Highlights from India budget 2015/16 that begins on April 1

FISCAL DEFICIT

Fiscal deficit seen at 3.9 percent of GDP in 2015/16
Will meet the challenging fiscal target of 4.1 percent of GDP
Remain committed to meeting medium term fiscal deficit target of 3 percent of GDP
Current account deficit below 1.3 percent of GDP
Jaitley says have to keep fiscal discipline in mind despite need for higher investment

GROWTH

INFLATION

Expects consumer inflation to remain close to 5 percent by March, opening room for more monetary policy easing
Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 percent
"One of the achievements of my government has been to conquer inflation. This decline in my view represents a structural shift."

REVENUES

Revenue deficit seen at 2.8 percent of GDP Non tax revenue seen at 2.21 trillion rupees
Agricultural incomes are under stress
Net receipts under market stabilisation scheme estimated at 200 billion rupees

DISINVESTMENT

Government targets 410 billion rupees ($6.7 billion) from stake sales in companies in 2015/16
Total stake sale in 2015/16 seen at 695 billion rupees
Sets stake sale target for 2016/17 at 550 billion rupees
Revises down stake sale target for 2014/15 to 313.5 billion rupees

MARKET REFORMS

Propose to merge commodities regulator with SEBI
To bring a new bankruptcy code Jaitley says will move to amend the RBI act this year, and provide for a monetary policy committee
To set up public debt management agency
Proposes to introduce a public contract resolution of disputes bill
To establish an autonomous bank board bureau to improve management of public sector banks

POLICY REFORMS

To enact a comprehensive new law on black money
Propose to create a universal social security system for all Indians
To launch a national skills mission soon to enhance employability of rural youth
To raise visa-on-arrival facility to 150 countries from 43
Allocates 346.99 billion rupees for rural employment guarantee scheme
Raises threshold for application of transfer pricing rules to 200 million rupees from current 50 million rupees

BORROWING

Gross market borrowing seen at 6 trillion rupees Net market borrowing seen at 4.56 trillion rupees

GENERAL ANTI-AVOIDANCE RULES (GAAR)

TAXATION

To abolish wealth tax Replaces wealth tax with additional 2 pct surcharge on super rich
Proposes to cut to 25 percent corporate tax over next four years
Corporate tax of 30 percent is uncompetitive
Net gain from tax proposals seen at 150.68 billion rupees
Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.
Proposes to rationalise capital gains tax regime for real estate investment trusts
Expects to implement goods and services tax by April 2016
To reduce custom duty on 22 items
Basic custom duty on commercial vehicle doubled to 20 percent
Proposes to increase service tax rate and education cess to 14 percent from 12.36 percent
Plans to introduce direct tax regime that is internationally competitive on rates without exemptions
Exemptions for individual tax payers to continue
To enact tough penalties for tax evasion in new bill
Tax dept to clarify indirect transfer of assets and dividend paid by foreign firms

IMPORT TAX

Import tax on iron and steel increased to 15 percent from 10 percent Import tax on metallurgical coke increased to 5 percent from 2.5 percent

INFRASTRUCTURE

Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year
Plans to set up national investment infrastructure fund
Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects
Proposes 5 "ultra mega" power projects for 4,000 MW each
Second unit of Kudankulam nuclear power station to be commissioned
Will need to build additional 100,000 km of road
Ports in public sector will be encouraged to corporatise under Companies Act

EXPENDITURE

Plan expenditure estimated at about 4.65 trillion rupees
Non-plan expenditure seen at about 13.12 trillion rupees
Allocates 2.46 trillion rupees for defence spending
Allocates 331.5 billion rupees for health sector
If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion rupees

INVESTMENT

Government to provide 79.4 billion rupees capital infusion to state-run banks
Propose to do away with different types of foreign investment caps and replace them with composite caps
To allow foreign investment in alternative investment funds
Public investment needed to catalyse investment

GOLD

CIGARETTES

Raises excise duty on cigarettes by 25 percent for cigarettes of length not exceeding 65 mm
Raises excise duty by 15 percent for cigarettes of other lengths

SUBSIDIES

FINANCE MINISTER'S COMMENTS

"We inherited a sentiment of doom and gloom. The investment community had almost written us off. We have come a long way since then."
"We have turned around the economy, dramatically restoring macroeconomic stability and creating the conditions for sustainable poverty elimination, job creation, durable double digit economic growth."
"While being mindful of the challenges ... this gives us reason to feel optimistic."
"Domestic and international investors are seeing us with renewed interest and hope."

MODI ON TWITTER

2015 Budget will further reignite our growth engine, signalling the dawn of a prosperous future.
Budget is investment friendly & removes all doubts on tax issues. It assures investors that we have a stable, predictable & fair tax system.

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