ADVERTISEMENT

Provident Fund Withdrawals To Be Taxed: 10 Highlights Of Budget 2016

Finance Minister Arun Jaitley raised capital expenditure, but retained fiscal deficit target
Finance Minister Arun Jaitley raised capital expenditure, but retained fiscal deficit target

Finance Minister Arun Jaitley’s third budget has been described as pro-poor by analysts.  Mr Jaitley raised allocation for rural and infrastructure sectors, but retained the fiscal deficit target as promised last year.

Here are 10 big announcements from Mr Jaitley's speech:

1) 60 per cent of provident fund withdrawals will be taxed from April 1, 2016, according to Budget 2016. Currently, withdrawals from Employee Provident Fund are completely exempt from income tax.

2) Fiscal deficit target has been retained at 3.5 per cent of GDP for next fiscal year in a big boost for stocks, currency and bond markets.

3) Farmers' incomes to be doubled in five years by 2022. Total allocation for agriculture sector has been hiked to Rs 35,984 crore.

4) Big focus on rural distress: Government will spend a record Rs 38,500 crore on rural jobs programme (MGNREGA). Rural road development schemes will get Rs 19,000 crore, while another Rs 20,000 crore will be used to fund irrigation schemes.

5) Continued push for infrastructure development: The finance minister allocated Rs 2.21 lakh crore for building road and rail infrastructure.

6) The government will infuse Rs 25,000 crore into state-run banks, struggling under a pile of bad loans. More resources will be raised for additional capital if required, the finance minister said.

7) A new amnesty scheme for those holding unaccounted money and assets has been announced. Those declaring undisclosed income under this scheme will have to pay 45 per cent tax.

8) The government will not resort to retrospective taxation in future, while proposing a one-time tax dispute resolution for retrospective taxation. General anti avoidance tax rule (GAAR) will be implemented from April 1, 2017.

9) Proposes to levy infrastructure cess of 1-4 per cent which will make cars costlier. Cigarettes will cost more on 10-15 per cent excise duty hike. A "Krishi Kalyan" cess of 0.5 per cent has been proposed on all services effective June 1, 2016. This will make most of services (such as eating out, buying property, etc.) more expensive.

10) Income tax relief for small taxpayers, more taxes for super-rich: Those earnings less than Rs 5 lakh per annum will get additional relief of Rs 3,000 on income tax, but the surcharge on super-rich (income of over Rs 1 crore) has been hiked from 12 per cent to 15 per cent.