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Moneymindz Budget Review on 2017-18

2017-budget

MoneyMindz.com India’s First Free Online / On-call Financial Advisory

After the success of de-monetization, India has revamped itself from the hurdles and stood firm when Mr. Jaitley announced the budget today. In the last two and half years administration has moved from discretionary, favoritism based to system and transparency based. Inflation brought under control. CPI-based inflation declined from 6% in July 2016 to 3.4% in December, 2016. Economy has moved on a high growth path. India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17.

DEMONITISATION:

 It is the most bold and decisive measure made by our honorable Prime Minister on November to curb tax evasion and parallel economy. The main indication for the govt. was to resolve some issues like eliminating corruption, black money, counterfeits currency and terror funding. There might be some temporary drop in economic activity (if any). This step will help in generating long term benefits including reduced corruption. Greater Digitalization and increasing flow of financial savings are taken into concern. The pace of Re-monetization has picked up and started accelerating which will soon reach a level of comfort for our people. Assistance to backward classes and introduction to digital transactions in rural areas has been introduced.
 

SOME OF THE KEY POINTS OF THE BUDGET:

1. PERSONAL INCOME-TAX:

  1. Income tax rate cut to 5% for individuals having income between 2.5 lakh and 5 lakh.
  2. 10% surcharges on individual income above 50 lakh and up to 1 crore to make up for 15000 crore loss of due to personal I-T rate.
  3. 15% surcharges on income above 1 crore to continue.
  4. Direct tax collection not commensurate with income and expenditure pattern.

2. GOODS AND SERVICES TAX:

  1. The GST Council has finalized its recommendations on almost all the issues based on consensus on the basis of 9 meetings held.
  2. Preparation of IT system for GST is in an ongoing process.
  3. Panoptic reach-out efforts to trade and industry for GST will start from 1st April, 2017 to make people aware of the new taxation system.

3. PROMOTING DIGITAL ECONOMY:

  1. Under the scheme of presumptive income for small and medium tax payers whose turnover is up to 2 Crores, the present, 8% of their turnover which is counted as presumptive income is reduced to 6% in respect of turnover which is by non-cash means.
  2. No transaction above 3 lakh would be permitted in cash subject to certain exceptions.
  3. Miniaturized POS card reader for m-POS (other than mobile phones or tablet computers), micro ATM standards version 1.5.1, Finger Print Readers/ Scanners and Iris Scanners and on their parts and components for manufacture of such devices to be exempt from BCD, Excise/CV duty and SAD.
  4. Nearly 125 lakh people have adopted the BHIM app till now. The Government will launch two new schemes to promote the usage of BHIM: they are A) Referral Bonus Scheme for individuals and B) Cashback Scheme for Merchants.
  5. Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly
  6. 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
  7. A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration.
  8. 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.

 4. HOUSING AND REAL ESTATE SECTOR:

  1. Under the scheme for profit-linked income tax deduction for promotion of affordable housing, carpet area will be taken into count instead of built up area measuring 30 and 60 Sq.mt.
  2. The 30 Sq.mt. limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 Sq.mt. will apply
  3. For builders for whom constructed buildings are stock-in-trade, tax on notional rental income will only apply after one year of the end of the year in which completion certificate is received.
  4. Exemption from capital gain tax for persons holding land on 2.6.2014, the date on which the State of Andhra Pradesh was reorganized, and whose land is being pooled for creation of capital city of Andhra Pradesh under the Government scheme.

5. FINANCIAL SECTOR:

  1. Foreign Investment Promotion Board to be abolished in 2017-18 and further relaxation of FDI policy is under consideration.
  2. Bill relating to curtail the menace of illicit deposit schemes will be introduced. A bill relating to resolution of financial firms will be introduced in the current Budget Session of Parliament. This will contribute to stability and resilience of our financial system.
  3. Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalization of FDI policy is under consideration.
  4. An expert committee will be constituted to study and promote creation of an operational and legal framework to integrate spot market and derivatives market in the agricultural sector, for commodities trading. e- NAM to be an integral part of the framework.
  5. Bill relating to curtail the menace of illicit deposit schemes will be introduced. A bill relating to resolution of financial firms will be introduced in the current Budget Session of Parliament. This will contribute to stability and resilience of our financial system.
  6. A mechanism to streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contracts will be introduced as an amendment to the Arbitration and Conciliation Act 1996.
  7. A Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established.

6. FARMERS:

  1. Target for agricultural credit in 2017-18 has been fixed at a record level of 10 lakh Crores.
  2. Farmers will also benefit from 60 days’ interest waiver announced on 31 Dec 2016.
  3. Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ with an initial corpus of ` 5,000 Crores.
  4. Dairy Processing and Infrastructure Development Fund to be set up in NABARD with a corpus of ` 2000 Crores and will be increased to ` 8000 Crores over 3 years.
  5. To ensure flow of credit to small farmers, Government to support NABARD for computerisation and integration of all 63,000 functional Primary Agriculture Credit Societies with the Core Banking System of District Central Cooperative Banks. This will be done in 3 years at an estimated cost of ` 1,900 crores.
  6. Coverage under Fasal Bima Yojana scheme will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19 for which a budget provision of ` 9000 crore has been made.

7. YOUTH:

  1. National Testing Agency to be set-up as an autonomous and self-sustained premier testing organization to conduct all entrance examinations for higher education institutions.
  2. Pradhan Mantri Kaushal Kendras to be extended to more than 600 districts across the country. 100 India International Skills Centers will be established across the country.
  3. Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) to be launched at a cost of ` 4000 crores. SANKALP will provide market relevant training to 3.5 crore youth.
  4. Next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of ` 2,200 crores
  5. A scheme for creating employment in the leather and footwear industries along the lines in Textiles Sector to be launched.
  6. Incredible India 2.0 Campaign will be launched across the world to promote tourism and employment.

8. INFRASTRUCTURE

  1. For transportation sector as a whole, including rail, roads, shipping, provision of 2,41,387 crores has been made in 2017-18.
  2. For 2017-18, the total capital and development expenditure of Railways has been pegged at ` 1,31,000 crores. This includes ` 55,000 crores provided by the Government
  3. For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with a corpus of ` 1 lakh crores over a period of 5 years
  4. Unmanned level crossings on Broad Gauge lines will be eliminated by 2020
  5. In the next 3 years, the throughput is proposed to be enhanced by 10%. This will be done through modernization and up-gradation of identified corridors.
  6. Railway lines of 3,500 kms will be commissioned in 2017-18. During 2017-18, at least 25 stations are expected to be awarded for station redevelopment.
  7. 500 stations will be made differently abled friendly by providing lifts and escalators.
  8. It is proposed to feed about 7,000 stations with solar power in the medium term
  9. SMS based Clean My Coach Service has been started
  10. ‘Coach Mitra’, a single window interface, to register all coach related complaints and requirements to be launched.
  11. By 2019, all coaches of Indian Railways will be fitted with bio toilets. Tariffs of Railways would be fixed, taking into consideration costs, quality of service and competition from other forms of transport.
  12. A new Metro Rail Policy will be announced with focus on innovative models of implementation and financing, as well as standardization and indigenization of hardware and software

 More Key Features:

  • Model shops and establishment bill to open up additional opportunities for employment of women.
  • New metro rail policy to be unveiled.
  • Service charge on e-tickets booked through IRCTC will be withdrawn.
  • Total expenditure in FY18 at 21.47 lakh crore.
  • Excise duty on pan masala containing tobacco to 12% from 10%.
  • Government to undertake reforms in UGC, give autonomy to colleges and institutions.
  • Maximum cash donation any party can receive will be 2000 from one source.
  • 500 stations will be differently abled by providing lifts and escalators.

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