Union Budget 2017: Post-Notes Ban, Salaried People Correctly Expected Tax Cut, Says Arun Jaitley
Government will boost spending on rural poor, promises Finance Minister 60-day waiver on interest for loans for farmers hit by notes ban Basic rate of income tax halved to soften demonetisation blow
Finance Minister Arun Jaitley said the government will boost spending on the rural poor; in the Budget that he presented today to Parliament, he also halved the basic rate of income tax, in attempts at succor after November's shock move to ban high-value banknotes.
Mr Jaitley said demonetisation will offer a "bigger, cleaner and real GDP" and increase revenues by forcing people to declare untaxed wealth.
The minister promised to increase government funding for farmers, who have been hard hit by the currency ban, with a 60-day waiver on interest for agricultural loans.
He also promised more affordable housing for the poor and slashed the basic rate of income tax from 10 percent to five percent for those earning 2.5 and 5 lakhs annually.
"The present burden of taxation is mainly on the taxpayer and the salaried employees who are showing their income correctly. Therefore post-demonetisation, there is a legitimate expectation of this class of people to reduce their burden of taxation," he told Parliament.
He said the government would double the income of farmers in the next five years and bring 10 million households out of poverty by 2019.
The finance minister also laid out further measures to increase tax revenues after last November's currency ban, saying tax evasion had become India's "new normal". "We are largely a tax non-compliant society. When too many evade tax, the burden falls on those who are honest," he said.
Prime Minister Narendra Modi's unanticipated decision removed around 86 per cent of India's available cash at a stroke, triggering massive queues outside banks. In recent weeks, the cash shortage has eased considerably.
The government conceded on Tuesday that the fallout would hit short-term expansion in the world's fastest-growing major economy, but said it would ultimately help boost growth by reducing corruption.
The government relaxed its fiscal deficit target to 3.2 per cent for the financial year 2017-18, citing the increase in government spending, but said it would be back on track for a three-per cent deficit the following financial year.
Yesterday, it lowered its growth forecast for the 2016-17 fiscal year ending in March to 7.1 per cent, down from 7.6 per cent in the previous year, acknowledging the pain of its demonetisation scheme.
(With inputs from AFP)