Sunday, March 1, 2015

Annual Budget 2015: Highlights and Review

28th February marked the Annual Budget presentation in the Lok Sabha for the year 2015.

During it's 10 month tenure, Modi government has shown some tremendous progress towards their promises and it can be safely said that we can expect more out of them in coming years. Well budget was initiated by our Finance Minister, Mr. Arun Jaitely, by highlighting some of such achievements.
They were mainly related to low inflation rate, strengthening of INR and remarkable GDP growth.

Ambitious projects such as Housing for all were talked about which are to be achieved by the year 2022, i.e. 'The Amrut Mahotsav'- 75th year of Independence. They also included electrification of villages,providing medical services, availability of schools, communication connectivity and so on. It is a vison for 'Team India', led by our PM.
Arun Jaitely also provided the information about various projects and schemes that the government would like to initiate for the welfare of society. They were related to 'Swachh Bharat Abhiyaan', 'Jan Surakasha' and some new schemes such as 'MUDRA Banks' for SC/ST/OBC.
However I wont touch this topic in detail, as second part of the budget holds more importance from our point of view.

Following are the major tax reforms brought in by the budget -

  • Introduction of GST from 1st April, 2016.
  • Reduction of corporate tax to 25% within 4 yrs.
  • Service tax rate to be 14% instead of 12.36%.
  • Dedcution u/s 80D (Health Insurance Premium) can be availed upto Rs. 25.000 for normal citizens and Rs. 30,000 for senior citizens.
  • Wealth Tax to be abolished.
  • However, additional 2% surcharge to be charged on individuals with income of Rs. 1crore or more.
  • 100% deduction available for contribution towards Clean Ganga Projects and Swachh Bharat Abhiyaan.
  • Transport allowance exemption raised to Rs. 1600 p.m.
  • Additional deduction of Rs. 50,000 u/s 80CCD (Pension Scheme). This deduction is available over and above the Rs. 1,50,000 deduction for section 80C.
  • PAN mandatory for transaction over Rs 1,00,000.
  • General Anti Avoidance Rule (GAAR) to be applied from April 2017.
  • Very Senior Citizens to get exemption of Rs. 30,000, even if they aren't paying Health Insurance Premium u/s 80D.
  • Additional deduction of Rs. 25,000 for differently-abled person.
  • Deduction on contribution to Pension Fund and New Pension Fund increased to Rs. 1,50,000.
  • Increase in Custom Duty on certain products.( Metallergical Coke, Iron&Steel, Commercial Vehicle)
  • New service tax exemptions (Preconditioning of fruits & vegetables, Life Insurance, Ambulance Service, Admission to zoo, national park , transport of goods for export)
  • Contributions to Sukanya Samridhi Scheme to be tax free.
These were the main highlights of our Budget 2015

I personally feel that this is an excellent budget, though from an individual perspective it may not seem so, but it will increase our country's global competitiveness. Major issues of individuals have been addressed to and a balanced approach towards development of all segments of our economy is being adopted. 
However, I also feel that such amount of amendments in service tax weren't necessary, considering the fact that we will have GST from the very next year.
Many people are complaining  about no changes in Income tax slab rates. But since we already got them in our last budget, it was evident that they shall remain unchanged after this budget.
Plus efforts against black money were commendable, which if applied can boost our economy.
Also, budget addressed needs of SC/ST/OBC, senior citizens, specially-abled people and very senior citizens, whose needs are much important to bring about social harmony in our society. As earlier mentioned, this budget did indeed try too look into every need of ours.

Overall, I feel that budget was perfectly designed to put India right in the race with leading nation. As I said earlier, we have to look beyond our small personal effects of budget and focus on the bigger picture. Of course benefits of having black money back in  our nation will overshadow the 1.64% increase in service tax rates. I have really high expectations from implementation of the budget, and hopefully Modi government will deliver what it has promised.

Till then, let's keep our hopes high, and appreciate the positive aspects of this budget.

Reviews are most welcomed.

-Shubham Singhal

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