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Budget Speech - 2016-2017

Budget - Dated:- 29-2-2016 - Minister of Finance February 29, 2016 Madam Speaker, I rise to present the Budget for the year 2016-17. 2. I am presenting this Budget when the global economy is in serious crisis. Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015. Financial markets have been battered and global trade has contracted. Amidst all these global headwinds, the Indian economy has held its ground firmly. Thanks to our inherent strengths and the policies of this Government, a l .....

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opportunities. 4. Let us look at our achievements compared to the last three years of the previous Government when growth had decelerated to 6.3%. The growth of GDP has now accelerated to 7.6%. This was possible notwithstanding the contraction of global exports by 4.4% compared to 7.7% growth in world exports during the last three years of the previous Government. CPI inflation was at 9.4% during the last three years of the previous Government. Under our Government, CPI inflation has come down .....

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50 billion US dollars. 6. Our initiatives in the last 21 months have not only placed the economy on a faster growth trajectory but have bridged the trust deficit, created by the previous Government. We had to work in an unsupportive global environment, adverse weather conditions and an obstructive political atmosphere. 7. We believe in the principle that money with the Government belongs to the people and we have the sacred responsibility to spend it prudently and wisely for the welfare of our p .....

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e must strengthen our firewalls against these risks by ensuring macroeconomic stability and prudent fiscal management. Second, since foreign markets are weak, we must rely on domestic demand and Indian markets to ensure that India s growth does not slow down. And third, we must continue with the pace of economic reforms and policy initiatives to change the lives of our people for the better. 9. We see these challenges as opportunities. The financial years 2015-16 and 2016-17 have been and will b .....

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, therefore, has to prioritise its expenditure. We wish to enhance expenditure in the farm and rural sector, the social sector, the infrastructure sector and provide for recapitalisation of the banks. This will address those sectors which need immediate attention. Once the Government discharges these priority obligations, it shall then focus on other areas which are also of utmost priority to the Government. 10. While increasing the outlay of various social sector programmes, the Government will .....

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new initiative to ensure that the BPL families are provided with a cooking gas connection, supported by a Government subsidy. This will significantly improve the health of women and those BPL families who suffer adversely from the ill-effects of Chulha cooking. 11. The Annual Budget is also an opportunity for the Government to outline its priorities for the year to come. The priority of our Government is clearly to provide additional resources for vulnerable sections, rural areas and social and .....

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enefits are conferred upon persons who deserve it, by giving a statutory backing to the AADHAR platform; bringing significant changes in the legislative framework relating to the transport sector so as to free it from constraints and restrictions; incentivising gas discovery and exploration by providing calibrated marketing freedom; enactment of a comprehensive law to deal with resolution of financial firms; providing legal framework for dispute resolution in PPP projects and public utility cont .....

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d infrastructure; (iii) Social Sector including Healthcare: to cover all under welfare and health services; (iv) Education, Skills and Job Creation: to make India a knowledge based and productive society; (v) Infrastructure and Investment: to enhance efficiency and quality of life; (vi) Financial Sector Reforms: to bring transparency and stability; (vii) Governance and Ease of Doing Business: to enable the people to realise their full potential; (viii) Fiscal Discipline: prudent management of Go .....

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ink beyond food security and give back to our farmers a sense of income security . Government will, therefore, reorient its interventions in the farm and non-farm sectors to double the income of the farmers by 2022. Our total allocation for Agriculture and Farmers welfare is ₹ 35,984 crore. 15. We need to address issues of optimal utilisation of our water resources; create new infrastructure for irrigation; conserve soil fertility with balanced use of fertilizer; and provide value addition .....

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will be fast tracked. This will help to irrigate 80.6 lakh hectares. These projects require Rs.17,000 crore next year and Rs.86,500 crore in the next five years. We will ensure that 23 of these projects are completed before 31st March, 2017. 19. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs.20,000 crore. To achieve all these, a total provision of Rs.12,517 crore has been made through budgetary support and market borrowings in 2016-17. 20. Simu .....

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utrient level of the soil and can make judicious use of fertilizers. The target is to cover all 14 crore farm holdings by March 2017. ₹ 368 crore has been provided for National Project on Soil Health and Fertility. Besides, 2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years. Fertilizer companies will also co-market city compost which increases the efficacy of chemical fertilizer. A policy for conversion of c .....

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scheme called Organic Value Chain Development in North East Region . The emphasis is on value addition so that organic produce grown in these parts find domestic and export markets. A total provision of Rs.412 crore has been made for these schemes. 24. Incentives are being given for enhancement of pulses production. Rs.500 crores under National Food Security Mission has been assigned to pulses. The number of districts covered has been increased to 622. 25. A national level competition will be he .....

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have already amended their APMC Acts and are ready to come on board. More States are expected to join this platform in the coming year. The Unified Agricultural Marketing E Platform will be dedicated to the Nation on the birthday of Dr. Baba Saheb Ambedkar on 14th April this year. 27. 97 lakh MT of storage capacity was added to the Central pool stock during the current year.28. We are implementing the Pradhan Mantri Gram Sadak Yojana (PMGSY) as never before. This Scheme had suffered in the past .....

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kms of roads. Accordingly, the pace of construction which is currently 100 kms per day, as compared to the average of 73.5 kms during 2011-14, will be substantially stepped up. 29. To support farmers in the aftermath of natural calamities, Government has revised the norms of assistance under the National Disaster Response Fund in April 2015. 30. Special focus has been given to ensure adequate and timely flow of credit to the farmers. Against the target of Rs.8.5 lakh crore in 2015-16, the targe .....

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rmers in all parts of the country. Three specific initiatives will be taken up in 2016-17 for this. First, the remaining States will be encouraged to take up decentralized procurement. Second, an online Procurement System will be undertaken through the Food Corporation of India. This will usher in transparency and convenience to the farmers through prior registration and monitoring of actual procurement. Third, effective arrangements have been made for pulses procurement. 33. Farmers also take u .....

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ted at a cost of Rs.850 crores over the next few years. 34. There has been a visible rise in the yield of honey, from an average of 18 to 20 kg per box per annum in the year 2013-14 to 25 kg per box per annum by 2015-16. The total production of honey in the country has increased from 76,150 metric tonnes in 2014-15 to 86,500 metric tonnes. 90% of the domestic honey is now exported. II. Rural Sector 35. After agriculture, I now turn to the other segments of the rural economy. 36. A sum of Rs.2.87 .....

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uidelines to actualise this. 37. There is an urgent need to focus on areas of drought and rural distress. Every block in these distress areas will be taken up as an intensive Block under the Deen Dayal Antyodaya Mission. Formation of Self Help Groups (SHGs) will be speeded up to promote multiple livelihoods. Cluster Facilitation Teams (CFT) will be set up under MGNREGS to ensure water conservation and natural resource management. These districts would also be taken up on priority under Pradhan M .....

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electrified. The Honourable Prime Minister, in his address to the Nation on 15th August, 2015 announced that the remaining villages will be electrified within the next 1000 days. 41. As on 23rd February, 2016, 5542 villages have been electrified. This is more than the total combined achievement of previous three years. The Government is committed to achieve 100% village electrification by 1st May, 2018. Rs. 8,500 crore has been provided for Deendayal Upadhayaya Gram Jyoti Yojna and Integrated P .....

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9,000 crore has been provided for Swachh Bharat Abhiyan. 43. In order to continue this momentum, priority allocation from Centrally Sponsored Schemes will be made to reward villages that have become free from open defecation. 44. We need to derive greater benefit from our demographic advantage. We need to spread digital literacy in rural India. Of the 16.8 crore rural households as many as 12 crore households do not have computers and are unlikely to have digitally literate persons. We have alr .....

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e and will be implemented as a Central sector scheme with effect from 1st April, 2016. The revamped Programme will build an integrated land information management system. Rs.150 crore has been provided for this purpose. 46. Panchayat Raj Institutions need to develop governance capabilities to deliver on the Sustainable Development Goals. It is, therefore, proposed to launch a new restructured scheme, namely, Rashtriya Gram Swaraj Abhiyan, for which Rs.655 crore is being set apart in 2016-17. 47. .....

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class luxury. Gradually it spread to the middle class. But the poor do not have access to cooking gas. Women of India have faced the curse of smoke during the process of cooking. According to experts having an open fire in the kitchen is like burning 400 cigarettes an hour. The time has come to remedy this situation. 50. We have decided to embark upon on a massive mission to provide LPG connection in the name of women members of poor households. I have set aside a sum of Rs.2,000 crore in this .....

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ply chain of cooking gas. 51. I want to take this opportunity to express our gratitude and appreciation for the 75 lakh middle class and lower middle class households who have voluntarily given up their cooking gas subsidy, in response to the call given by the Hon ble Prime Minister. Their gesture is a matter of pride for the country. 52. Catastrophic health events are the single most important cause of unforeseen out-of-pocket expenditure which pushes lakhs of households below the poverty line .....

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cines available at affordable prices has been a key challenge. We will reinvigorate the supply of generic drugs. 3,000 Stores under Prime Minister s Jan Aushadhi Yojana will be opened during 2016-17. 54. About 2.2 lakh new patients of End Stage Renal Disease get added in India every year resulting in additional demand for 3.4 crore dialysis sessions. With approximately 4,950 dialysis centres in India, largely in the private sector and concentrated in the major towns, the demand is only half met. .....

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, I propose to exempt certain parts of dialysis equipment from basic customs duty, excise/CVD and SAD. 56. Scheduled Caste and Scheduled Tribe entrepreneurs are beginning to show great promise in starting and running successful business enterprises. The Prime Minister had given a call for promoting entrepreneurship among SC/ST to become job providers rather than job seekers. I am happy to inform you that the Union Cabinet has approved the Stand Up India Scheme to promote entrepreneurship among S .....

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m. It is proposed to constitute a National Scheduled Caste and Scheduled Tribe Hub in the MSME Ministry in partnership with industry associations. This Hub will provide professional support to Scheduled Caste and Scheduled Tribe entrepreneurs to fulfil the obligations under the Central Government procurement policy 2012, adopt global best practices and leverage the Stand Up India initiative. 58. The schemes for welfare and skill development for Minorities such as Multi-sectoral Development Progr .....

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d for this. Further, 62 new Navodaya Vidyalayas will be opened in the remaining uncovered districts over the next two years. 61. It is our commitment to empower Higher Educational Institutions to help them become world class teaching and research institutions. An enabling regulatory architecture will be provided to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions. This will enhance affordable access to high quality education for ordinary Indians .....

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ers to access degree certificates of candidates, it is proposed to establish a Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets, on the pattern of a Securities Depository. This will help validate their authenticity, safe storage and easy retrieval. Skill Development 64. Skill India mission seeks to capitalise our demographic advantage. Since its launch, the National Skill Development Mission has created an elaborate skilling eco-system and impa .....

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ll one crore youth over the next three years. 66. Entrepreneurship Education and Training will be provided in 2200 colleges, 300 schools, 500 Government ITIs and 50 Vocational Training Centres through Massive Open Online Courses. Aspiring entrepreneurs, particularly those from remote parts of the country, will be connected to mentors and credit markets. Job Creation 67. In order to incentivize creation of new jobs in the formal sector, Government of India will pay the Employee Pension Scheme con .....

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ce Bill, 2016 proposes to broaden and liberalize the scope of the employment generation incentive available under Section 80JJAA of the Income Tax Act. The deduction will be available not only to assessees deriving income from manufacture of goods in a factory but to all assessees who are subject to statutory audit under the Act. Thus, a deduction of 30% of the emoluments paid to such employees can be claimed for three years. The minimum number of days for which they should be employed during th .....

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propose to inter-link State Employment Exchanges with the National Career Service platform. 70. Retail Trade is the largest service sector employer in the country. Many more jobs can be created in this sector, provided the regulations are simplified. If Shopping Malls are kept open all seven days of the week, why not the small and medium shops? These shops should be given the choice to remain open on all seven days of the week on voluntary basis. The interest of the workers in terms of mandatory .....

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these projects was about 8,300 kms involving more than Rs.1 lakh crore investment. With exemplary and proactive interventions, nearly 85% of these projects have been put back on track. 73. India s highest ever kilometres of new highways were awarded in 2015. At the same time, India s highest ever production of motor vehicles was achieved in 2015. This is a sign of growth in the economy; but it presents a challenge also. Therefore, we have speeded up the process of road construction. I have prop .....

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016-17. This will be much higher than in the two previous years. The pace of completion of road projects will also rise to nearly 10,000 kms in 2016-17. In addition, nearly 50,000 kms of State highways will also be taken up for up-gradation as National Highways. 76. The total outlay for infrastructure in BE 2016-17 stands at Rs.2,21,246 crore. 77. Passenger traffic on our roads has to be made more efficient for the benefit of the common man and the middle class. This is a totally unreformed sect .....

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initiative will be provision of more efficient public transport facilities, greater public convenience, new investment in this moribund sector, creation of new jobs for our youth, growth of start-up entrepreneurs and other multiplier effects. These measures will take us faster down the road to development. 78. In 2015, India s major ports have handled the highest ever quality of cargo. We have also added the highest ever capacity in major ports. We have started a series of measures for moderniz .....

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vernments which can be revived at an indicative cost of Rs.50 crore to Rs.100 crore each. We will partner with the State Governments to develop some of these airports for regional connectivity. Similarly, 10 of the 25 non-functional air strips with the Airport Authority of India will also be developed. 80. India is blessed with rich natural resources including oil and gas. However, their discovery and exploitation has been below our potential. Imports of hydrocarbons occupy a large share of Indi .....

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to provide calibrated marketing freedom; and second, to do so at a pre-determined ceiling price to be discovered on the principle of landed price of alternative fuels. 81. In the other segments of the infrastructure sector, our Government has achieved the highest coal production growth in over two decades, highest ever capacity addition in generation, highest ever increase in transmission lines and in distribution of LED bulbs. 82. In the power sector, we need to diversify the sources of power g .....

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NABARD and Inland Water Authority through raising of Bonds during 2016-17. 84. Our private sector plays an important role in the development of infrastructure, many of which are implemented in the Public Private Partnership (PPP) mode. I would like to announce three new initiatives to reinvigorate this sector. (i) A Public Utility (Resolution of Disputes) Bill will be introduced during 2016-17 to streamline institutional arrangements for resolution of disputes in infrastructure related construc .....

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iced loans. 85. I would like to announce further reforms in our FDI policy. The changes proposed are in the areas of insurance and pension, Asset Reconstruction Companies, Stock Exchanges, etc. Details of the changes are given in Annex I of the Budget Speech. 86. The duty drawback scheme has been widened and deepened to include more products and countries. The Government will continue to take measures to support the export sector. 87. Our FDI policy has to address the requirements of farmers and .....

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Enterprises, including disinvestment and strategic sale, has been approved. We have to leverage the assets of CPSEs for generation of resources for investment in new projects. We will encourage CPSEs to divest individual assets like land, manufacturing units, etc. to release their asset value for making investment in new projects. The NITI Aayog will identify the CPSEs for strategic sale. 89. We will adopt a comprehensive approach for efficient management of Government investment in CPSEs by ad .....

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tuations in financial firms. A comprehensive Code on Resolution of Financial Firms will be introduced as a Bill in the Parliament during 2016-17. This Code will provide a specialized resolution mechanism to deal with bankruptcy situations in banks, insurance companies and financial sector entities. This Code, together with the Insolvency and Bankruptcy Code 2015, when enacted, will provide a comprehensive resolution mechanism for our economy. (ii) The RBI Act 1934, is being amended to provide st .....

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e their participation in the primary and secondary markets through stock exchanges and access to NDS-OM trading platform. (v) New derivative products will be developed by SEBI in the Commodity Derivatives market. (vi) To facilitate deepening of corporate bond market, a number of measures will be undertaken, details of which are given in Annex II of the Budget Speech. The enactment of Insolvency and Bankruptcy Code would provide a major boost to the development of the corporate bond market. (vii) .....

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es. The worst victims of these schemes are the poor and the financially illiterate. The operation of such schemes are often spread over many States. I, therefore, propose to bring in comprehensive Central legislation in 2016-17 to deal with the menace of such schemes. (ix) I also propose to amend the SEBI Act 1992 in the coming year to provide for more members and benches of the Securities Appellate Tribunal. 91. As the Honourable Members are well aware, the strength of the financial sector is d .....

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ays, Sugar and Steel. The Banks are putting in special efforts to effect recoveries, with a focus on reviving stalled projects. 92. To support the Banks in these efforts as well as to support credit growth, I have proposed an allocation of Rs.25,000 crore in BE 2016-17 towards recapitalisation of Public Sector Banks. If additional capital is required by these Banks, we will find the resources for doing so. We stand solidly behind these Banks. 93. Our Public Sector Banks will have to be strong an .....

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urt cases, to support reduction in the number of hearings and faster disposal of cases. 95. The Pradhan Mantri Mudra Yojana (PMMY) was launched for the benefit of bottom of the pyramid entrepreneurs. Banks and NBFC-MFIs have reported that the amount sanctioned under PMMY had reached about Rs.One lakh crore to over 2.5 crore borrowers by early February this year. I propose to increase the target next year to Rs.1,80,000 crore. 96. To provide better access to financial services, especially in rura .....

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us on process reforms, IT-enabled Government processes, etc. The whole idea is to remove the irritants for the public in their interface with Government agencies. 99. A Task Force has been constituted for rationalisation of human resources in various Ministries. A comprehensive review and rationalization of autonomous bodies is also underway. 100. A critical component of minimum Government and maximum governance is to ensure targeted disbursement of Government subsidies and financial assistance .....

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social security platform will be developed using Aadhar to accurately target beneficiaries. This will be a transformative piece of legislation which will benefit the poor and the vulnerable. · Second, we have already introduced Direct Benefit Transfer in LPG. Based on this successful experience, we propose to introduce DBT on pilot basis for fertilizer in a few districts across the country, with a view to improving the quality of service delivery to farmers. · Third, of the 5.35 la .....

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we will introduce a bill to amend the Companies Act, 2013 in the current Budget Session of the Parliament. The Bill would also improve the enabling environment for start-ups. The registration of companies will also be done in one day. 103. Monitoring of prices of essential commodities is a key element of good governance. A number of measures have been taken to deal with the problem of abrupt increase in prices of pulses. Government has approved creation of buffer stock of pulses through procurem .....

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stricts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism. We will do this through mutual agreement with participating States and Districts. 105. In 2017, the country will celebrate 70th Anniversary of our Independence. We will chalk out milestones for nation s journey beyond the 70th Anniversary of Independence. Dr. Toynbee, the historian, had observed that a chapter which had a Western beginning will have to have an Indian en .....

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onsolidation and for boosting growth. I have weighed the policy options and decided that prudence lies in adhering to the fiscal targets. Consequently, the fiscal deficit in RE 2015-16 and BE 2016-17 have been retained at 3.9% and 3.5% of GDP respectively. While doing so, I have ensured that the development agenda has not been compromised. 108. The total expenditure in the Budget for 2016-17 has been projected at Rs.19.78 lakh crore, consisting of Rs.5.50 lakh crore under Plan and Rs.14.28 lakh .....

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ore over Actuals of 2014-15. Details of allocations in certain vital sectors and schemes and transfers to States are given in Annex III to the Speech. 109. This is the last year of the 12th Plan. Successive committees have questioned the merit in having Plan and Non-Plan classification of Government expenditure. A broad understanding over the years has been that Plan expenditures are good and Non-Plan expenditures are bad. This results in skewed allocations in the Budget. We need to correct this .....

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ear s Budget is that we have improved upon the Revenue Deficit target from 2.8% to 2.5% of GDP in RE 2015-16. 111. The FRBM Act has been under implementation for more than a decade. Both Central and State Governments have made significant gains from the implementation of this Act. There is now a school of thought which believes that instead of fixed numbers as fiscal deficit targets, it may be better to have a fiscal deficit range as the target, which would give necessary policy space to the Gov .....

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the FRBM Act and give its recommendations on the way forward. 112. As the Honourable Members are aware, the Seventh Central Pay Commission has submitted its Report. Following the past practice, a Committee has been constituted to examine the Report and give its recommendations. In the meantime, I have made necessary interim provisions in the Budget. 113. We have rationalised and restructured more than 1500 Central Plan Schemes into about 300 Central Sector and 30 Centrally Sponsored Schemes. Thi .....

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art B of my Budget Speech. PART B Madam Speaker, 116. I shall now present my tax proposals 117. The Government acknowledges the role of taxpayers in nation building. Each rupee of tax contributes towards the Government s efforts to provide better infrastructure, rural revival and social well-being. Taxation is a major tool available to Government for removing poverty and inequality from the society. The posterity will not forgive us if we do not use this opportunity in this perspective. The thru .....

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ion of taxation. (9) Use of Technology for creating accountability. Relief to small tax payers 118. In order to lessen tax burden on individuals with income not exceeding Rs.5 lakhs, I propose to raise the ceiling of tax rebate under section 87A from Rs.2,000 to Rs.5,000. There are 2 crore tax payers in this category who will get a relief of Rs.3,000 in their tax liability. 119. The people who do not have any house of their own and also do not get any house rent allowance from any employer today .....

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crore rupees. At present about 33 lakh small business people avail of this benefit, which frees them from the burden of maintaining detailed books of account and getting audit done. I propose to increase the turnover limit under this scheme to Rupees two crores which will bring big relief to a large number of assesses in the MSME category. 121. I also propose to extend the presumptive taxation scheme to professionals with gross receipts up to Rs.50 lakh with the presumption of profit being 50% o .....

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aced in public domain and we have received a large number of constructive suggestions. The final plan of phasing out exemptions is given in Annexure. The highlights are as follows:- (a) The accelerated depreciation provided under IT Act will be limited to maximum 40% from 1.4.2017. (b) The benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020. (c) The benefit of section 10AA to new SEZ units will be available to those units which commence activity befor .....

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er 1.3.2016 are proposed to be given an option to be taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation. (b) I also propose to lower the corporate income tax rate for the next financial year of relatively small enterprises i.e companies with turnover not exceeding Rs.5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess. 124. Startups generate .....

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to economic growth. I propose a special patent regime with 10% rate of tax on income from worldwide exploitation of patents developed and registered in India. 126. In order to get more investment in Asset Reconstruction Companies (ARCs) which play a very important role in resolution of bad debts, I propose to provide complete pass through of income-tax to securitization trusts including trusts of ARCs. The income will be taxed in the hands of the investors instead of the trust. However, the tru .....

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I would like to reiterate our commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017. 131. In order to meet with our commitment to BEPS initiative of OECD and G-20, the Finance Bill, 2016 includes provision for requirement of country by country reporting for companies with a consolidated revenue of more than Euro 750 million. 132. I propose to exempt service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies e .....

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and other goods for differently abled (Divyang) persons attract Nil basic customs duty. I propose to extend this exemption to Braille paper. Incentivising domestic value addition to help Make in India. 136. Customs and excise duty structure plays an important role in incentivizing domestic value addition towards Make in India campaign of our Government. In line with that, I propose to make suitable changes in customs and excise duty rates on certain inputs, raw materials, intermediaries and com .....

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ioned society 137. Pension schemes offer financial protection to senior citizens. I believe that the tax treatment should be uniform for defined benefit and defined contribution pension plans. I propose to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme. 138. In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of .....

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se to reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases. Measures for promoting affordable housing 142. Pradhan Mantri Awas Yojna embodies the assurance of the Government to address the housing needs of all and more specifically the poor, in a time bound manner. Construction of houses creates considerable employment opportunities as well. In order to fuel activity in the housing sector, I propose to give 100% deduction for pr .....

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use does not exceed Rs.50 lakh. 144. Another proposal to stimulate housing activity is to facilitate investments in Real Estate Investment Trusts. I propose that any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax. 145. It is proposed to exempt service tax on construction of affordable houses up to 60 square metres under any scheme of the Central or State Government including PPP Schemes. 146. I also .....

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therefore, propose that in addition to DDT paid by the companies, tax at the rate of 10% of gross amount of dividend will be payable by the recipients, that is, individuals, HUFs and firms receiving dividend in excess of Rs.10 lakh per annum. 148. I also propose to raise the surcharge from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs.1 crore. 149. I also propose to collect tax at source at the rate of 1% on purchase of luxury cars exceeding .....

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of Options is proposed to be increased from .017% to .05%. 151. In order to tap tax on income accruing to foreign e-commerce companies from India, it is proposed that a person making payment to a nonresident, who does not have a permanent establishment, exceeding in aggregate Rs.1 lakh in a year, as consideration for online advertisement, will withhold tax at 6% of gross amount paid, as Equalization levy. The levy will only apply to B2B transactions. 152. I propose to impose a Cess, called the K .....

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s of certain capacity and 4% on other higher engine capacity vehicles and SUVs. 154. I also propose to impose an excise duty of 1% without input tax credit or 12.5% with input tax credit on articles of jewellery [excluding silver jewellery, other than studded with diamonds and some other precious stones], with a higher exemption and eligibility limits of Rs. 6 crores and Rs. 12 crores respectively. Necessary steps will also be taken to enable the new taxpayers to comply with this levy without an .....

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e consumption of tobacco and tobacco products, I propose to increase the excise duties on various tobacco products other than beedi by about 10 to 15%. 158. I propose to amend the Finance Act, 1994 so as to declare assignment by the Government of the right to use the radio-frequency spectrum and its subsequent transfers a service, to make it clear that assignment of right to use the spectrum is a service leviable to service tax and not sale of intangible goods. Reducing litigation and providing .....

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of compliant. 160. I propose a limited period Compliance Window for domestic taxpayers to declare undisclosed income or income represented in the form of any asset and clear up their past tax transgressions by paying tax at 30%, and surcharge at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. There will be no scrutiny or enquiry regarding income declared in these declarations under the Income Tax Act or the Wealth Tax Act and the declarants will have immunity from pr .....

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aving given one opportunity for evaded income to be declared once, we would then like to focus all our resources for bringing people with black money to books. 162. Litigation is a scourge for a tax friendly regime and creates an environment of distrust in addition to increasing the compliance cost of the tax payers and administrative cost for the Government. There are about 3 lakh tax cases pending with the 1st Appellate Authority with disputed amount being 5.5 lakh crores. In order to reduce t .....

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eal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty. Certain categories of persons including those who are charged with criminal offences under specific Acts are proposed to be barred from availing this scheme. 164. I had in my Budget speech of July, 2014 assured that this Government would not retrospectively create a fresh tax liability. I had also hoped then that the cases pending in various courts and other legal for a relating to certain retr .....

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rospective amendment. In order to allay any fears of tax adventurism, this Committee will now be chaired by the Revenue Secretary and consist of Chairman, CBDT and an expert from outside. This Committee will effectively oversee the implementation of the assurances. 165. In order to give an opportunity to the past cases which are ongoing under the retrospective amendment, I propose a one-time scheme of Dispute Resolution for them, in which, subject to their agreeing to withdraw any pending case l .....

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discretion to levy penalty at the rate of 100% to 300% of tax sought to be evaded. I propose to modify the entire scheme of penalty by providing different categories of misdemeanor with graded penalty and thereby substantially reducing the discretionary power of the tax officers. The penalty rates will now be 50% of tax in case of underreporting of income and 200% of tax where there is misreporting of facts. Remission of penalty is also proposed in certain circumstances where taxes are paid and .....

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nother tax payer friendly measure, I propose to provide a time limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty. 169. The Income-tax Department is also issuing instruction making it mandatory for the assessing officer to grant stay of demand once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of Income-tax (Appeals). In case of deviation, assessing officer has to get orders of his superiors. The tax p .....

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flow, reduce the compliance burden and associated litigation, particularly those relating to apportionment of credit between exempted and non exempted final products/services. The amendments in these rules will also enable manufacturers with multiple manufacturing units to maintain a common warehouse for inputs and distribute inputs with credits to the individual manufacturing units. Simplification and rationalization of taxation 173. The Government has already accepted many recommendations of .....

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isions for Income Tax as per Annexure. 176. Non-residents without PAN are currently subjected to a higher rate of TDS. It is proposed to amend the relevant provision to provide that on furnishing of alternative documents, the higher rate will not apply. 177. The facility for revision of return, hitherto available to a service tax assessee only, is being extended to Central Excise assessees also. 178. I propose to provide additional options to banking companies and financial institutions, includi .....

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ndian Customs Single Window Project. We have made significant progress in this and it would be implemented at major ports and airports starting from beginning of next financial year. 181. The customs Baggage Rules for international passengers are being simplified so as to increase the free baggage allowance. The filing of baggage declaration will be required only for those passengers who carry dutiable goods. Use of Technology for creating accountability 182. Technology is a boon for mankind. We .....

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ard, or for special reasons to be recorded, the assessing officer wants to hear the party, there will be no face to face contact of IT Department with assessee. 184. Income-tax Department (ITD) will fully expand the pilot initiative of e-Sahyog with a view to reduce compliance cost, especially for small taxpayers. The objective of the e-Sahyog pilot project is to provide an online mechanism to resolve mismatches in Income-tax returns without requiring taxpayers to attend the Income-tax office. 1 .....

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y direct tax proposals would result in revenue loss of Rs. 1,060 crore and my indirect proposals are expected to yield Rs.20,670 crores. Thus the net impact of all tax proposals would be revenue gain of Rs.19,610 crores. CONCLUSION Madam Speaker, 188. This Budget is being presented amidst global and domestic headwinds. There are several challenges. We see them as opportunities. I have outlined the agenda of our Government to Transform India for the benefit of the farmers, the poor and the vulner .....

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n investment will be allowed in the insurance and pension sectors in the automatic route up to 49% subject to the extant guidelines on Indian management and control to be verified by the Regulators. (ii) 100% FDI in Asset Reconstruction Companies (ARCs) will be permitted through automatic route. Foreign Portfolio Investors (FPIs) will be allowed up to 100% of each tranche in securities receipts issued by ARCs subject to sectoral caps. (iii) Investment limit for foreign entities in Indian stock e .....

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instruments will be expanded to include hybrid instruments subject to certain conditions. (vi) FDI will be allowed beyond the 18 specified NBFC activities in the automatic route in other activities which are regulated by financial sector regulators. (vii) With a view to promote Make in India and following the practices in advanced countries, foreign investors will be accorded Residency Status subject to certain conditions. Currently, these investors are granted business visa only up to 5 years .....

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pients. Annex No. II to Part A MEASURES FOR DEEPENING OF CORPORATE BOND MARKET (a) LIC of India will set up a dedicated fund to provide credit enhancement to infrastructure projects. The fund will help in raising the credit rating of bonds floated by infrastructure companies and facilitate investment from long term investors. (b) RBI will issue guidelines to encourage large borrowers to access a certain portion of their financing needs through market mechanism instead of the banks. (c) Investmen .....

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or an electronic platform for repo market in corporate bonds will be developed by RBI. Annex No. III-A to Part A ALLOCATIONS OF IMPORTANT MINISTRIES, SECTORS and VULNERABLE SECTIONS Rs in crore MINISTRY/DEPARTMENT Actual 14-15 RE 15-16 RE 15-16 Ministry Of Agriculture And Farmers Welfare 25917 22958 44485 Ministry Of Drinking Water And Sanitation 12091 10907 14010 Ministry Of Health And Family Welfare 32154 34957 39533 Ministry Of Housing And Urban Poverty Alleviation 2728 1961 5411 Ministry Of .....

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ces, River Development And Ganga Rejuvenation 5480 7032 6201 Ministry Of Women And Child Development 18539 17352 17408 SECTOR TOTALS Actual 2014-15 Actual 2014-15 Actual 2014-15 IEBR Total for 2016-17 Agriculture and Irrigation 31497 25988 47912 6300 54212.33 Social Sectors including Education and Health 136431 139619 151581 … … Rural Development and Drinking Water 81908 90185 101775 … … Infrastructure & Energy 185139 180610 221246 25000 246246.39 ALLOCATION FOR W .....

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24005 4 Schemes under Scheduled Castes Sub-Plan- across all Ministries 38833 5 Allocation for North Eastern Region-across all Ministries 33097 6 Umbrella Scheme for Development of Minorities. 1245 a Multi-Sectoral Development Programme forMinorities 1125 b Education Scheme for Madrasas and Minorities 120 7 Green Revolution 12980 a Krishonnati Yojna 7580 b Rashtriya Krishi Vikas Yojna 5400 8 White Revolution 1273 9 Blue Revolution 575 10 Pradhan Mantri Krishi Sinchai Yojna (PMKSY) 5717 a Har Khet .....

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nal Programme of Mid-day Meals in Schools 9700 18 Integrated Child Development Scheme (Umbrella ICDS) 16120 19 Pradhan Mantri Awas Yojna (PMAY) 20075 20 Urban Rejuvenation Mission (AMRUT and Mission for Development of 100 Smart Cities) 7296 21 Make in India: Scheme for Investment Promotion and Amended Technology Upgradation Fund Scheme 1804 22 National Industrial Corridors 1448 23 Digital India Programme and E-learning, E-panchayat, Land Records Modernisation 2059 24 Central Pool of Resources fo .....

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4 Metro Projects 10000 35 Namame Gange- National Ganga Plan 2250 36 Rashtriya Yuva Sashakthikaran Karyakram 397 37 Khelo India 216 38 Recapitilization of Public Sector Banks 25000 This Annex provides total allocations (Plan and Non-Plan) under 38 important Schemes. Rationalization of Schemes was undertaken to avoid too thin spread of resources. The allocation for BE 2016-17 only is provided as it is not immediately feasible to draw a one-to-one correspondence between the newly rationlised scheme .....

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216108 241900 Grants 258890 203608 229400 Loans 11939 12500 12500 State Governments 264725 208587 234366 UT 6104 7521 7534 4 Total (Grant & Loans) 348027 324420 360337 Grants 336015 311841 347756 Loans 12012 12579 12581 4 Total Assistance 685835 830613 930674 State Governments 678819 820133 920358 UT 7016 10480 10316 5 Less - Recovery of Loans & Advances 10658 9093 9473 State Governments 10582 8649 9028 UT 76 444 445 6 Net Resources transferred to State & UT Governments (1+4-5) 67517 .....

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eme, 2015 shall not be charged to capital gains tax. It is also proposed to provide that long terms capital gains arising to any person on transfer of Sovereign Gold Bond shall be eligible for indexation benefits. 1.2 It is proposed to provide that any gains arising on account of appreciation of rupee against a foreign currency at the time of redemption of rupee denominated bond of an Indian company subscribed by a non-resident shall be exempt from capital gains tax. 1.3 It is proposed to provid .....

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ry notified by the Central Government will also be eligible for the said regime. It is also proposed to provide that the condition of not having control and management of any business or not carrying on any business by the fund will be applicable only to activities in India and not from India. 1.6 The determination of residency of foreign company on the basis of Place of Effective Management is proposed to be deferred by one year. It shall now apply with effect from1.04.2017. It is also proposed .....

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(MAT) shall not be applicable to a foreign company, w.e.f. 01.04.2001 if the foreign company does not have as a permanent establishment under relevant Double Taxation Avoidance Agreement (DTAA) or a place of business in India. 1.8 With a view to facilitate setting up of international financial centre in India, it is proposed to provide for the following tax benefits:- v The companies located in international financial services centre shall not be liable to dividend distribution tax. v Minimum Al .....

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from tax. v The transaction in foreign currency of sale of commodity derivatives taking place on a recognised association established in international financial services centre shall not be liable to commodity transaction tax. 1.9 It is proposed to provide that the subsidy granted by the Central Government and credited directly to the corpus of fund established for specific purposes laid down by Government shall not be treated as income of such fund. 1.10 Consequent upon the judgement of variou .....

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ometax Act. 2. Measures to rationalize the Pension Sector 2.1 It is proposed to provide a uniform tax treatment to the recognized provident fund, national pension system and superannuation fund. Accordingly, the following are proposed:- v Exemption limit is proposed to be increased from Rs.1 lakh to Rs.1.5 lakh for annual contribution by an employer to a superannuation fund. v A monetary limit of Rs.1.5 lakh is proposed to be provided for annual contribution by an employer to a recognised provid .....

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s also proposed that the exemption under the recognized provident fund and superannuation fund will be limited to 40% of the accumulated amount arising out of contributions made in such funds on or after 01.04.2016. However, this restriction shall not be applicable to an employee participating in a recognized provident fund and whose monthly salary does not exceed Rs.15,000/-. 3. Measures to promote the Housing and Real Estate Sector 3.1 It is proposed to provide that deduction of interest payab .....

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of registration shall be taken for the purposes of computing capital gains in case of transfer of immovable property if any payment in consequence of such agreement has been made by the purchaser of the property through any mode other than cash. 4. Measures to Phase Out Deductions 4.1 It proposed to phase out the following deductions available in the Income-tax Act:- (i) Section 10AA of the Income-tax Act : Deduction for units established in SEZ It is proposed to amend section 10AA of the Income .....

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.4.2017 (iii) Section 35 of the Income-tax Act : Deduction for Expenditure on Scientific Research. It is proposed to amend section 35 of the Income-tax Act so as to reduce the weighted deduction under section 35(1)(ii), 35 (2AA) and 35 (2AB) to 150% from the financial year 2017-18 to financial year 2019-20 and from the financial year 2020-21 onwards the deduction shall be restricted to 100%. It is also proposed that deduction under section 35(1) (iia) and (iii) of the Income-tax Act shall be red .....

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e-tax Act : Deduction for Expenditure on social projects. It is proposed to amend section 35AC of the Income-tax Act so as to provide that no deduction under the said section shall be available from financial year 2017-18 (Assessment Year 2018-19). (vi) Section 35CCC of the Income-tax Act : Deduction for expenditure on agricultural extensions project. It is proposed to amend section 35CCC of the Income-tax Act to restrict the deduction to 100% from financial year 2017-18 (Assessment Year 2018-19 .....

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tructure facility. It is proposed to amend section 80IA of the Income-tax Act so as to provide that no deduction shall be available to enterprise which starts development, operation and maintenance of any infrastructure facility on or after 1st April, 2017. It is further proposed to provide that the development, operation and maintenance of an infrastructure facility beginning on or after 1st April, 2017 shall be eligible for investment linked deduction under section 35AD of the Income-tax Act. .....

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o provide that no deduction shall be available to an undertaking engaged in production of mineral oil or natural gas if the production commences on or after 1st April, 2017. 5. Measures for TDS / TCS Rationalisation Present Section Heads Existing Threshold Limit ( Rs.) Proposed Threshold Limit ( Rs.) 192A Payment of accumulated balance due to an employee in EPF 30,000 50,000 194BB Winnings from Horse Race 5,000 10,000 194C Payments to Contractors Aggregate annual limit of 75,000 Aggregate annual .....

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ets 10% 5% 194H Commission or brokerage 10% 5% 194K Income in respect of Units To be omitted w.e.f 01.06.2016 194L Payment of Compensation on acquisition of Capital Asset To be omitted w.e.f 01.06.2016 5.2 It is proposed to amend section 206AA of the Income-tax Act so as to provide that TDS shall not be deducted at a higher rate in case of non-residents not having PAN, subject to prescribed condition. 5.3 It is proposed to extend DTAA benefits by allowing for rate in force being applicable for w .....

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ame extent as it would have been taxed, if the investor had made underlying investments directly and not through trust. It is also proposed to provide that the income of securitisation trust shall be exempt and that the securitisation trust shall effect tax deduction at source. 5.5 It is also proposed to provide that upon self-certification, no tax will be deducted on rental payments if the income of the payee does not exceed the maximum amount not chargeable to tax. 6. Measures for promoting Ec .....

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ities which are confined to display of uncut and unassorted diamonds in a notified Special Zone. 6.3 It is proposed to provide that the plant & machinery acquired and installed for transmission activity would also be eligible for additional depreciation under section 32(1)(iia) of the Income-tax Act. 6.4 It is proposed to amend sub-section (1A) of section 32AC of the Income-tax Act to provide that the acquisition of the plant & machinery of the specified value has to be made in the previ .....

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tion to not carrying out any profession will be chargeable to tax as an income from business or profession. 6.7 It is proposed to amend the provisions of the Income-tax Act so as to provide that the fees paid for obtaining right to use the spectrum is to be amortized over the period for which the right to use the spectrum has been granted. 7. Measures for prevention of abuse of Law 7.1 It is proposed to provide that where a trust or institution registered u/s 12AA of the Income-tax Act ceases to .....

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-tax. 7.2 For implementing the country by country (CbC) reporting and master file submission in relation to OECD report on BEPS action plan Action 13, which is the minimum standard to be followed by every member/partner country, it is proposed to provide for furnishing of documents by the specified person. It is also proposed to provide for penal consequence in case of non-compliance by such person. 7.3 It is proposed to provide that no set off of losses shall be allowed against deemed undisclos .....

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ares in accordance with relevant provisions of the Companies Act and that the distributed income shall mean, the consideration paid on buyback of shares as reduced by the amount received by the company for issue of such shares to be determined in the prescribed manner. 8. Measures for Simplification of Procedures 8.1 It is proposed to amend the provision of section 44AB of the Incometax Act to enhance the threshold limit for audit of accounts from Rs. 25 lakh to Rs. 50 lakh for persons having in .....

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xt 5 years. 8.3 It is proposed to amend section 139 of the Income-tax Act so as to provide that,- v a person shall be required to furnish his return of income if this total income during the previous year without claiming exemption under section 10(38) exceeds the maximum amount which is not chargeable to tax. v a person, who has not furnished a return for any previous year by the due date, may furnish the same before the end of the relevant assessment year or before the completion of the assess .....

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n paid on or before the date of furnishing of the return. 8.4 It is proposed to amend the provisions of section 211 of the Incometax Act to provide that the number of instalments and due dates for payment of advance tax in the case of individuals, HUFs, firms, etc. shall be the same as is applicable to companies. It is also proposed that the taxpayer eligible for presumptive taxation scheme under section 44AD of the Income-tax Act shall pay whole amount of advance tax in one instalment on or bef .....

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property in cases where assessee furnishes a Bank Guarantee from a scheduled bank of an amount not less than the fair market value of such property or of an amount sufficient to protect the interest of revenue. 8.8 As a step forward in digitisation of processes of the Income-tax Department, it is proposed to provide that notices and documents may be issued by the income tax authorities in electronic form also. 8.9 It is proposed to amend section 147 of the Income-tax Act to provide that a case .....

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shall be processed u/s 143(1) of the Act. INDIRECT TAX The Table below summarises the changes in Customs, Central Excise and Service Tax rate structures and law and procedure. Sl.No. Changes Existing Proposed I Promoting Agriculture and food processing 1. Krishi Kalyan Cess proposed to be levied on all taxable services to finance and promote initiatives to improve agriculture, with effect from 01.06.2016. - 0.5% 2. Services provided by National Centre for Cold Chain Development under Department .....

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for farm level pre-cooling) being extended for cold chain including pre-cooling unit,pack houses, sorting and grading lines and ripening chambers also. 10% 5% 5. BCD on refrigerated containers being Reduced 10% 5% 6. Excise duty on refrigerated containers being reduced 12.5% 6% 7. Excise duty on micronutrients [covered under S. No. 1(f) of Schedule 1 Part (A) of the Fertilizer Control Order, 1985 and manufactured by the manufacturers which are registered under the FCO, 1985] being reduced. 12.5% .....

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firm of advocates providing legal service; and (ii) a person represented on an arbitral tribunal to an arbitral tribunal, being withdrawn and service tax being levied under forward charge, with effect from 01.04.2016. Nil 14% 2. Exemption to construction, erection, commissioning or installation of original works pertaining to monorail or metro, in respect of contracts entered into on or after 1st March 2016 being withdrawn, with effect from 01.03.2016. Nil 5.6% 3. Exemption to the services of t .....

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sehold goods by a Goods Transport Agency is being rationalized at the rate of 60%, without input tax credit, with effect from 01.04.2016. 4.2% 4.2% III Measures to boost construction sector and promote affordable housing Existing Proposed 1. Service Tax on services in respect of- (i) construction services under Housing For All (HFA) (Urban) Mission/ Pradhan Mantri Awas Yojana (PMAY); (ii) construction projects under Affordable housing in partnership component of PMAY, subject to carpet area of d .....

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site. 12.5% Nil IV Promoting social security and moving towards a pensioned society 1. Service Tax on service of life insurance business provided by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority (PFRDA) being exempted, with effect from 01.04.2016. 3.5% Nil 2. Service tax on services provided by Employees Provident Fund Organization (EPFO) to employees, being exempted, with effect from 01.04.2016. 14% Nil 3. Composition rate of ser .....

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1. The services provided by mutual fund agent/distributor to a mutual fund or asset management company being taxed under forward charge, with effect from 01.04.2016. 14% 14% 2. Service tax on the regulatory services provided by Securities and Exchange Board of India and Insurance Regulatory Development Authority being exempted, with effect from 01.04.2016. 14% NIL 3. Additional options being provided for reversal of actual input tax credits with respect to non-taxable services provided by them .....

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ellery BCD on Imitation jewellery being increased. 10% 15% 3. Metals BCD being increased on a) Primary aluminium 5% 7.5% b) Other aluminium products 7.5% 10% c) Zinc alloys 5% 7.5% 5% 7.5% 4. Renewable Energy (i) BCD on Industrial solar water heater being increased. 7.5% 10% (ii) BCD exemption on solar tempered glass /solar tempered (anti-reflective coated) glass being withdrawn and 5% concessional BCD being imposed, subject to actual user conditions. Nil 5% (iii) Solar lamp being exempt from ex .....

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produced crude oil [OIDB Cess under the Oil Industry (Development) Act, 1974], being reduced. Rs. 4500 PMT 20% ad Valorem (ii) BCD being rationalized on: a) Coal; briquettes, ovoids and similar solid fuels manufactured from coal 2.5% /10% 2.5% b) Lignite, whether or not agglomerated, excluding jet 10% 2.5% c) Peat (including peat litter), whether or not agglomerated 10% 2.5% d) Coke and semi-coke of coal, of lignite or of peat, whether or not agglomerated; retort carbon 5% / 10% 5% e) Coal gas, .....

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ch coke, obtained from coal tar or from other mineral tars 5% /10% 5% 7. Chemicals & Petrochemicals (i) BCD on all acyclic hydrocarbons and all cyclic hydrocarbons [other than paraxylene which attracts Nil BCD and styrene which attracts 2% BCD] being rationalized. 5% /2.5% 2.5% (ii) BCD on denatured ethyl alcohol (Ethanol) being reduced, subject to actual user condition. 5% 2.5% (iii) SAD on Orthoxylene, being reduced, for the manufacture of phthalic anhydride subject to actual user conditio .....

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port of specified fabrics [for manufacture of textile garments for export] of value equivalent to 1% of FOB value of exports in the preceding financial year being exempted subject to the specified conditions. Applicable rate Nil 10. Electronics / Hardware (i) BCD on polypropylene granules / resins for the manufacture of capacitor grade plastic films being reduced. 7.5% Nil (ii) BCD on E-Readers being increased. Nil 7.5% (iii) BCD on parts of E-readers being reduced. Applicable rate 5% (iv) Nil B .....

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g and Packaging of semiconductor chips (ATMP) being exempted. Applicable BCD SAD - 4% Nil BCD Nil SAD (vii) The exemption from basic customs duty, CV duty, SAD on charger/adapter, battery and wired headsets/speakers for manufacture of mobile phone being withdrawn. BCD - Nil CVD - Nil SAD - Nil Applicable BCD CVD - 12.5% SAD - 4% (viii) Inputs, parts and components, subparts for manufacture of charger / adapter, battery and wired headsets /speakers, of mobile phone, subject to actual user conditi .....

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gnetic cartridges and stylus, Antennas, EHT cables, Level meters/level indicators/ tuning indicators/ peak level meters/ battery meter/VC meters/Tape counters, Tone arms, Electron guns being withdrawn. Nil Applicable BCD (xi) Specified telecommunication equipment [Soft switches and Voice over Internet Protocol (VoIP) equipment namely VoIP phones, media gateways, gateway Product/Switch (POTP/POTS), Optical controllers and session border controllers, Optical Transport equipment; combination of one .....

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ibre /cables being withdrawn. Nil 10% (xiii) Basic Customs Duty on specified capital goods and inputs for use in manufacture of Micro fuses, Sub-miniature fuses, Resettable fuses and Thermal fuses being exempted. Applicable rate Nil (xiv) Concessional Basic Customs Duty on Neodymium Magnet (before Magnetization) and Magnet Resin (Strontium Ferrite compound/before formed, before magnetization) for manufacture of BLDC motors, being prescribed subject to actual user condition. Applicable rate 2.5% .....

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r being changed. Nil 2% [without ITC] or 12.5% [with ITC] (xviii) Excise duty on inputs, parts and components, subparts for manufacture of charger/adapter, battery and wired headsets/speakers of mobile phone, subject to actual user condition being exempted. 12.5% / Nil Nil (xix) Excise duty structure on Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion bat .....

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duced. 5% 2.5% (ii) Basic Customs Duty on brass scrap being reduced. 5% 2.5% (iii) Excise duty structure on disposable containers made of aluminium foils being changed. 2% [without ITC] or 6% [with ITC] 2% [without ITC] or 12.5% [with ITC] 12. Automobiles (i) BCD on Golf cars being increased. 10% 60% (ii) Nil BCD and 6% excise/CVD being extended on parts of electric vehicles and hybrid vehicles, presently. Available upto 31.03.2016 Without any time limit (iii) BCD on aluminium Oxide for manufact .....

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3. Capital Goods (i) CVD exemption on specified machinery required for construction of roads being withdrawn. Nil 12.5% 14. Defence Production (i) Customs duties exemption on direct imports of specified goods for defence purposes by Government of India or State Governments being withdrawn, with effect from 01.04.2016. BCD- Nil CVD - Nil SAD - Nil BCD - 5% to 10% CVD - 12.5% SAD - 4% (ii) BCD exemption on specified goods imported by contractors of Government of India PSUs or sub-contractors of su .....

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n procured by MROs for maintenance, repair, and overhauling [MRO] of aircraft subject to a certification by the Directorate General of Civil Aviation Applicable excise duty Nil (iii) Procedure for availment of exemption from customs duties on parts, testing equipment, tools and tool-kits for maintenance, repair and overhaul of aircraft being simplified based on records and subject to actual user condition. (iv) The restriction of one year for utilization of duty free parts for maintenance, repai .....

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Excise duty on capital goods and spares thereof, raw materials, parts, material handling equipment and consumable for repairs of ocean-going vessels by a ship repair unit subject to actual user condition being exempted. Applicable excise duty Nil (ii) The procedure for availment of exemption from Basic Customs Duty, CVD and SAD by ship repair units being simplified based on records and subject to actual user condition. 17. Miscellaneous (i) Basic customs duty on import of Medical Use Fission Mo .....

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ures and fittings, railway safety or traffic control equipment, etc. being reduced. 12.5% 6% (v) Foreign Satellite data on storage media when imported by National Remote Sensing Centre (NRSC), Hyderabad being exempted. Applicable BCD, CVD, SAD Nil BCD Nil CVD Nil SAD (vi) Clean Energy Cess / Clean Environment Cess on coal, lignite or peat, produced or extracted as per traditional and customary rights enjoyed by local tribals without any license or lease in the State of Nagaland being exempted. R .....

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les of retail sale price of Rs.1000 or more being changed. Nil (without ITC) or 6%/12.5% (with ITC) 2% (without ITC) or 12.5% (with ITC) (ii) The Tariff value for excise /CVD purposes on readymade garments and made up articles of textiles being changed. 30% of retail sale price 60% of retail sale price (iii) Excise duty on PSF / PFY, manufactured from plastic scrap or plastic waste including waste PET bottles, being changed. 2% (without ITC) or 6% (with ITC) 2% (without ITC) or 12.5% (with ITC) .....

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wind operated electricity generators being increased. Nil 6% (iii) Valid agreement between importer / producer of power with urban local body for processing of municipal solid waste for not less than ten years from the date of commissioning of project being provided as an alternative condition for availing concessional customs/excise duty benefits in case of power generation project based on municipal and urban waste. 21. Jewellery Excise duty exemption on Articles of Jewellery [excluding silver .....

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ssessment of excise duty, for all categories of footwear being revised. 25% 30% 23. Service tax (i) a) Services provided by Indian Shipping lines by way of transportation of goods by a vessel to outside India being zero rated with effect from 1st March, 2016; and No credit Input tax credit allowed b) Service tax on services provided by them by way of transportation of goods by a vessel from outside India up to the customs station in India being imposed, with effect from 1st June, 2016. Nil 14% ( .....

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raining, Ministry of Skill Development & Entrepreneurship being exempted, with effect from 01.04.2016. 14% NIL (v) Notification No. 41/2012-ST, was amended by notification No.1/2016-ST so as to, inter alia, allow refund of service tax on services used beyond the factory etc. for the export. This amendment is being made effective from 1st July 2012. This will come into effect from the date of enforcement of Finance Bill 2016. (vi) Quarterly payment of service tax being extended to One Person .....

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tionalized at 15%, except in case of service tax collected but not deposited to the exchequer, in which case the rate of interest will be 24% from the date on which the service tax payment became due. Customs 18% Excise 18% Customs Excise Service tax 15%. For assesses with taxable value during preceding year/years covered by the notice is less than Rs. 60 Lakh, the rate of interest on delayed payment of service tax will be 12%.This will come into effect from date of enforcement of Finance Bill, .....

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of hydrocarbon activities being extended to such operations undertaken under PetroleumExploration Licenses (PEL) or Mining Leases (ML) issued or renewed before 1st April 1999. 5. CENVAT Credit Rules, 2004 being amended, to improve credit flow, reduce the compliance cost and litigation, particularly those relating to apportionment of credit between exempted and on exempted final products / services. Changes are also being made in the provisions relating to input service distributor, including ext .....

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s against the main noticee have been closed, with effect from date of enforcement of Finance Bill, 2016. 7. Rules prescribing procedure for import or domestic procurement of goods at concessional rates of customs and excise duties for certain specified purposes being simplified. 8. Number of returns for central excise assessee, above a certain threshold, is being reduced, from 27 to 13, one annual and 12 monthly returns. The annual return will also have to be filed by service tax assessees, abov .....

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bove a certain threshold of Rs. 2 crore. This will come into effect from date of enforcementof Finance Bill, 2016. 11. The Customs Act being amended to provide for deferred payment of customs duties for certain class of importers and exporters. In consultations with Ministry of Shipping, the facility of direct port delivery is being extended to more importers. 12. In 2014-15 Budget, the intent to implement Indian Customs Single Window Project was announced. Significant progress has been made in .....

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The name of Clean Energy Cess levied on coal, lignite and peat being changed to Clean Environment Cess and its rate being increased. Rs. 200 PMT Rs. 400 PMT 2. Credit of input services on transport of passengers by rail at the existing rate of abatement of 70% being allowed, with effect from 01.04.2016. 4.2% Without Credit 4.2% With input service credit 3. Credit of input services on transport of goods in containers by rail at a reduced abatement rate of 60% being allowed, with effect from 01.0 .....

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duty concessions on specified parts of electric vehicles / hybrid vehicles being extended. Upto 31.03.2016 Without time limit VIII Reduce litigation and providing certainty in taxation 1. An Indirect tax Dispute Resolution Scheme, 2016, being introduced wherein in respect of cases pending before Commissioner (Appeals), the assesse, after paying the duty, interest and penalty equivalent to 25% of penalty imposed, can file a declaration. The proceedings against the assessee will be closed and he .....

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s [with abatement of 30%]. 4. Exemptions being restored , with effect from 01.04.2015, in relation to contracts which had been entered into prior to 01.03.2015 for services of: a) construction provided to the Government, a local authority or a governmental authority, in respect of construction of govt. schools, hospitals etc. b) construction of ports, airports. 5.6% of total amount Nil 5. Exemption from service tax being extended to services provided by way of construction, maintenance etc. of c .....

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effect from date of enforcement of Finance Bill, 2016. 8. Explanation 2 in section 65B(44) of the Finance Act, 1994 being amended so as to clarify that any activity carried out by a lottery distributor or selling agent are liable to service 9. Being clarified that service provided by the Indian Railways to Container Train Operators (CTOs) of haulage of their container train is a service of Transport of Goods by Rail . 14% 4.2% 10. Services provided by the Indian Institutes of Management (IIM) b .....

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being amended so as to provide that time limit for filing application for refund of Cenvat Credit, in case of export of services, is 1 year from the specified date, with effect from 01.03.2016. 13. Assignment by the Government of the right to use the radio-frequency spectrum and its subsequent transfers being declared as a service so as to make it clear that assignment of right to use the spectrum is a service leviable to service tax and not sale of intangible goods, with effect from date of enf .....

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e tax on information technology software [in respect of Software recorded on media NOT FOR RETAIL SALE ] being ensured by exempting from excise duty only that portion of the transaction value on which service tax is paid, with effect from 01.03.2016. 14% 14% IX Rationalization/anti avoidance Existing Proposed 1. The abatement rate at 70% in respect of services by way of construction of residential complex etc. being rationalized, with effect from 01.04.2016. 3.5%/ 4.2% 4.2% 2. Concessional CVD o .....

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Actual user condition for the imports of Phosphoric Acid and Anhydrous Ammonia at concessional BCD/CVD for manufacture of Fertilizers being prescribed. 4. Actual user condition on imports of LCD/LED/OLED Panels at Nil BCD for manufacture of LCD/LED/OLED TVs being prescribed. 5. Excise duty payable per machine per month on chewing tobacco without lime tube / lime pouches and jarda scented tobacco being aligned by providing the same speed slabs for both the products. 6. Abatement rate being ratio .....

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es by Government to a business entity, over such period of time as the period for which the rights have been assigned. This comes into effect from 01.04.2016. 9. Exemption limit on services provided by a performing artist in certain folk or classical art forms of music, dance or theatre, being enhanced to ₹ 1.5 lakh per event, with effect from 01.04.2016. 14% Nil X Additional Resource Mobilization Existing Proposed 1. BCD on Cashew nuts in shell being increased. Nil 5% 2. Excise duty on wa .....

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er: a) Petrol/LPG/CNG driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1200cc; - 1% b) Diesel driven motor vehicles of length not exceeding 4m and engine capacity not exceeding 1500cc; - 2.5% c) Other higher engine capacity and SUVs and bigger sedans. - 4% Three wheeled vehicles, Electrically operated vehicles, Hybrid vehicles, Hydrogen vehicles based on fuel cell technology, Motor vehicles which after clearance have been registered for use solely as taxi, Cars .....

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ing increased 12.5% or Rs.3375 per thousand, whichever is higher 12.5% or Rs.3755 per thousand, whichever is higher 3. Excise duty on Cigarettes of tobacco substitutes being increased Rs.3375 per Thousand Rs.3755 per thousand 4. Excise duty on Cigarillos of tobacco substitutes being increased 12.5% or Rs.3375 per thousand, whichever is higher 12.5% or Rs.3755 per thousand, whichever is higher 5. Excise duty on other forms of tobacco substitutes being increased 12.5% or Rs.3375 per thousand, whic .....

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s.21 per thousand Tariff rate Rs.80 per thousand Effective rate Rs.21 per thousand 9. Additional Duty of Excise on cigarettes being increased Rs. Per thousand Rs. Per thousand (i) Non filter not exceeding 65 mm. 70 215 (ii) Non-filter exceeding 65 mm but not exceeding 70 mm. 110 370 (iii) Filter not exceeding 65 mm. 70 215 (iv) Filter exceeding 65 mm but not exceeding 70 mm. 70 260 (v) Filter exceeding 70 mm but not exceeding 75 mm. 110 370 (vi) Other 180 560 10. Other products (i) A number of a .....

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to record based control in most of cases. Several other consequential changes are also being made. Section 25 of the Customs Act, 1962 being amended 80 also omit the requirement of publishing and offering for sale on the date of its issue, by the Directorate of Publicity and Public Relations of CBEC, of notification issued for publication in the official gazette. Sections 28, 47, 51 and 156 of the Customs Act, 1962 being amended so as provide for deferred payment of customs duties to certain cla .....

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nded to delete the payment of fees to Customs for supervision of manufacturing facilities under Bond; and empower Principal Commissioner or Commissioner of Customs to licence such facilities. THE CUSTOMS TARIFF ACT, 1975 The First Schedule to the Customs Tariff Act, 1975 being amended so as to include editorial changes in the Harmonized System of Nomenclature (HSN) in certain chapters to be effective from 01.01.2017. The First Schedule to the Customs Tariff Act, 1975 being amended so as to: a) p .....

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hange the reference: from IS:1460:2000 to IS:1460:2005 for high speed diesel (HSD) and from IS:1460 to IS: 15770:2008 for light diesel oil (LDO) THE CENTRAL EXCISE ACT, 1944 Section 5A being amended, so as to omit the requirement of publishing and offering for sale on the date of issue, by the Directorate of Publicity and Public Relations of CBEC, of notifications issued for publication in the Official Gazette. Section 11A of the Central Excise Act, 1944 being amended so as to increase the limit .....

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st wearable devices (commonly known as smart watches ); and 4) Accessories of motor vehicle and certain other specified goods. THE CENTRAL EXCISE TARIFF ACT, 1985 The First and Second Schedules to the Central Excise Tariff Act, 1985 being amended so as to include editorial changes in the Harmonized System of Nomenclature (HSN) in certain chapters to be effective from 01.01.2017. the First Schedule to the Central Excise Tariff Act, 1985 being amended so as: a) to prescribe separate tariff lines f .....

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S:1460:2000 to IS:1460:2005 for high speed diesel (HSD) and from IS:1460 to IS: 15770:2008 for light diesel oil (LDO). THE FINANCE ACT, 1994 [SERVICE TAX] Section 73, being amended so as to increase the limitation period from 18 months to 30 months for short levy/non levy/short payment/non-payment/erroneous refund of service tax, with effect from date of enforcement of Finance Bill, 2016. THE CENTRAL SALES ACT, 1956 Section 3 of the Central Sales Tax Act, 1956 being amended so as to insert an ex .....

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entral Road Fund Act, 2000, being amended so as to substitute clause (viii) of subsection (1) to provide a formula for redistribution of the cess for different purposes. THE PREVENTION OF MONEY LAUNDERING ACT, 2002, THE SMUGGLERS AND FOREIGN EXCHANGE MANIPULATORS (FORFEITURE OF PROPERTY ACT, 1976 and NARCOTICS DRUGS AND PSYCHOTROPIC SUBSTANCES ACT, 1985 The three Tribunals established under these Acts being merged and being provided that Appellate Tribunal established under the Smugglers and For .....

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