Measures to boost growth and employment generation
Finance Minister Arun Jaitely said, 2016-17 Union Budget will give thrust to three sectors – farming and rural, social sector including healthcare and infrastructure. Presenting the budgetary proposals in Lok Sabha, he said, despite global economic slowdown, export contraction and two consecutive droughts, India registered a robust GDP growth of 7.6 per cent.
As the Finance Minister rose to present the budget, opposition members demanded that their notice of privilege against Human Resource Development Minister Smriti Irani be taken up. P. Venugopal of the Congress pressed for taking up of his notice. However, Speaker Sumitra Mahajan said, the notice is under her consideration. Parliamentary Affairs Minister M. Venkaiah Naidu criticised the opposition, saying it is cheap politics to block presentation of annual budget.
100% deduction of profits for 3 out of 5 years for startups set-up during April 2016 to March 2019
Finance Minister Arun Jaitley said that startups generate employment, bring innovation and are expected to be key partners in Make in India programme. He proposed to assist their propagation through 100% deduction of profits for 3 out of 5 years for startups set-up during April 2016 to March 2019. MAT will apply in such cases. However, capital gains will not be taxed if invested in regulated/notified Fund of Funds and by individuals in notified startups, in which they hold majority shares.
Jaitley also proposed a special patent regime with 10% rate of tax of income from worldwide exploitation of patents developed and registered in India.
To get more investment in Asset Reconstruction Companies (ARCs), the Union Finance Minister proposed to provide a complete pass through of income-tax to securitization trusts including trusts of ARCs. He said that the income will be taxed in the hands of investors instead of the trust. However, the trust will be liable to deduct tax at source.
The period for getting benefit of long term capital gain regime in case of unlisted companies was proposed to be reduced from three to two years.
Jaitley also said that non-banking financial companies shall be eligible for deduction to the extent of 5% of their income in respect of provision for bad and doubtful debts. He reiterated the commitment to implement GAAR from 1.4.2017.
The Union Finance Minister Jaitley also informed that to meet the 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.
He further proposed to exempt service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship. He also proposed to exempt service tax on general insurance services provided under ‘Niramya’ Health Insurance Scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability.
The Finance Minister Jaitley also proposed to extend nil basic customs duty to Braille paper.