New Delhi: Tax payers could save on their salaries and consumer goods like TVs, soap, footwear, processed food and computers will cost less as the Rs.18-lakh crore ($300-billion) maiden budget of Prime Minister Narendra Modi's government promised to arrest price rise, boost investor mood, cut expenditure and restore India's growth to 7-8 percent in three years. Finance Minister Arun Jaitley on Thursday doled out income tax sops by raising threshold exemption and investment limits by Rs 50,000, raised duties on cigarettes, tobacco, pan-masala and aerated drinks, widened service tax base and announced measures to spur growth manufacturing and revive investor confidence. Without tinkering with the tax rates and allowing continuing 3 per cent education cess on all tax payers, he provided encouraging signals for domestic and foreign investors offering not to "ordinarily" bring about any tax change retrospectively which creates a fresh liability.
Jaitley said he has taken important steps that were necessary but not taken in the last 10 years to put the economy back on track. The budget for 2014-15 raised the threshold income tax exemption limit from Rs 2 lakh to Rs 2.5 lakh and investments under 80C by Rs 50,000 to Rs 1.5 lakh, and raised interest exemption on housing loan on self-occupied property by Rs 50,000 to Rs 2 lakh. The exemption limit for senior citizens has been raised from Rs 2.5 lakh to Rs 3 lakh. The tax sops could leave up to Rs 40,000 in the hands of assessees. However, there is no change in rate of surcharge either for the corporate or individuals and the education cess of three per cent will also continue. Baggage allowance for passengers returning from abroad has been raised from Rs 35,000 to Rs 45,000.
The Budget makes cigarettes, tobacco, pan-masala, gutka and cold-drinks costlier by raising excise duties while CRT TVs used by poor, LCD and LED TV panels of less than 19-inches will be cheaper through cuts in customs duties. Direct tax proposals in the budget involve a sacrifice of Rs 22,200 crore while indirect tax proposals will yield a revenue of Rs 7,525 crore. Assuaging sentiments of foreign investors deterred by the change brought in 2012, Jaitley announced that all fresh cases arising out of retrospective amendments of 2012 in respect of indirect transfers will be scrutinised by a high level committee to be constituted by the CBDT before any action is initiated.
"I hope the investor community both within India and abroad will repose confidence on our stated position and participate in the Indian growth story with renewed vigour," he said, offering a stable and predictable tax regime. He also said the government will revive the revised Direct Taxes Code (DTC) taking into account the comments of stakeholders. The Service Tax net has been widened by inclusion of radio-cabs and online ads to mop up additional revenue by pruning the negative list. The Finance Minister said government will promote FDI by raising the cap to 49 per cent in Defence and Insurance with full Indian management and control.
The Budget raises defence spending by 12.5 per cent to Rs 2.29 lakh crore. Non-plan expenditure for the current year has been estimated at Rs 12,19,892 crore with additional amount for fertiliser subsidy and capital expenditure for armed forces. The total expenditure estimates stand at Rs 17,94,892 crore. Gross tax receipts will be Rs 13,64,524 crore, of which Centre's share will Rs 9,77,258 crore. Non-tax revenues for current financial year will be Rs 2,12,505 crore and capital receipts other than borrowings will be Rs 73,952 crore. The Budget pegs the fiscal deficit for the current fiscal at 4.1 per cent of the GDP and 3.6 and 3 per cent in 2015-16 and 2016-17 respectively. Jaitley said he began working with constraints based on the targets set by his predecessor. In 45 days, this is the best he could do, he said.
