BUDGET 2017 – A Look at Every Clause

Budget 2017-18, presented by Finance Minister Arun Jaitley on Wednesday has three significant changes embedded in it.

First, presentation of Budget advanced to 1st February to enable the Ministries to operationalise all activities from the commencement of the financial year.

Secondly, merger of Railways Budget with General Budget to bring Railways to the centre stage of Government’s Fiscal Policy.

Thirdly, removal of plan and nonplan classification of expenditure to facilitate a holistic view of allocations for sectors and ministries.

Here are features of Budget 2017:

 In the last two and half years administration has moved from discretionary, favouritism based to system and transparency based
 Inflation brought under control. CPI-based inflation declined from 6% in July 2016 to 3.4% in December, 2016
 Economy has moved on a high growth path. 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. FDI grew 36% in H1 2016-17 over H1 2015-16, despite 5% reduction in global FDI inflows. Foreign exchange reserves have reached 361 billion US Dollars as on 20th January, 2017
 War against black money launched
 Government continued on path of fiscal consolidation, without compromising on public investment.
 The Indian economy has been robust to mild shocks and IMF forecasts, India to be one of the fastest growing major economies in 2017
 World economy faces considerable uncertainty, in the aftermath of major economic and political developments during the last year
 The US Federal Reserve’s , intention to increase policy rates in 2017, may lead to lower capital inflows and higher outflows from the emerging economies
 Uncertainty around commodity prices, especially that of crude oil, has implications for the fiscal situation of emerging economies
 Signs of retreat from globalisation of goods, services and people, as pressures for protectionism are building up
 Passage of the Constitution Amendment Bill for GST and the progress for its introduction
 Demonetisation of high denomination bank notes
 Enactment of the Insolvency and Bankruptcy Code; amendment to the RBI Act for inflation targeting; enactment of the Aadhar bill for disbursement
of financial subsidies and benefits

 Bold and decisive measure to curb tax evasion and parallel economy
 Government’s resolve to eliminate corruption, black money, counterfeit currency and terror funding
 Drop in economic activity, if any, to be temporary
 Generate long term benefits including reduced corruption, greater digitisation, increased flow of financial savings and greater formalisation of the economy
 Pace of remonetisation has picked up and will soon reach comfortable levels
 The surplus liquidity in the banking system will lower borrowing costs and increase the access to credit
 Announcements made by the Honourable Prime Minister on 31st Dec, 2016 focusing on 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 classes and women under the Mudra Yojana, address key concerns of our economy
 Agenda for 2017-18 is : “Transform, Energise and Clean India” – TEC India
 TEC India seeks to
 Transform the quality of governance and quality of life of our people;
 Energise various sections of society, especially the youth and the vulnerable, and enable them to unleash their true potential; and
 Clean the country from the evils of corruption, black money and non-transparent political funding
 Ten distinct themes to foster this broad agenda:
 Farmers : committed to double the income in 5 years;
 Rural Population : providing employment & basic infrastructure;
 Youth : energising them through education, skills and jobs;
 The Poor and the Underprivileged : strengthening the systems of social security, health care and affordable housing;
 Infrastructure: for efficiency, productivity and quality of life;
 Financial Sector : growth & stability by stronger institutions;
 Digital Economy : for speed, accountability and transparency;
 Public Service : effective governance and efficient service delivery through people’s participation;
 Prudent Fiscal Management: to ensure optimal deployment of resources and preserve fiscal stability;
 Tax Administration: honouring the honest.
 Target for agricultural credit in 2017-18 has been fixed at a record level of 10 lakh crores
 Farmers will also benefit from 60 days’ interest waiver announced on 31 Dec 2016
 To ensure flow of credit to small farmers, Government to support NABARD for computerisation and integration of all 63,000 functional Primary
Agriculture Credit Societies 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.
 Coverage under Fasal Bima Yojana scheme will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19 for which a
budget provision of
9000 crore has been made
 New mini labs in Krishi Vigyan Kendras (KVKs) and ensure 100% coverage of all 648 KVKs in the country for soil sample testing
 As announced by the Honourable Prime Minister, the Long Term Irrigation Fund already set up in NABARD to be augmented by 100% to take the total corpus of this Fund to 40,000 crores.
 Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ with an initial corpus of
5,000 crores
 Coverage of National Agricultural Market (e-NAM) to be expanded from 250 markets to 585 APMCs. Assistance up to 75 lakhs will be provided to
every e-NAM
 A model law on contract farming to be prepared and circulated among the States for adoption
 Dairy Processing and Infrastructure Development Fund to be set up in NABARD with a corpus of
2000 crores and will be increased to 8000 crores over 3 years
 Over
3 lakh crores spent in rural areas every year, for rural poor from Central Budget, State Budgets, Bank linkage for self-help groups, etc
 Aim to bring one crore households out of poverty and to make 50,000 Gram Panchayats poverty free by 2019, the 150th birth anniversary of Gandhiji
 Against target of 5 lakh farm ponds under MGNREGA, 10 lakh farm ponds would be completed by March 2017. During 2017-18, another 5 lakh farm
ponds will be taken up
 Women participation in MGNREGA has increased to 55% from less than 48%
 MGNREGA allocation to be the highest ever at 48,000 crores in 2017-18.
 Pace of construction of PMGSY roads accelerated to 133 km roads per day in 2016-17, against an avg. of 73 km during 2011-2014
 Government has taken up the task of connecting habitations with more than 100 persons in left wing extremism affected Blocks under PMGSY. All
such habitations are expected to be covered by 2019 and the allocation for PMGSY, including the State's Share is
27,000 crores in 2017-18
 Allocation for Pradhan Mantri Awaas Yojana – Gramin increased from 15,000 crores in BE 2016-17 to 23,000 crores in 2017-18 with a target to complete 1 crore houses by 2019 for the houseless and those living in kutcha houses.
 Well on our way to achieving 100% village electrification by 1st May 2018.
 Allocation for Prime Minister’s Employment Generation Program and Credit Support Schemes has been increased three fold
 Sanitation coverage in rural India has gone up from 42% in Oct 2014 to about 60%. Open Defecation Free villages are now being given priority for
piped water supply.
 As part of a sub mission of the National Rural Drinking Water Programme (NRDWP), it is proposed to provide safe drinking water to over 28,000
arsenic and fluoride affected habitations in the next four years.
 For imparting new skills to people in rural areas, mason training will be provided to 5 lakh persons by 2022
 A programme of “human resource reforms for results” will be launched during 2017-18 for human resources development in Panchayati Raj Institutions
 Total allocation for Rural, Agriculture and Allied sectors is ` 187223 crores

 To introduce a system of measuring annual learning outcomes in our schools
 Innovation Fund for Secondary Education proposed to encourage local innovation for ensuring universal access, gender parity and quality improvement to be introduced in 3479 educationally backward districts.

 Good quality higher education institutions to have greater administrative and academic autonomy
 SWAYAM platform, leveraging IT, to be launched with at least 350 online courses. This would enable students to virtually attend courses taught by
the best faculty
 National Testing Agency to be set-up as an autonomous and self-sustained premier testing organisation to conduct all entrance examinations for
higher education institutions
 Pradhan Mantri Kaushal Kendras to be extended to more than 600 districts across the country. 100 India International Skills Centres will be established across the country.
 Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) to be launched at a cost of 4000 crores. SANKALP
will provide market relevant training to 3.5 crore youth
 Next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of
2,200 crores
 A scheme for creating employment in the leather and footwear industries along the lines in Textiles Sector to be launched
 Incredible India 2.0 Campaign will be launched across the world to promote tourism and employment.
 Mahila Shakti Kendra will be set up with an allocation of 500 crores in 14 lakh ICDS Anganwadi Centres. This will provide one stop convergent
support services for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition
 Under Maternity Benefit Scheme
6,000 each will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children
 Affordable housing to be given infrastructure status
 National Housing Bank will refinance individual housing loans of about 20,000 crore in 2017-18
 Government has prepared an action plan to eliminate Kala-Azar and
Filariasis by 2017, Leprosy by 2018, Measles by 2020 and Tuberculosis by
2025 is also targeted
 Action plan has been prepared to reduce IMR from 39 in 2014 to 28 by
2019 and MMR from 167 in 2011-13 to 100 by 2018-2020
 To create additional 5,000 Post Graduate seats per annum to ensure
adequate availability of specialist doctors to strengthen Secondary and
Tertiary levels of health care
 Two new All India Institutes of Medical Sciences to be set up in Jharkhand
and Gujarat
 To foster a conducive labour environment, 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.
 Propose to amend the Drugs and Cosmetics Rules to ensure availability of
drugs at reasonable prices and promote use of generic medicines
 The allocation for Scheduled Castes has been increased by 35% compared
to BE 2016-17. The allocation for Scheduled Tribes has been increased to
31,920 crores and for Minority Affairs to 4,195 crores
 For senior citizens, Aadhar based Smart Cards containing their health
details will be introduced
 For transportation sector as a whole, including rail, roads, shipping,
provision of
2,41,387 crores has been made in 2017-18.
 For 2017-18, the total capital and development expenditure of Railways
has been pegged at 1,31,000 crores. This includes 55,000 crores
provided by the Government
 For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with
a corpus of 1 lakh crores over a period of 5 years
 Unmanned level crossings on Broad Gauge lines will be eliminated
by 2020
 In the next 3 years, the throughput is proposed to be enhanced by 10%.
This will be done through modernisation and upgradation of identified
 Railway lines of 3,500 kms will be commissioned in 2017-18. During
2017-18, at least 25 stations are expected to be awarded for station
 500 stations will be made differently abled friendly by providing lifts and
 It is proposed to feed about 7,000 stations with solar power in the
medium term
 SMS based Clean My Coach Service has been started
 ‘Coach Mitra’, a single window interface, to register all coach related
complaints and requirements to be launched
 By 2019, all coaches of Indian Railways will be fitted with bio toilets.
Tariffs of Railways would be fixed, taking into consideration costs, quality
of service and competition from other forms of transport
 A new Metro Rail Policy will be announced with focus on innovative
models of implementation and financing, as well as standardisation and
indigenisation of hardware and software
 A new Metro Rail Act will be enacted by rationalising the existing laws.
This will facilitate greater private participation and investment in
construction and operation.
 In the road sector, Budget allocation for highways increased from
57,976 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
 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
 Select airports in Tier 2 cities will be taken up for operation and
maintenance in the PPP mode
 By the end of 2017-18, high speed broadband connectivity on optical fibre
will be available in more than 1,50,000 gram panchayats, under
BharatNet. A DigiGaon initiative will be launched to provide
tele-medicine, education and skills through digital technology
 Proposed to set up strategic crude oil reserves at 2 more locations,
namely, Chandikhole in Odisha and Bikaner in Rajasthan. This will take
our strategic reserve capacity to 15.33 MMT
 Second phase of Solar Park development to be taken up for additional
20,000 MW capacity.
 For creating an eco-system to make India a global hub for electronics
manufacturing a provision of
745 crores in 2017-18 in incentive
schemes like M-SIPS and EDF.
 A new and restructured Central scheme with a focus on export
infrastructure, namely, Trade Infrastructure for Export Scheme (TIES) will
be launched in 2017-18
 Foreign Investment Promotion Board to be abolished in 2017-18 and
further liberalisation of FDI policy is under consideration
 An expert committee will be constituted to study and promote creation of
an operational and legal framework to integrate spot market and
derivatives market in the agricultural sector, for commodities trading.
e- NAM to be an integral part of the framework.
 Bill relating to curtail the menace of illicit deposit schemes will be
introduced. A bill relating to resolution of financial firms will be introduced
in the current Budget Session of Parliament. This will contribute to stability
and resilience of our financial system
 A mechanism to streamline institutional arrangements for resolution of
disputes in infrastructure related construction contracts, PPP and public
utility contracts will be introduced as an amendment to the Arbitration and
Conciliation Act 1996.
 A Computer Emergency Response Team for our Financial Sector (CERT-Fin)
will be established
 Government will put in place a revised mechanism and procedure to
ensure time bound listing of identified CPSEs on stock exchanges. The
shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed in stock
 Propose to create an integrated public sector ‘oil major’ which will be able
to match the performance of international and domestic private sector oil
and gas companies
 A new ETF with diversified CPSE stocks and other Government holdings will
be launched in 2017-18
 In line with the ‘Indradhanush’ roadmap, 10,000 crores for
recapitalisation of Banks provided in 2017-18
 Lending target under Pradhan Mantri Mudra Yojana to be set at
lakh crores. Priority will be given to Dalits, Tribals, Backward Classes and
 125 lakh people have adopted the BHIM app so far. The Government will
launch two new schemes to promote the usage of BHIM; these are,
Referral Bonus Scheme for individuals and a Cashback Scheme for
 Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will
be launched shortly
 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
 A proposal to mandate all Government receipts through digital means,
beyond a prescribed limit, is under consideration
 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 September 2017
 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
 The Government e-market place which is now functional for procurement
of goods and services
 To utilise the Head Post Offices as front offices for rendering passport
 A Centralised Defence Travel System has been developed through which
travel tickets can be booked online by our soldiers and officers
 Web based interactive Pension Disbursement System for Defence
Pensioners will be established
 To rationalise the number of tribunals and merge tribunals wherever
 Commemorate both Champaran and Khordha revolts appropriately
 Stepped up allocation for Capital expenditure by 25.4% over the previous
 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
 For the first time, a consolidated Outcome Budget, covering all Ministries
and Departments, is being laid along with the other Budget documents
 FRBM Committee has recommended 3% fiscal deficit for the next three
years, keeping in mind the sustainable debt target and need for public
investment, fiscal deficit for 2017-18 is targeted at 3.2% of GDP and
Government remains committed to achieve 3% in the following year
 Net market borrowing of Government restricted to 3.48 lakh crores after
buyback in 2017-18, much lower than
4.25 lakh crores of the previous
 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
 Between 8th November and 30th December 2016, deposits between 2 lakh
Rupees and 80 lakh Rupees 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.
 Under the scheme for profit-linked income tax deduction for promotion of
affordable housing, carpet area instead of built up area of 30 and 60
Sq.mtr. will be counted.
 The 30 Sq.mtr. limit will apply only in case of municipal limits of 4
metropolitan cities while for the rest of the country including in the
peripheral areas of metros, limit of 60 Sq.mtr. will apply
 For builders for whom constructed buildings are stock-in-trade, tax on
notional rental income will only apply after one year of the end of the year
in which completion certificate is received
 Reduction in the holding period for computing long term capital gains
from transfer of immovable property from 3 years to 2 years. Also, the
base year for indexation is proposed to be shifted from 1.4.1981 to
1.4.2001 for all classes of assets including immovable property
 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
 Exemption from capital gain tax for persons holding land on 2.6.2014, the
date on which the State of Andhra Pradesh was reorganised, and whose
land is being pooled for creation of capital city of Andhra Pradesh under
the Government scheme
 Concessional withholding rate of 5% charged on interest earned by foreign
entities in external commercial borrowings or in bonds and Government
securities is extended to 30.6.2020. This benefit is also extended to Rupee
Denominated (Masala) Bonds
 For the purpose of carry forward of losses in respect of 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)
exemption available to the start-ups for 3 years out of 5 years is changed
to 3 years out of 7 years
 MAT credit is allowed to be carried forward up to a period of 15 years
instead of 10 years at present
 In order to make MSME companies more viable, income tax for companies
with annual turnover upto 50 crore is reduced to 25%
 Allowable provision for Non-Performing Asset of Banks increased from
7.5% to 8.5%. Interest taxable on actual receipt instead of accrual basis in
respect of NPA accounts of all non-scheduled cooperative banks also to be
treated at par with scheduled banks
 Basic customs duty on LNG reduced from 5% to 2.5%
 Under scheme of presumptive income for small and medium tax payers
whose turnover is upto 2 crores, the present, 8% of their turnover which is
counted as presumptive income is reduced to 6% in respect of turnover
which is by non-cash means
 No transaction above
3 lakh would be permitted in cash subject to
certain exceptions
 Miniaturised POS card reader for m-POS (other than mobile phones or
tablet computers), micro ATM standards version 1.5.1, Finger Print Readers
/ Scanners and Iris Scanners and on their parts and components for
manufacture of such devices to be exempt from BCD, Excise/CV duty and
 Need to cleanse the system of political funding in India
 Maximum amount of cash donation, a political party can receive, will be
2000/- from one person.
 Political parties will be entitled to receive donations by cheque or digital
mode from their donors.
 Amendment to the Reserve Bank of India Act to enable the issuance of
electoral bonds in accordance with a scheme that the Government of India
would frame in this regard.
 Every political party would have to file its return within the time prescribed
in accordance with the provision of the Income-tax Act
 Existing exemption to the political parties from payment of income-tax
would be available only subject to the fulfilment of these conditions
 Scope of domestic transfer pricing restricted to only if one of the entities
involved in related party transaction enjoys specified profit-linked
 Threshold limit for audit of business entities who opt for presumptive
income scheme increased from
1 crore to 2 crores. Similarly, the
threshold for maintenance of books for individuals and HUF increased from
turnover of 10 lakhs to 25 lakhs or income from 1.2 lakhs to 2.5 lakhs
 Foreign Portfolio Investor (FPI) Category I & II exempted from indirect
transfer provision. 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
 Commission payable to individual insurance agents exempt from the
requirement of TDS subject to their filing a self-declaration that their
income is below taxable limit
 Under scheme for presumptive taxation for professionals with receipt upto
50 lakhs p.a. advance tax can be paid in one instalment instead of four
 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
 Existing rate of taxation for individual assesses between income of
2.5 lakhs to 5 lakhs reduced to 5% from the present rate of 10%
 Surcharge of 10% of tax payable on categories of individuals whose annual
taxable income is between
50 lakhs and 1 crore
 Simple one-page form to be filed as Income Tax Return for the category of
individuals having taxable income upto
5 lakhs other than business
 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.
 The GST Council has finalised its recommendations on almost all the issues
based on consensus on the basis of 9 meetings held
 Preparation of IT system for GST is also on schedule.
 The extensive reach-out efforts to trade and industry for GST will start
from 1st April, 2017 to make them aware of the new taxation system.
RAPID (Revenue, Accountability, Probity, Information and Digitisation)
 Maximise efforts for e-assessment in the coming year
 Enforcing greater accountability of officers of Tax Department for specific
act of commission and omission.

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