Saturday, February 28, 2015

Union Budget 2015-16:-- Neither Drastic nor Fantastic

The Union budget is on the expected lines where  the finance minister did not touch the tax rates and slabs maintaining the status quo for the most part. While this was widely expected as we had mentioned in article on the expectations from the budget, it can be termed at most insipid from the point of view of a salaried individual.
There are some unexpected good moves like the phased reduction of the rate of corporate tax to 25% over a period of 4 years and diverting 62% of the tax receipts to the state. With this move the finance minister has increased the responsibility of states in terms of public spending.
While nothing much has been done on the front of individual taxation and the limit of investment under section 80 C has been kept at 150000, the limit for deduction from taxable income of   premium paid on health insurance has been increased to 25000 for individuals and 30000 for senior citizens under section 80 D. Tax free transport allowance which has been hovering at Rs 800 has been thankfully increased to 1600 per month. No other exemption or deduction has been tampered with as the time lag between the last budget and this budget has been barely 9 months and many limits had been increased by the finance minister last time around.
The replacement of Wealth tax with the 2% surcharge on the Super rich (Taxable income > 1 Cr) would yield additional revenues of 8000 cr to the government and would save the hassle of valuation and measurement of wealth every year.
For a resident individual while the relief in tax  is not visible there  is an additional burden in the form of increased service tax from 12.36% to a lump sum rate of 14%, this would certainly  have an impact on the  wallet of the common man as there are hardly any services which do not come under the net of Service tax and we  only can  hope that when the GST will come into play in 2016, this additional burden would be rationalized.
There has been intent on the part of the government to counter the menace of black money by putting in place stricter legislations including the scope for rigorous imprisonment for stashing money abroad.
There has been a focus on job creation and encouragement to the entrepreneurship with initiatives like SETU ( Self Employment and Talent utilization) and more could be expected in future.  Quoting JAM ( Jan Dhan yojana, Aadhar and Mobile) in economic survey as a means of Financial Inclusion could have far reaching effects
Thus while this budget  falls short on instant gratification for the common man, One hopes that the measure initiated are in the right earnest and fulfill the objective of sustainable and inclusive growth and development in the targeted time frame.

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