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BUDGET 2017-18 SPEECH - Speech of Mr. Arun Jaitley Minister of Finance as on February 1 2017

Budget - Dated:- 1-2-2017 - Budget 2017-2018 Speech of Arun Jaitley Minister of Finance February 1, 2017 Madam Speaker, On this auspicious day of Vasant Panchami, I rise to present the Budget for 2017-18. Spring is a season of optimism. I extend my warm greetings to everyone on this occasion. 2. Madam Speaker, our Government was elected amidst huge expectations of the people. The underlying theme of countless expectations was good governance. The expectations included burning issues like inflati .....

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sion making; • from blanket and loose entitlements to targeted delivery; and • from informal economy to formal economy. Inflation, which was in double digits, has been controlled; sluggish growth has been replaced by high growth; and a massive war against black money has been launched. We have worked tirelessly on all these fronts and feel encouraged by the unstinted support of the people to our initiatives. The Government is now seen as a trusted custodian of public money. I take this .....

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y, in the aftermath of major economic and political developments during the last one year. Nevertheless, the International Monetary Fund (IMF) estimates that world GDP will grow by 3.1% in 2016 and 3.4% in 2017. The advanced economies are expected to increase their growth from 1.6% to 1.9% and the emerging economies from 4.1% to 4.5%. As per current indications, macro-economic policy is expected to be more expansionary in certain large economies. Growth in a number of emerging economies is expec .....

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has implications for the fiscal situation of emerging economies. It is however expected that increase, if any, in oil prices would get tempered by quick response from producers of shale gas and oil. This would have a sobering impact on prices of crude and petroleum. Third, in several parts of the world, there are signs of increasing retreat from globalisation of goods, services and people, as pressures for protectionism are building up. These developments have the potential to affect exports fro .....

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in pulses. India s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17. Foreign Direct Investment (FDI) increased from ₹ 1,07,000 crores in the first half of last year to ₹ 1,45,000 crores in the first half of 2016-17. This marks an increase by 36%, despite 5% reduction in global FDI inflows. Foreign exchange reserves have reached 361 billion US Dollars as on 20th January, 2017, which represents a comfortable cover for about 12 .....

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years, have shown that India has considerably improved its policies, practices and economic profile. These are reflected in Doing Business Report of the World Bank; World Investment Report 2016 of UNCTAD; Global Competitiveness Report of 2015-16 and 2016-17 of the World Economic Forum; and several other Reports. India has become the sixth largest manufacturing country in the world, up from ninth previously. We are seen as an engine of global growth. 10. In the last one year, our country has witn .....

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een extensively discussed in both Houses of Parliament. I thank all Members of both the Houses for having passed the Constitution Amendment unanimously. I also thank the State Governments for resolving all relevant issues in the GST Council. 11. Demonetisation of high denomination bank notes was in continuation of a series of measures taken by our Government during the last two years. It is a bold and decisive measure. For several decades, tax evasion for many has become a way of life. This comp .....

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it seeks to change the retrograde status quo. Drop in economic activity, if any, on account of the currency squeeze during the remonetisation period is expected to have only a transient impact on the economy. I am reminded here of what the Father of the Nation, Mahatma Gandhi, had said: A right cause never fails . 12. Demonetisation has strong potential to generate long-term benefits in terms of reduced corruption, greater digitisation of the economy, increased flow of financial savings and gre .....

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hird transformational achievement of our Government, namely, the JAM vision, will have an epoch making impact on our economy and the lives of our people. 13. Madam Speaker, we are at an important turning point in the path of our growth and development. 14. The pace of remonetisation has picked up and will soon reach comfortable levels. The effects of demonetisation are not expected to spill over into the next year. Thus IMF, even while revising India s GDP forecast for 2016 downwards, has projec .....

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eated by demonetisation, will lower borrowing costs and increase the access to credit. This will boost economic activity, with multiplier effects. 15. The announcements made by Honourable Prime Minister on 31st December, 2016 address many of the key concerns of our economy at this juncture, such as, housing for the poor; relief to farmers; credit support to MSMEs; encouragement to digital transactions; assistance to pregnant women and senior citizens; and priority to dalits, tribals, backward cl .....

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on targeting; enactment of the Aadhar bill for disbursement of financial subsidies and benefits; significant reforms in FDI policy; the job creating package for textile sector; and several other measures. We will continue the process of economic reforms for the benefit of the poor and the underprivileged. 18. Madam Speaker, the Budget for 2017-18 contains three major reforms. First, the presentation of the Budget has been advanced to 1st February to enable the Parliament to avoid a Vote on Accou .....

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ice prevalent since 1924. This decision brings the Railways to the centre stage of Government s fiscal policy and would facilitate multi modal transport planning between railways, highways and inland waterways. The functional autonomy of Railways will, however, continue. Third, we have done away with the plan and non-plan classification of expenditure. This will give us a holistic view of allocations for sectors and ministries. This would facilitate optimal allocation of resources. 19. Madam Spe .....

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e evils of corruption, black money and non-transparent political funding. I propose to present my Budget proposals under ten distinct themes to foster this broad agenda. The themes are : (i) Farmers : for whom we have committed to double the income in 5 years; (ii) Rural Population : providing employment and basic infrastructure; (iii) Youth : energising them through education, skills and jobs; (iv) Poor and the Underprivileged : strengthening the systems of social security, health care and affo .....

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RMERS 20. The Indian farmer has once again shown his commitment and resilience in the current year. The total area sown under kharif and rabi seasons are higher than the previous year. With a better monsoon, agriculture is expected to grow at 4.1% in the current year. 21. In last year s Budget speech, I focused on income security of farmers to double their income in 5 years. I had also announced a number of measures. We have to take more steps and enable the farmers to increase their production .....

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ns from the cooperative credit structure. 23. About 40% of the small and marginal farmers avail credit from the cooperative structure. The Primary Agriculture Credit Societies (PACS) act as the front end for loan disbursements. We will support NABARD for computerisation and integration of all 63,000 functional PACS with the Core Banking System of District Central Cooperative Banks. This will be done in 3 years at an estimated cost of ₹ 1,900 crores, with financial participation from State .....

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o settle the arrear claims. For 2017-18, I have provided a sum of ₹ 9,000 crores. The sum insured under this Yojana has more than doubled from ₹ 69,000 crores in Kharif 2015 to ₹ 1,41,625 crores in Kharif 2016. 25. Issuance of Soil Health Cards has gathered momentum. The real benefit to farmers would be available only when the soil samples are tested quickly and nutrient level of the soil is known. Government will therefore set up new mini labs in Krishi Vigyan Kendras (KVKs) a .....

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chieve the goal, per drop more crop . The Fund will have an initial corpus of ₹ 5,000 crores. 28. For the post-harvest phase, we will take steps to enable farmers to get better prices for their produce in the markets. The coverage of National Agricultural Market (e-NAM) will be expanded from the current 250 markets to 585 APMCs. Assistance up to a ceiling of ₹ 75 lakhs will be provided to every e-NAM market for establishment of cleaning, grading and packaging facilities. This will le .....

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1. Dairy is an important source of additional income for the farmers. Availability of milk processing facility and other infrastructure will benefit the farmers through value addition. A large number of milk processing units set up under the Operation Flood Programme has since become old and obsolete. A Dairy Processing and Infrastructure Development Fund would be set up in NABARD with a corpus of ₹ 8,000 crores over 3 years. Initially, the Fund will start with a corpus of ₹ 2,000 cr .....

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ayats poverty free by 2019, the 150th birth anniversary of Gandhiji. We will utilise the existing resources more effectively along with annual increases. This mission will work with a focused micro plan for sustainable livelihood for every deprived household. A composite index for poverty free gram panchayats would be developed to monitor the progress from the baseline. 34. Our Government has made a conscious effort to reorient MGNREGA to support our resolve to double farmers income. While provi .....

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proofing of gram panchayats. 35. Participation of women in MGNREGA has increased to 55% from less than 48% in the past. 36. Honourable Members would be happy to note that the budget provision of ₹ 38,500 crores under MGNREGA in 2016-17 has been increased to ₹ 48,000 crores in 2017-18. This is the highest ever allocation for MGNREGA. The initiative to geo-tag all MGNREGA assets and putting them in public domain has established greater transparency. We are also using space technology .....

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of ₹ 19,000 crores in 2017-18 for this scheme. Together with the contribution of States, an amount of ₹ 27,000 crores will be spent on PMGSY in 2017-18. 38. We propose to complete 1 crore houses by 2019 for the houseless and those living in kutcha houses. I have stepped up the allocation for Pradhan Mantri Awaas Yojana - Gramin from ₹ 15,000 crores in BE 2016-17 to ₹ 23,000 crores in 2017-18. 39. We are well on our way to achieving 100% village electrification by 1st May .....

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e than 3 times. 41. Swachh Bharat Mission (Gramin) has made tremendous progress in promoting safe sanitation and ending open defecation. Sanitation coverage in rural India has gone up from 42% in October 2014 to about 60%. Open Defecation Free villages are now being given priority for piped water supply. 42. We propose to provide safe drinking water to over 28,000 arsenic and fluoride affected habitations in the next four years. This will be a sub mission of the National Rural Drinking Water Pro .....

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ural areas to improve their life and environment. This is a non-negotiable agenda for our Government. The total allocation for the rural, agriculture and allied sectors in 2017-18 is ₹ 1,87,223 crores, which is 24% higher than the previous year. III. YOUTH 46. Let me now focus on my proposals for the youth. 47. Quality education will energise our youth. In the words of Swami Vivekananda, The education which does not help the common mass of people to equip themselves for the struggle for li .....

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n. The focus will be on 3479 educationally backward blocks. 50. In higher education, we will undertake reforms in the UGC. Good quality institutions would be enabled to have greater administrative and academic autonomy. Colleges will be identified based on accreditation and ranking, and given autonomous status. A revised framework will be put in place for outcome based accreditation and credit based programmes. 51. We propose to leverage information technology and launch SWAYAM platform with at .....

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. This would free CBSE, AICTE and other premier institutions from these administrative responsibilities so that they can focus more on academics. 53. We have a huge demographic advantage. Skill India mission was launched in July 2015 to maximise the potential of our youth. 54. Pradhan Mantri Kaushal Kendras (PMKK) have already been promoted in more than 60 districts. We now propose to extend these Kendras to more than 600 districts across the country. 100 India International Skills Centres will .....

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ancement (STRIVE) will also be launched in 2017-18 at a cost of ₹ 2,200 crores. STRIVE will focus on improving the quality and market relevance of vocational training provided in ITIs and strengthen the apprenticeship programmes through industry cluster approach. 57. A special scheme for creating employment in the textile sector has already been launched. A similar scheme will be implemented for the leather and footwear industries. 58. Tourism is a big employment generator and has a multip .....

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. This will provide one stop convergent support services for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition. A nationwide scheme for financial assistance to pregnant women has already been announced by Honourable Prime Minister on 31st December, 2016. Under this scheme, ₹ 6,000 each will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children. 61. For .....

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8. Thanks to the surplus liquidity created by demonetisation, the Banks have already started reducing their lending rates, including those for housing. In addition, interest subvention for housing loans has also been announced by the Honourable Prime Minister. 64. Poverty is usually associated with poor health. It is the poor who suffer the maximum from various chronic diseases. Government has therefore prepared an action plan to eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018 and Me .....

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r annum. In addition, steps will be taken to roll out DNB courses in big District Hospitals; strengthen PG teaching in select ESI and Municipal Corporation Hospitals; and encourage reputed Private Hospitals to start DNB courses. We will work with the State Governments to take these tasks forward. The Government is committed to take necessary steps for structural transformation of the Regulatory framework of Medical Education and Practice in India. 66. Two new All India Institutes of Medical Scie .....

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d harmonious labour relations lead to higher productivity. Legislative reforms will be undertaken to simplify, rationalise and amalgamate the existing labour laws into 4 Codes on (i) wages; (ii) industrial relations; (iii) social security and welfare; and (iv) safety and working conditions. The Model Shops and Establishment Bill 2016 has been circulated to all States for consideration and adoption. This would open up additional avenues for employment of women. The amendment made to the Payment o .....

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to ₹ 31,920 crores and for Minority Affairs to ₹ 4,195 crores. The Government will introduce outcome based monitoring of expenditure in these sectors by the NITI Aayog. 70. For senior citizens, Aadhar based Smart Cards containing their health details will be introduced. A beginning will be made through a pilot in 15 districts during 2017-18. The LIC will implement a scheme for senior citizens to provide assured pension, with a guaranteed return of 8% per annum for 10 years. V. INFRA .....

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rovided by the Government. 73. Among other things, the Railways will focus on four major areas, namely : (i) Passenger safety; (ii) Capital and development works; (iii) Cleanliness; and (iv) Finance and accounting reforms. 74. For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with a corpus of ₹ 1 lakh crores over a period of 5 years. Besides seed capital from the Government, the Railways will arrange the balance resources from their own revenues and other sources. Gover .....

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sioned in 2017-18, as against 2,800 kms in 2016-17. Steps will be taken to launch dedicated trains for tourism and pilgrimage. 76. Railways have set up joint ventures with 9 State Governments. 70 projects have been identified for construction and development. 77. A beginning has been made with regard to station redevelopment. At least 25 stations are expected to be awarded during 2017-18 for station redevelopment. 500 stations will be made differently abled friendly by providing lifts and escala .....

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tted with bio toilets. Pilot plants for environment friendly disposal of solid waste and conversion of biodegradable waste to energy are being set up at New Delhi and Jaipur railway stations. Five more such solid waste management plants are now being taken up. 80. Today Indian Railways face stiff competition from other modes of transportation which are dominated by the private sector. Transformative measures have to be undertaken to make Indian Railways competitive to retain their position of pr .....

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s been withdrawn. Cashless reservations have gone up from 58 to 68%. (iii) As part of accounting reforms, accrual based financial statements will be rolled out by March 2019. 81. It will be our continuous endeavour to improve the Operating Ratio of the Railways. The tariffs of Railways would be fixed, taking into consideration costs, quality of service, social obligations and competition from other forms of transport. 82. Metro rail is emerging as an important mode of urban transportation. A new .....

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crores in BE 2016-17 to ₹ 64,900 crores in 2017-18. 2,000 kms of coastal connectivity roads have been identified for construction and development. This will facilitate better connectivity with ports and remote villages. The total length of roads, including those under PMGSY, built from 2014-15 till the current year is about 1,40,000 kms which is significantly higher than previous three years. 85. An effective multi modal logistics and transport sector will make our economy more competitive .....

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provided ₹ 2,41,387 crores in 2017-18. This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities. 88. Telecom sector is an important component of our infrastructure eco system. The recent spectrum auctions have removed spectrum scarcity in the country. This will give a major fillip to mobile broadband and Digital India for the benefit of people living in rural and remote areas. 89. Under the BharatNet Project, OFC has bee .....

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p Strategic Crude Oil Reserves. In the first phase, 3 such Reserves facilities have been set up. Now in the second phase, it is proposed to set up caverns at 2 more locations, namely, Chandikhole in Odisha and Bikaner in Rajasthan. This will take our strategic reserve capacity to 15.33 MMT. 91. In solar energy, we now propose to take up the second phase of Solar Park development for additional 20,000 MW capacity. 92. We are also creating an eco-system to make India a global hub for electronics m .....

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and restructured Central scheme, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18. 94. The total allocation for infrastructure development in 2017-18 stands at ₹ 3,96,135 crores. VI. FINANCIAL SECTOR 95. I now turn to the Financial Sector. The focus of TEC India agenda in this sector is on building stable and stronger institutions. We will continue with our reform agenda with several new measures. 96. Our Government has already undertaken substantive refor .....

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and necessary announcements will be made in due course. 97. The Commodities markets require further reforms for the benefits of farmers. An expert committee will be constituted to study and promote creation of an operational and legal framework to integrate spot market and derivatives market for commodities trading. e-NAM would be an integral part of such framework. 98. The draft bill to curtail the menace of illicit deposit schemes has been placed in the public domain and will be introduced sh .....

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ility and resilience of our financial system. It will also protect the consumers of various financial institutions. Together with the Insolvency and Bankruptcy Code, a resolution mechanism for financial firms will ensure comprehensiveness of the resolution system in our country. 100. I had stated in my last Budget speech that a Bill will be introduced to streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contr .....

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other stakeholders. 102. I have also proposed several other measures in the financial sector which are listed in Annex I. 103. Listing of Public Sector enterprises will foster greater public accountability and unlock the true value of these companies. The Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges. The disinvestment policy announced by me in the last budget will continue. 104. The shares of Railway PSEs like .....

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ed public sector oil major which will be able to match the performance of international and domestic private sector oil and gas companies. 106. Our ETF, comprising shares of ten CPSEs, has received overwhelming response in the recent Further Fund Offering (FFO). We will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18. 107. The focus on resolution of stressed legacy .....

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tion company under the SARFAESI Act will be permitted in SEBI registered stock exchanges. This will enhance capital flows into the securitization industry and will particularly be helpful to deal with bank NPAs. 109. The Pradhan Mantri Mudra Yojana has contributed significantly to funding the unfunded and the underfunded. Last year, the target of ₹ 1.22 lakh crores was exceeded. For 2017-18, I propose to double the lending target of 2015-16 and set it at ₹ 2.44 lakh crores. Priority .....

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to clean the system and weed out corruption and black money. It has a transformative impact in terms of greater formalisation of the economy and mainstreaming of financial savings into the banking system. This, in turn, is expected to energise private investment in the country through lower cost of credit. India is now on the cusp of a massive digital revolution. 112. A shift to digital payments has huge benefits for the common man. The earlier initiative of our Government to promote financial .....

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4. Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly. This will be specifically beneficial for those who do not have debit cards, mobile wallets and mobile phones. A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards. Banks have targeted to introduce additional 10 lakh new PoS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based PoS by Septem .....

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teps would be taken to promote and possibly mandate petrol pumps, fertilizer depots, municipalities, Block offices, road transport offices, universities, colleges, hospitals and other institutions to have facilities for digital payments, including BHIM App. A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration. 117. Government will strengthen the Financial Inclusion Fund to augment resources for taking up these initiatives. 118. Go .....

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n with, it is proposed to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems. Necessary amendments are proposed to this effect in the Finance Bill 2017. 120. As we move faster on the path of digital transactions and cheque payments, we need to ensure that the payees of dishonoured cheques are able to realise the payments. Government is therefore considering the option of amending the Neg .....

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ces, has been selected as one of the winners of the South Asia Procurement Innovation Awards of the World Bank. 124. Our citizens in far flung regions of the country find it difficult to obtain passports and redress passport related grievances. We have decided to utilise the Head Post Offices as front offices for rendering passport services. 125. Our defence forces keep the country safe from both external and internal threats. A Centralised Defence Travel System has now been developed through wh .....

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cumbersome procedures of Government recruitment. There are multiplicity of agencies and examinations. We propose to introduce a system of single registration and two tier system of examination. 128. Over the years, the number of tribunals have multiplied with overlapping functions. We propose to rationalise the number of tribunals and merge tribunals wherever appropriate. 129. In the recent past, there have been instances of big time offenders, including economic offenders, fleeing the country t .....

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blic service and transparent governance. Service to the people was the life-long commitment of the Father of the Nation, Mahatma Gandhi. As we approach, the 150th Birth Anniversary of the Mahatma, we will take all steps to celebrate it in a befitting manner. A High Level Committee under the Chairmanship of Honourable Prime Minister is proposed to be set up for the same. We will also commemorate the centenary year of Champaran Satyagrah this year. Government of India will support Government of Gu .....

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penditure, the focus is now on Revenue and Capital expenditure. I have stepped up the allocation for Capital expenditure by 25.4% over the previous year. This will have multiplier effects and lead to higher growth. The total resources being transferred to the States and the Union Territories with Legislatures is ₹ 4.11 lakh crores, against ₹ 3.60 lakh crores in BE 201617. Details of allocations for important sectors and schemes and transfer of resources to States are given in Annex I .....

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tries and Departments, is being laid along with the other Budget documents. This will improve accountability of Government expenditure. 135. The FRBM Review Committee has given its report recently. The Committee has done an elaborate exercise and has recommended that a sustainable debt path must be the principal macro-economic anchor of our fiscal policy. The Committee has favoured Debt to GDP of 60% for the General Government by 2023, consisting of 40% for Central Government and 20% for State G .....

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Escape Clause, I am refraining from doing so. The Report of the Committee will be carefully examined and appropriate decisions taken in due course. 136. Nevertheless, I take note of the fiscal deficit roadmap of 3% recommended by the Committee for the next three years. I have taken into consideration the need for higher public expenditure in the context of sluggish private sector investment and slow global growth. I have kept in mind the recommendation of the Committee that a sustainable debt s .....

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rores of the previous year. More importantly, the Revenue Deficit of 2.3% in BE 2016-17 stands reduced to 2.1% in the Revised Estimates. The Revenue Deficit for next year is pegged at 1.9% , against 2% mandated by the FRBM Act. 138. It will be our endeavour to improve upon these fiscal numbers, especially the fiscal deficit, in the next year, through greater focus on quality of expenditure and higher tax realisation from the huge cash deposits in Banks, triggered by demonetisation. PART B Madam .....

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74 crore. As against 5.6 crore informal sector individual enterprises and firms doing small business in India, the number of returns filed by this category are only 1.81 crore. Out of the 13.94 lakh companies registered in India upto 31st March, 2014, 5.97 lakh companies have filed their returns for Assessment Year 2016-17. Of the 5.97 lakh companies which have filed their returns for Assessment Year 2016-17 so far, as many as 2.76 lakh companies have shown losses or zero income. 2.85 lakh compa .....

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4 lakh people show income above ₹ 10 lakhs. Of the 76 lakh individual assesses who declare income above ₹ 5 lakh, 56 lakh are in the salaried class. The number of people showing income more than ₹ 50 lakh in the entire country is only 1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold, and number of Indian citizens who flew abroad, either for business or tourism, is 2 crore in the year 2015. From all these figures .....

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; 2 lakh and ₹ 80 lakh were made in about 1.09 crore accounts with an average deposit size of ₹ 5.03 lakh. Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of ₹ 3.31 crores. This data mining will help us immensely in expanding the tax net as well as increasing the revenues, which was one of the objectives of demonetisation. 143. Madam Speaker, one of the main priorities of our Government is to eliminate the black money component from the e .....

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x in personal income tax in the first three quarters of the current financial is 34.8%. 145. Madam Speaker, the thrust of my tax proposals in this Budget is stimulating growth, relief to middle class, affordable housing, curbing black money, promoting digital economy, transparency of political funding and simplification of tax administration. Measures for Promoting Affordable Housing and Real Estate Sector 146. In my budget proposals last year, I had announced a scheme for profit-linked income t .....

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. will apply. In order to be eligible, the scheme was to be completed in 3 years after commencement. I propose to extend this period to 5 years. 147. At present, the houses which are unoccupied after getting completion certificates are subjected to tax on notional rental income. For builders for whom constructed buildings are stock-in-trade, I propose to apply this rule only after one year of the end of the year in which completion certificate is received so that they get some breathing time for .....

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while encouraging the mobility of assets. We also plan to extend the basket of financial instruments in which the capital gains can be invested without payment of tax. 149. For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed. 150. The new capital for State of Andhra Pradesh is being constructed by innovative land-pooling mechanism without use of the Land Acquisition Act. I propose to exempt fro .....

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nefit is also extended to Rupee Denominated (Masala) Bonds. 152. The Government gave income tax exemptions to start-ups with certain conditions last year. For the purpose of carry forward of losses in respect of such start-ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues. Also the profit linked deduction available to the start-ups for 3 years out of 5 years is being changed to .....

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o allow companies to use MAT credit in future years, I propose to allow carry forward of MAT upto a period of 15 years instead of 10 years at present. 154. In my Budget proposals in 2015, I had announced that I would be bringing the corporate income tax rate down to 25% gradually. In 2016 Budget, I had announced a reduction by 1% in case of those companies whose turnover is less than ₹ 5 crore. In the same Budget, I had also announced that new manufacturing companies who do not avail of an .....

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ctive tax rate of 25.90%. 156. In order to make MSME companies more viable and also to encourage firms to migrate to company format, I propose to reduce the income tax for smaller companies with annual turnover upto ₹ 50 crore to 25%. As per data of Assessment Year 2015-16, there are 6.94 lakh companies filing returns of which 6.67 lakh companies fall in this category and, therefore, percentage-wise 96% of companies will get this benefit of lower taxation. This will make our MSME sector mo .....

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anks. This will remove hardship of having to pay tax even when interest income is not realised. 158. Considering the wide range of use of LNG as fuel as well as feed stock for petro-chemicals sector, I propose to reduce the basic customs duty on LNG from 5% to 2.5%. 159. In order to incentivise domestic value addition and to promote Make in India, I propose to make changes in Customs & Central Excise duties in respect of certain items which are given in the Annex III of this speech. Some of .....

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deduction, both for revenue as well as capital expenditure, to ₹ 10,000. Similarly, the limit of cash donation which can be received by a charitable trust is being reduced from ₹ 10,000/- to ₹ 2000/-. 162. The Special Investigation Team (SIT) set up by the Government for black money has suggested that no transaction above ₹ 3 lakh should be permitted in cash. The Government has decided to accept this proposal. Suitable amendment to the Income-tax Act is proposed in the F .....

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arties are an essential ingredient of a multi-party Parliamentary democracy. Even 70 years after Independence, the country has not been able to evolve a transparent method of funding political parties which is vital to the system of free and fair elections. An attempt was made in the past by amending the provisions of the Representation of Peoples Act, the Companies Act and the Income Tax Act to incentivise donations by individuals, partnership firms, HUFs and companies to political parties. Bot .....

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cash. 165. An effort, therefore, requires to be made to cleanse the system of political funding in India. Donors have also expressed reluctance in donating by cheque or other transparent methods as it would disclose their identity and entail adverse consequences. I, therefore, propose the following scheme as an effort to cleanse the system of funding of political parties: a) In accordance with the suggestion made by the Election Commission, the maximum amount of cash donation that a political p .....

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be redeemable only in the designated account of a registered political party. These bonds will be redeemable within the prescribed time limit from issuance of bond. d) Every political party would have to file its return within the time prescribed in accordance with the provision of the Income-tax Act.Needless to say that the existing exemption to the political parties from payment of income-tax would be available only subject to the fulfilment of these conditions. This reform will bring about g .....

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due to domestic transfer pricing provisions, I propose to restrict the scope of domestic transfer pricing only if one of the entities involved in related party transaction enjoys specified profit-linked deduction. 167. I propose to increase the threshold limit for audit of business entities who opt for presumptive income scheme from ₹ 1 crore to ₹ 2 crores. Similarly, the threshold for maintenance of books for individuals and HUF is being increased from turnover of ₹ 10 lakhs t .....

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ve this difficulty, I propose to exempt Foreign Portfolio Investor (FPI) Category I & II from indirect transfer provision. I also propose to issue a clarification that indirect transfer provision shall not apply in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India. 170. As on today, a TDS of 5% is being deducted from commission payable to individual insurance agents even if th .....

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fund expeditiously, the time period for revising a tax return is being reduced to 12 months from completion of financial year, at par with the time period for filing of return. Also the time for completion of scrutiny assessments is being compressed further from 21 months to 18 months for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and thereafter. Personal Income-Tax 173. While the Government is trying to bring within tax-net more people who are evading taxes, th .....

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#8377; 2.5 lakhs to ₹ 5 lakhs to 5% from the present rate of 10%. This would reduce the tax liability of all persons below ₹ 5 lakh income either to zero (with rebate) or 50% of their existing liability. In order not to have duplication of benefit, the existing benefit of rebate available to the same group of beneficiaries is being reduced to ₹ 2500 available only to assessees upto income of ₹ 3.5 lakhs. The combined effect of both these measures will mean that there woul .....

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l also get a uniform benefit of ₹ 12,500/- per person. The total amount of tax foregone on account of this measure is ₹ 15,500 crores. 175. In order to make good some of this revenue loss on account of this relief, I propose to levy a surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between ₹ 50 lakhs and ₹ 1 crore. The existing surcharge of 15% of Tax on people earning more than ₹ 1 crore will continue. This is likely to g .....

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I appeal to all citizens of India to contribute to Nation Building by making a small payment of 5% tax if their income is falling in the lowest slab of ₹ 2.5 lakhs to ₹ 5 lakhs. 177. Some other important proposals for amendment in Tax Laws which are not covered by me in my speech are given in Annex III of this speech. Goods and Services Tax 178. There has been substantial progress towards ushering in GST, by far, the biggest tax reform since independence. Since the enactment of the C .....

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Council. Since then, the GST Council held 9 meetings to discuss various issues relating to GST, including broad contours of the GST rate structure, threshold exemption and parameters for composition scheme, details for compensation to States due to implementation of GST, examination of draft model GST law, draft IGST law and the Compensation Law and administrative mechanism for GST. It is my privilege to inform this august house that the GST Council has finalised its recommendations on almost a .....

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of GST is likely to bring more taxes both to Central and State Governments because of widening of tax net. I have preferred not to make many changes in current regime of Excise & Service Tax because the same are to be replaced by GST soon. RAPID 180. In the Annual Conclave of Tax officers called Rajaswa Gyan Sangam held in June 2016, the Prime Minister had expressed his desire to bring reforms in tax administration in the form of an approach of RAPID which stands for Revenue, Accountability, .....

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an to enforce greater accountability of officers of Tax Department for specific act of commission and omission. I would like to assure everyone that honest, tax-compliant person would be treated with dignity and courtesy. 181. Madam Speaker, my direct tax proposals for exemptions, etc. would result in revenue loss of ₹ 22,700 crore but after counting for revenue gain of ₹ 2,700 crore for additional resource mobilisation proposal, the net revenue loss in direct tax would come to ͅ .....

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day, which is more appropriate for this, than today. 184. With these words, Madam Speaker, I commend the Budget to the House. Annex I to Part A Other measures in the Financial Sector 1. The commodities and securities derivative markets will be further integrated by integrating the participants, brokers, and operational frameworks. 2. The process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers, etc. will be made fully online by SEBI. This will im .....

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ompanies are categorised as Qualified Institutional Buyers (QIBs) by SEBI. They are eligible for participation in IPOs with specifically earmarked allocations. It is now proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorised as QIBs. This will strengthen the IPO market and channelize more investments. 6. Listing and trading of Security Receipts issued by a securitisation company or a reconstruction company under the SARFAESI Act will be p .....

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; Welfare 44485 48072 51026 2 Ministry of Development of North Eastern Region 2430 2524 2682 3 Ministry of Drinking Water and Sanitation 14010 16512 20011 4 Ministry of Health and Family Welfare 38206 39688 48853 5 Ministry of Housing and Urban Poverty Alleviation 5411 5285 6406 6 Ministry of Human Resource Development 72394 73599 79686 7 Ministry of Micro, Small and Medium Enterprises 3465 5463 6482 8 Ministry of Minority Affairs 3827 3827 4195 9 Ministry of New and Renewable Energy 5036 4360 5 .....

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ild Development 17408 17640 22095 ALLOCATION FOR WELFARE OF SC, ST, OTHER VULNERABLE GROUPS, WOMEN, CHILDREN AND NORTH EASTERN REGION Description of the Allocation BE 2016-2017 RE 2016-2017 BE 2017-2018 I Allocation for the welfare of Scheduled Tribes across all ministries 24005 25602 31920 II Allocation for the welfare of Scheduled Castes across all ministries 38833 40920 52393 III Allocation for the Welfare of Other Vulnerable Groups 1873 1892 1976 IV Allocation for North Eastern Region across .....

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7 4 Social sectors 168100 176225 195473 4a Education and Health 112138 114806 130215 4b Social sectors with welfare orientation 55962 61419 65258 5 Employment Generation, Skill and Livelihood 12141 14870 17273 6 Scientific Ministries 33467 34359 37435 Source : Expenditure Profile and Expenditure Budget 2017-18 B to Part A ALLOCATION FOR IMPORTANT SCHEMES (In Crores of Rupees) Sl.No. Name of scheme BE 2016-2017 RE 2016-2017 BE 2017-2018 1 Mahatma Gandhi National Rural Employment Guarantee Program .....

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00 12800 16248 11 National Livelihood Mission - Ajeevika 3325 3334 4849 12 Urban Rejuvenation Mission : AMRUT & Smart Cities Mission 7296 9559 9000 13 Green Revolution 12560 10360 13741 14 White Revolution 1138 1312 1634 15 Blue Revolution 247 392 401 16 Pradhan Mantri Krishi Sinchai Yojana (PMKSY) aggregated across three ministries 5767 5189 7377 17 Mission for Empowerment and Protection for Women 907 821 1089 18 Environment, Forestry and Wildlife 850 819 962 19 Employment Generation Progra .....

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lic Sector Banks according to the Indradhanush scheme 25000 25000 10000 26 Integrated Power Development Scheme and Deen Dayal Upadhyaya Gram Jyoti Yojna 8500 7874 10635 27 Namami Gange- National Ganga Plan 2150 1441 2250 28 Sagarmala 450 406 600 29 LPG connection to poor households 2000 2500 2500 to Part A Resources Transferred to State and UTs with Legislature (In Crores of Rupees) Sl. No. Actuals 2015-16 BE 2016-17 RE 2016-17 BE 2017-18 1 Devolution of states' share in taxes 506193 570337 .....

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s (Net) (4-7a) 817890 916326 976034 1071995 9 Total Central Transfers to UTs with Legislature (Net) (5-7b) 5080 4875 5114 3563 10 Total Transfers from Centre (Net) (8+9) 822970 921201 981148 1075558 In addition 11 Special State Government Securities issued from National Small Savings Fund (NSSF)* 58750 26375 13000 15000 * Only Madhya Pradesh, Kerala, Arunachal Pradesh and Delhi have chosen to receive loans from NSSF starting from 2016-17. Source: Budget at a Glance 2017-18. Annex III to Part B o .....

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Hindu undivided family (HUF) and firms. 1.2 It is proposed to widen the scope of section 56 of the Income-tax Act to provide that any money, immovable property or specified movable property received without consideration or with inadequate consideration, by any person, subject to certain exemption and exceptions, shall be taxable if its value exceeds rupees fifty thousand. 1.3 It is proposed to provide that in case of transfer of unquoted equity shares, where the fair market value, determined in .....

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ed after 1st October, 2004. 1.5 It is proposed to introduce a new provision in the Income-tax Act to provide for tax deduction at source at the rate of five per cent. by an individual or HUF, other than those whose books of account are required to be audited, while making payment of rent of an amount exceeding ₹ 50,000 per month. It is also proposed to provide that such tax shall be deducted and deposited only once in a financial year through a challancum-statement. Further, the deductor s .....

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butable to the adjustment is not brought to India within the prescribed time. 1.7 In order to address the issue of thin capitalisation, it is proposed to provide that the interest paid by an Indian company or permanent establishment of a foreign company, in excess of thirty percent of earnings before interest, taxes, depreciation and amortisation (EBITDA), or interest paid to its associated enterprise, whichever is less, shall not be allowed as deduction in computing its taxable profit. It is al .....

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t assessment years. 1.9 It is proposed that donation by an entity registered under section 12A or approved under section 10(23C), to other entity, registered under section 12A, with the direction that such donation shall form part of the corpus, shall not be treated as application of income for charitable purposes. 2. Rationalisation Measures 2.1 It is proposed to provide that in case of foreign company, sale of leftover stock of crude oil in case of strategic petroleum reserve after the expiry .....

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ue of the asset which has been taken into account for the purpose of computation of accreted income on which tax has been paid in accordance with provisions of Chapter XII-EB of the Income-tax Act, shall be taken as the cost of acquisition of that asset. 2.5 It is proposed to modify the conditions of special taxation regime for off shore funds under section 9A of the Income-tax Act so as to provide that the maintenance of minimum fund size would not be necessary in the year in which the fund is .....

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sed that in cases where grant of refund is likely to adversely affect the interest of revenue, it can be withheld with the approval of the higher authority after recording the reasons in writing. 2.8 It is proposed to provide that certain entities, like, Investor Protection Funds, Core Settlement Guarantee Fund, Tea/Coffee/Rubber Boards, MPEDA, or APDEA; enjoying exemption from levy of income-tax under section 10 of the Income-tax Act shall be required to furnish return of their income. 2.9 In o .....

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e Incometax Act exceeds the amount of FTC admissible against the tax payable by the assesse on his income in accordance with the other provisions of the Act, such excess credit shall be ignored while computing the amount of credit under section 115JAA or section 115JD. 2.12 In a case where the foreign tax credit has not been granted to the assesse on the ground that payment of such tax is in dispute, it is proposed to provide, subject to certain conditions, additional time to the Assessing Offic .....

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ernment, banks or such other persons or class of persons or receipts notified by the Central Government. It is also proposed to provide for a penalty in case of contravention of this provision. 2.14 It is proposed to clarify that provisions relating to tax deduction at source shall not apply to exempt compensation received under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. 2.15 It is proposed to lower the rate of deduction of tax .....

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provide for grant of interest in case of refund of excess payment of TDS. 2.19 It is proposed to merge the Authority for Advance Ruling (AAR) for IncomeTax with AAR for Customs, Central Excise and Service Tax; and create common AAR. It is also proposed to amend the qualifications for appointment of Chairman and Members. 2.20 It is proposed to make the orders passed by the authority under section 10(23C) of the Income-tax Act, appealable before the Tribunal. 2.21 It is proposed to authorise the C .....

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in Section 112 of the Income-tax Act providing for concessional rate of tax in respect of transfer of share of a private limited company shall be applicable retrospectively from assessment year 2013-14. 2.24 It is proposed to amend section 10AA of the Income-tax Act so as to provide that the amount of deduction referred therein shall be allowed from the total income computed in accordance with the provisions of the Act before giving effect to the provisions of the said section and that the said .....

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-tax Act, is defined under the said agreement, the said term shall be assigned the meaning as provided in the said agreement and where the term is not defined in the agreement, but is defined in the Act, it shall be assigned the meaning as defined in the Act or any technical explanation issued by the Central Government. 2.27 It is proposed to provide that where the capital asset referred to in section 35AD of the Income-tax Act is used for an ineligible business and the benefit of said section i .....

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do not conform to the conditions of registration, shall be required to obtain fresh registration. 2.29 In order to strengthen the TCS regime, it is proposed to provide that the collectee shall furnish his PAN to the collector, failing which, tax shall be collected at a higher rate. 2.30 In order to provide parity between an individual who is an employee and an individual who is self-employed, it is proposed to provide that the selfemployed individual shall be eligible for deduction upto twenty .....

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y Director or the Assistant Director of Income-tax to call for information for the purpose of any enquiry without seeking approval of the higher authority. 2.33 It is proposed to expand the provision of section 133A of the Income-tax Act so as to include any place at which activity for charitable purpose is carried on. 2.34 It is proposed to authorise the CBDT to frame a scheme for centralised issuance of notice calling for information and documents for the purpose of verification of information .....

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upto ten years preceding the year in which search took place. 2.36 In order to strengthen the TDS provisions, it is proposed to provide that a disallowance shall be made in respect of an expenditure incurred against income from other sources unless tax has been deducted thereon at applicable rates. 2.37 In order to maintain the confidentiality of the source of the information and the identity of the informer, it is proposed to clarify that the reasons to believe as recorded by the income-tax au .....

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10 of the Income-tax Act, 1961 so as to make the correct reference to Foreign Exchange Management Act (FEMA). 2.40 It is proposed to provide a sun set clause in respect of deduction allowed to certain persons in respect of investment in listed equity shares and listed units of an equity oriented fund. 2.41 It is proposed to exempt capital gains arising out of transfer of a rupee denominated bond by a non-resident to a non-resident. Indirect Taxes I. PROPOSALS INVOLVING CHANGE IN DUTY / TAX RATE .....

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lan fruit extract BCD - 7.5% BCD - 2.5% Capital Goods 5. Ball screws, linear motion guides and CNC systems for use in the manufacture of CNC machine tools, subject to actual user condition Ball screws and liner motion guides BCD - 7.5% CNC systems BCD - 10% BCD - 2.5% Renewable Energy 6. All items of machinery required for fuel cell based power generating systems to be set up in the country or for demonstration purposes, subject to certain specified conditions BCD - 10% /7.5% CVD - 12.5% BCD - 5 .....

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ect to actual user condition Applicable BCD 5% Commodity Rate of Duty From To B. Changes in Customs and Excise / CV duty to address the problem of duty inversions in certain sectors Chemicals & Petrochemicals 10. o-Xylene BCD - 2.5% BCD - Nil 11. 2-Ethyl Anthraquinone [2914 69 90] for use in manufacture of hydrogen peroxide, subject to actual user condition BCD - 7.5% BCD - 2.5% 12. Vinyl Polyethylene Glycol (VPEG) for use in manufacture of Poly Carboxylate Ether, subject to actual user cond .....

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ual user condition BCD - 10% BCD - 5% 16. Hot Rolled Coils [7208] for use in the manufacture of welded tubes and pipes falling under heading 7305 or 7306, subject to actual user condition BCD - 12.5% BCD - 10% Automobiles 17. Clay 2 Powder (Alumax) for use in ceramic substrate for catalytic convertors, subject to actual user conditon BCD - 7.5% BCD - 5% Renewable Energy 18. Solar tempered glass for use in the manufacture of solar cells/panels/modules BCD - 5% BCD - Nil 19. Parts/raw materials fo .....

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AD - 4% BCD - 5% CVD - Nil SAD - Nil Miscellaneous 21. Membrane Sheet and Tricot / Spacer for use in the manufacture of RO membrane element for household type filters, subject to actual user condition CVD - 12.5% CVD - 6% C. Changes in Customs duty to provide adequate protection to domestic industry Food Processing 22. Cashew nut, roasted, salted or roasted and salted BCD - 30% BCD - 45% Electronics / Hardware 23. Populated Printed Circuit Boards (PCBs) for use in the manufacture of mobile phone .....

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for manufacture of: miniaturized POS card reader for m-POS (not including mobile phones or tablet computer), micro ATM as per standards version 1.5.1, Finger Print Reader / Scanner, and Iris Scanner Applicable BCD, CVD SAD BCD - Nil CVD - Nil SAD - Nil II. Imposition of export duty to conserve domestic resources 27. Other aluminium ores, including laterite Nil 15% III. Improving ease of doing business and Export Promotion 28. De-minimis customs duties exemption limit for goods imported through .....

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r IV. Anti-avoidance measure 30. Silver medallion, silver coins, having silver content not below 99.9%, semi-manufactured form of silver and articles of silver CVD - Nil CVD -12.5% Note: (a) Basic Customs Duty means the customs duty levied under the Customs Act, 1962. (b) CVD means the Additional Duty of Customs levied under sub-section (1) of section 3 of the Customs Tariff Act, 1975. (c) SAD means the Special Additional Duty of Customs levied under subsection (5) of section 3 of the Customs Ta .....

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f tobacco substitutes Rs.3755 per thousand Rs.4006 per thousand 4. Cigarillos of tobacco substitutes 12.5% or ₹ 3755 per thousand, whichever is higher 12.5% or ₹ 4006 per thousand, whichever is higher 5. Others of tobacco substitutes 12.5% or ₹ 3755 per thousand, whichever is higher 12.5% or ₹ 4006 per thousand, whichever is higher 6. Paper rolled biris -handmade Rs.21 per thousand Rs.28 per thousand 7. Paper rolled biris - Rs.21 per thousand Rs.78 per thousand Commodity .....

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t to actual user condition Applicable duty 6% 11. Waste and scrap of precious metals or metals clad with precious metals arising in course of manufacture of goods failing in Chapter 71 Strips, wires, sheets, plates and foils of silver Articles of silver jewellery, other than those studded with diamond, ruby, emerald or sapphire Silver coin of purity 99.9% and above, bearing a brand Nil Nil subject to the condition that no credit of duty paid on inputs or input services or capital goods has been .....

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nufacture of: Miniaturized POS card reader for m-POS (not including mobile phones or tablet computers), Micro ATM as per standards version 1.5.1, FingerPrint Reader / Scanner, and Iris Scanner Applicable duty Nil Note: Basic Excise Duty means the excise duty set forth in the First Schedule to the Central Excise Tariff Act, 1985. CHANGES IN RATE OF ADDITIONAL DUTY LEVIED UNDER SECTION 85 OF THE FINANCE ACT, 2005 Commodity Rate of duty From To A. Pan Masala 1. Pan Masala 6% 9% B. Tobacco and Tobac .....

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but not exceeding 75mm Rs.370 per thousand Rs.541 per thousand 8. Other Cigarettes Rs.560 per thousand Rs.811 per thousand 9. Chewing tobacco (including filter khaini) 6% 12% 10. Jarda scented tobacco 6% 12% SERVICE TAX S. No. Changes Existing Proposed A. Relief to the armed forces of the Union from service tax 1. Services provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds by way of life insurance to members of the Army, Navy and Air Force under the Group In .....

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years or more) by State Government industrial development corporations/undertakings to industrial units, is proposed to be made effective from 1.6.2007 (the date when the services of renting of immovable property became taxable). 14% Nil 2. Rule 2A of the Service Tax (Determination of Value) Rules, 2006 is proposed to be amended from 01.07.2010 so as to make it clear that value of service portion in execution of works contract involving transfer of goods and land or undivided share of land, as t .....

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for a period of one year from the date of commencement of operations of the Regional Connectivity Scheme (RCS) airport as notified by Ministry of Civil Aviation. 14% Nil D. Rationalization Measures 1. The exemption in respect of services provided by Indian Institutes of Management (IIMs) by way of two year full time residential Post Graduate Programmes (PGP) in Management for the Post Graduate Diploma in Management (PGDM), to which admissions are made on the basis of the Common Admission Test ( .....

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