Budget 2015: Corporate Tax to be Cut, GAAR Deferred; Sensex Soars Again

Finance Minister Arun Jaitley presented the government's first full-year budget today, seen as a test of Prime Minister Narendra Modi's stomach for free-market economics. It has been billed as a make-or-break budget for the government.

1) "The Credibility of Indian economy has been re-established. The world is predicting it is India's time to fly," the Finance Minister said as he began his speech, asserting, "We have turned around the economy."

2) Over an hour into his speech, Mr Jaitley said corporate tax would be cut to 25 per cent over the next four years, from the current levels of 30 per cent.

3) He also announced the deferment of the dreaded General Anti-Avoidance Rules or GAAR by two years - it was to have kicked in from April 1, 2015. Under the GAAR regime, authorities can deny tax benefit to any arrangement that is entered into primarily to avoid tax.

4) Stock markets that had gotten off the day's high, with the Sensex dipping briefly, soared again on those announcements. Analysts said a delay in achieving the fiscal roadmap and a higher allocation for social schemes may have dented sentiments earlier.

5) Mr Jaitley had announced that the government will target a 3.9 per cent fiscal deficit for year starting April 1, 2015 to make room for higher investment in infra and capital expenditure.

6) The government plans to spend Rs 1.25 lakh crore for investment out of which Rs 70,000 crore will come from budgetary outlay, Mr Jaitley said, also promising, "We will achieve 3 per cent fiscal deficit target in two years rather than three years."

7) The Finance Minister said the real GDP growth is expected to be 7.4% making India the fastest growing economy in the world. India's economy, he said, is expected to grow between 8-8.5 per cent in the fiscal year that starts April 1, 2015. "Aiming for a double-digit growth seems feasible very soon," Mr Jaitley said.

8) We have been able to conquer inflation; our objective is to keep inflation below 6 percent, Mr Jaitley said.

9) Emphasising the Modi government's commitment to ease of doing business in the country, Mr Jaitley said the government would set up pre-existing regulatory policies instead of the need for prior permissions.

10) The finance minister said there was a need to reduce subsidy leakages and not subsidy. He also committed more monies for a number of social schemes including MNrega, a flagship scheme of the previous Congress government.