NEW DELHI: Finance minister Arun Jaitley on Saturday abolished the wealth tax on super-rich with an income of Rs 1 crore or more per year and replaced it with a surcharge of 2%. He also proposed to cut corporate tax from 30 % to 25% over next the next four years.
He proposed no change in personal Income Tax. Health Insurance Premium deduction hiked from Rs 15,000 to Rs 25,000; for senior citizens to Rs 30,000.
Jaitley presented a Union Budget aimed at high growth, saying the pace of cutting the fiscal deficit would slow as he seeks to boost investment and ensure that ordinary people benefit.
Jaitley, delivering his first full-year budget since Prime Minister Narendra Modi’s landslide election victory last May, said growth would accelerate to between 8-8.5% in the fiscal year starting in April.
“India is about to take off,” Jaitley, 62, said early in his speech to lawmakers. “The world is predicting that this is India’s chance to fly.”
Jaitley said he would stand by the fiscal deficit target for the 2014-15 fiscal year, which ends March 31, of 4.1% of gross domestic product.
But he pushed back by a year his medium-term goal of cutting the deficit to 3% of gross domestic product. In 2015-16 the deficit will be 3.9% of GDP, up from the 3.6% target inherited from the last government.
Jaitley said it was time for a “quantum leap” on reforms and that incremental change “is not going to take us anywhere”, building on expectations that the 2015-16 budget would deliver big-bang reforms.
The minister said the government would seek to boost the efficiency of the MNREGA scheme. “Rs 34,699 crore is allocated for MNREGA scheme,” he said.
Jaitley earlier said the state of the country’s economy was better placed today with its credibility re-established by a series of measures taken by his government.
“I am presenting the union budget in an economic environment which is far more positive than in the recent past. While major economies of the world face difficulties, India is poised for higher growth trajectory,” Jaitley said as he started his budget speech in the Lok Sabha.
“The real GDP growth is estimated at 7.5% for this fiscal, making India the fastest-growing large economy of the world,” said Jaitley, watched keenly by Prime Minister Narendra Modi, seated next to him.
“We inherited a sentiment of doom and gloom and have come a long way by proper actions,” said the finance minister, adding: “Our objective is to improve quality of life and to pass benefits to common man.”
He also said a double-digit growth was now feasible. “Our objective is to conquer inflation. It will be only 5% by end of year.”
Following are the highlights of the Union Budget 2015-16:
* No change in personal Income Tax
* Health Insurance Premium deduction hiked from Rs 15,000
to Rs 25,000; for senior citizens to Rs 30,000
* Transport allowance exemption hiked to Rs 1,600, from Rs
800 per month
* Additional 2% surcharge on people earning over Rs 1 cr;
to fetch Rs 9,000 cr
* Wealth tax abolished
* Direct Taxes Code (DTC) dropped
* Rs 50,000 deduction for contribution to New Pension
Scheme
* To lower Corporate Tax to 25% over next four years
* GAAR implementation deferred by 2 years to April 2017
* Service Tax rate hiked to 14%, from 12.36%
* Tax free bonds for roads, railways, irrigation projects
* 2015-16 growth between 8-8.5%, double digit growth
feasible
* Retail inflation close to 5% by March, room for monetary
policy easing
* To achieve fiscal deficit of 3% of GDP by 2017-18
* Fiscal Deficit target 3.9% in 2015-16, 3.5% in 2016-17
* Revenue Deficit to be 2.8% in 2015-16
* Current Account Deficit for 2014-15 to be below 1.3% of
GDP
* To introduce comprehensive law to deal with black money
* Benami property transaction bill to tackle black money
transaction in real estate soon
* 100% deduction for contribution to Swachh Bharat, Clean
Ganga projects
* GST to be put in place by April 1, 2016
* Internationally competitive direct tax regime to be put
in place to incentivise saving
* Incentivise use of credit, debit cards; disincentivise
cash transaction to curb black money.
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