Budget Highlights - Transform, Energise and Clean India (TEC)

Budget 2017 has attempted to push reforms in major areas while carefully balancing the fiscal needs of the economy. It aims to further the Digital India Programinitiated by the Prime Minister. Here are some of the key provisions highlighted in the budget:

Major tax reforms for companies:

Small firms with turnover up to Rs 50 crore will pay 25% tax from the financial year 2017-18, instead of 30%. This will directly impact 96% of Indian companies and motivate them topay their taxes. The long overdue amendment of reasonable extension of the MAT credit period to 15 years (from the present period of 5 years)is now in force.

Incentivising tax paying individuals:

The budget provided a big boost for individuals whose income is below INR 5 lakh. The tax rate has been reduced from 10% to 5% for the income slab betweenINR 2.5 lakhsandINR 5 lakhs. Moreover,a one-page tax filing form has been introduced to ease tax return filing. A surcharge of 10% will now be levied for those whose annual income is betweenINR 50 lakh and 1 crore.

Encouraging sale of assets:

Capital Gains tax is a major consideration for anyone planning to sell assets. This budget aims to lessen the burden of this tax. The base year for determining the indexation benefit for capital gainshas been changed from 1981 to 2001. This step is expected to reduce the capital gains tax burden on property sellers and thereby make movement of immovable capital easier. Moreover, the period of holding for qualifying long term capital gain in case of immovable property is reduced to 2 years (from that of 3 years)through this Union Budget.

Promoting digital transactions:

“Promotion of a digital economy is an integral part of Government’s strategy to clean the system and weed out corruption and black money.” - Finance Minister in his Budget Speech

The BHIM App was launched to utilize the power of mobile phones for digital payments. To promote the enhanced usage of this App, there is a proposal to launch a Referral bonus scheme for individuals and Cash back scheme for merchant bankers. 1.25 crore people have already adopted BHIM App for digital payments.

The other measures introduced to ensure acceleration of digital transactions and provide a conducive environment are:

  • - Strengthening of the digital payment infrastructure and grievance handling mechanisms
  • - Proposal to mandate all Government receipts through digital means, beyond a prescribed limit
  • - Amendment to the Negotiable Instruments Act to ensure that the payees of dishonoured cheques can realise the payments

Apart from the above changes, the budget aimed at further strengthening the Government’s fight against black money. With a view to discourage high value transactions in cash and curb black money, the budget proposed that no person shall receive an amount of INR 300,000 or more in cash from a person in a day.