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• End-to-end integrated transport solutions for select commodities proposed
• Trade Infrastructure for Export Scheme (TIES) to be launched
The Union Minister for Finance and Corporate Affairs, Mr Arun Jaitley, while presenting the General Budget 2017-18 in Parliament on Wednesday, said that this Budget is the First combined Budget of Independent India that includes the Railways. He said that India is now in a position to synergise the investments in railways, roads, waterways and civil aviation.
For 2017-18, the total capital and development expenditure on Railways has been pegged at Rs 1,31,000 crore. This includes Rs 55,000 crore provided by the government, the Finance Minister added.
The Finance Minister gave details about proposed steps to be taken by the government to help Railways stay competitive vis-à-vis other modes of transportation dominated by the private sector and retain their position of pre-eminence. Key among these was end-to-end integrated transport solutions for select commodities, to be implemented through partnership with logistics players, who would provide both front and back-end connectivity. Rolling stocks and practices will be customised to transport perishable goods, especially agricultural products.
Record allocation for infrastructure development
Mr Jaitley said that the total allocation for infrastructure development in 2017-18 stands at Rs 3,96,135 crore. In the road sector, the Budget allocation has been stepped up for Highways from Rs 57,976 crore in BE 2016-17 to Rs 64,900 crores in 2017-18. Further, 2,000 km of coastal connectivity roads have been identified for construction and development to facilitate better connectivity with ports and remote villages.
The Minister also informed that a specific programme for development of multimodal logistics parks, together with multimodal transport facilities, will be drawn up and implemented to make the economy more competitive.
Speaking on upgradation of Civil Aviation infrastructure, he said that select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode. Further, the Airports Authority of India Act will be amended to enable effective monetisation of land assets. The resources so raised will be utilised for airport upgradation. For the transportation sector as a whole, including rail, roads, shipping, the Budget provides Rs 2,41,387 crore in 2017-18. This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities, the Finance Minister said.
He disclosed that the government is creating an ecosystem to make India a global hub for electronics manufacturing. Over 250 investment proposals for electronics manufacturing have been received in the last 2 years, totalling an investment of Rs 1.26 lakh crore. A number of global leaders and mobile manufacturers have set up production facilities in India, hence the Finance Minister said that allocation for incentive schemes like M-SIPS and EDF have been exponentially increased to an all-time high of Rs 745 crore in 2017-18.
Trade Infrastructure for Export Scheme (TIES)
Further, a new and restructured Central scheme, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18 to focus on India’s export infrastructure in a competitive world, it was pointed out.
This is seen as a move aimed at reducing the transaction costs, especially for the exim trade. Inadequate infrastructure pushes up transactions costs, impacting the competitiveness of Indian goods in the global markets. The scheme aims at creating modern infrastructure like last mile connectivity to ports, testing labs and certification centres.
String of measures towards Ease of Doing Business
Mr Jaitley announced a slew of reliefs in the government’s continuing policy towards providing an environment of “Ease of Doing Business”.
He raised the threshold limit for audit of business entities that opt for presumptive income scheme from Rs 1 crore to Rs 2 crore. Similarly, the threshold for the maintenance of books for individuals and HUF is proposed to be increased from turnover of Rs 10 lakh to Rs 25 lakh or income from Rs 1.2 lakh to Rs 2.5 lakh.
He further said that the Foreign Portfolio Investor (FPI) Category I & II will be exempt from indirect transfer provision under the IT Act. Besides, indirect transfer provision shall not apply in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India. This will remove apprehensions over taxation upon transfer of stake of investors of India-based funds located abroad but investing in India-based companies, he added.
In order to allow people to claim refunds expeditiously, the Finance Minister said that the time period for revising a tax return is being reduced to 12 months from completion of financial year, at par with the time period for filing of return. Also, the time for completion of scrutiny assessments is being compressed further from 21 months to 18 months for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and thereafter.
The Finance Minister proposed to restrict the scope of domestic transfer pricing only if one of the entities involved in related party transaction enjoys specified profit-linked deduction. He said this will reduce the compliance burden for domestic companies since the number of entities being covered under domestic pricing had gone up substantially resulting in longer scrutiny.
Tax rate reduced
The Finance Minister reduced the rate of taxation from the existing 10 per cent to 5 per cent for individual assessees between income of Rs 2.5 lakh to Rs 5 lakh. This would reduce the tax liability of all persons below Rs 5 lakh income either to zero (with rebate) or 50 per cent of their existing liability.
He said that the present burden of taxation is mainly on honest taxpayers and salaried employees who are showing their income correctly. Therefore, post-demonetisation, there is a legitimate expectation of this class of people to reduce their burden of taxation. He further said that if a nominal rate of taxation is kept for lower slab, many more people will prefer to come within the tax net.
A surcharge of 10 per cent of tax payable on categories of individuals whose annual taxable income is between Rs 50 lakh and Rs 1 crore has been proposed. This is likely to give additional revenue of Rs 2,700 crore.
Major push to digital economy; no cash transaction above Rs 3 lakh
In a bid to give a push to the digital economy and weed out corruption and black money, the Finance Minister said that the government has decided that no transaction above Rs 3 lakh will be permitted in cash.
The Finance Minister said that the government will launch two new schemes to promote the usage of BHIM App, i.e. Referral Bonus Scheme for individuals and a Cashback Scheme for merchants. BHIM App was launched to promote digital transactions and will unleash the power of mobile phones for digital payments and financial inclusion.
He also announced that Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly. This will be specifically beneficial for those who do not have debit cards, mobile wallets and mobile phones. A Mission will be set-up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards. Banks have targeted to introduce additional 10 lakh new PoS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based PoS by September 2017.
India is now on the cusp of a massive digital revolution, the Finance Minister stressed.
In a bid to incentivise digital transactions, he proposed that the presumptive income tax for small and medium taxpayers whose turnover is up to Rs 2 crore will be reduced from the present 8 per cent of the turnover, which is counted as presumptive income, to 6 per cent in respect of turnover which is received by non-cash means. This benefit will be applicable for transactions undertaken in the current year also, he added.
To strengthen and regulate the digital economy, the Finance Minister has proposed to create a Payments Regulatory Board in the Reserve Bank of India (RBI) by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems. The Committee on Digital Payments constituted by the Department of Economic Affairs has recommended structural reforms in the payment ecosystem, including amendments to the Payment and Settlement Systems Act, 2007. The government will undertake a comprehensive review of this Act and bring about appropriate amendments, the Finance Minister added.
Reduction in Customs & Excise for renewable energy sector
Substantial relief was announced in Customs and Excise duties for the renewable energy sector and for manufacture of cashless transaction devices.
The Finance Minister has proposed zero Customs and Excise duties on certain items related to cashless transaction devices to promote domestic manufacturing of these products.
Proposals for reduction in Customs duty on inputs and raw materials to reduce costs and for incentivising domestic value addition under Make in India have been submitted for certain items like liquefied natural gas, nickel, vegetable tanning extracts and certain capital goods.
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