharge on super-rich individuals, while increasing service tax that will result in higher cost of variety of services.

With the levy of 2 percent additional surcharge, the total surcharge on 'super-rich' individuals with an income of over Rs 1 crore, becomes 12 percent as against 10 percent now. In the case of domestic companies having income between Rs 1 crore and Rs 10 crore, it will be 7 per cent and 12 percent for firms with income above Rs 10 crore.

Also Read: Budget 2015: Corporate tax to be reduced; GST to be implemented

Presenting the Budget in the Lok Sabha, Jaitley announced fresh measures to tackle black money, including a comprehensive legislation that will make concealment of income and assets abroad a punishment with rigorous imprisonment of 10 years.

Also Read: Budget 2015: Finance Minister’s proposals to curb black money

In a bid to encourage foreign investors, Jaitley announced deferring of the implementation of controversial GAAR (General Anti-Avoidance Rules) by 2 years.

Budget 2015-16: Highlights

1. Budget 2015-16 marks the beginning of co-operative federalism and empowerment of the states.
2. Several new schemes announced.
3. Micro Units Development Refinance Agency (MUDRA) bank to refinance microfinance institutions.
4. Pradhan Mantri Suraksha Bima Yojana to cover accidental death risk of rs. 2 lakh for just rs. 12 per year premium.
5. Atal Pension Yojana for defined pension, government to contribute 50% of the premium.
6. Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death risk.
7. Proposal to create senior citizen welfare fund.
8. National Investment and Infrastructure Fund proposed.
9. Tax-free infrastructure bonds for projects in rail, road and irrigation sectors.
10. Setu(self-employment and talent utilization) mechanism to support start-up businesses.
11. 5 new ultra mega power projects to be set up.
12. Gold monetization scheme to replace present gold deposit and gold metal loan schemes.
13. Another rs. 1,000 crore for Nirbhaya fund.
14. New institutions including AIIMS, IIT and IIM to be set up.
15. Total expenditure estimated to be rs. 17,77,477 crore; fiscal deficit to be 3.9% of GDP.
16. Vision for stable taxation policy and a non-adversarial tax administration.
17. Fight against the scourge of black money to be taken forward.
18. Efforts on various fronts to implement GST from next year.
19. No change in the rate of personal income tax.
20. Proposal to reduce the corporate tax from 30% to 25% over the next four years, starting from next financial year.
21. Rationalization and removal of various tax exemptions.
22. Incentives to reduce tax disputes and improve administration.
23. Exemption to individual taxpayers to continue to facilitate savings.