Yet, the Budget chose the pragmatic route to allay the anxieties of the vulnerable in the aftermath of demonetisation, announcing a rise in public investments in irrigation and infrastructure, as well as schemes like MGNREGA, while not straying from the fiscal discipline path.
IT relief for majority
Mr. Jaitley granted considerable tax relief to people in the lowest tax bracket with an annual income of less than ₹five lakh, halving the minimum personal income tax rate to 5% from 10%. Effectively, those with an annual income of ₹4.5 lakh could have zero tax liability if they tap the tax exemptions available for investments under section 80 C of the Income Tax Act. An additional 10% surcharge has been levied on individuals with declared incomes between ₹50 lakh and ₹1 crore
The tax rate for medium and small enterprises, with an annual turnover of up to ₹50 crore, has been slashed to 25%. Significant sops have also been announced for affordable housing that has been granted ‘infrastructure’ status.
In the first Union Budget to incorporate the traditional Railway Budget, Mr. Jaitley admitted that demonetisation has temporarily impacted the economy, But he delivered follow-through actions, including a ban on cash transactions of over ₹3 lakh, in line with the recommendations of the Special Investigation Team on Black Money. Steps were also announced to cut the cost of digital payments and discourage business expenses over ₹10,000 being paid in cash.
Pursuing the Budget theme of “Transform, Energise and Clean India’’, Mr. Jaitley promised a tough new law to deal with “big time offenders, including economic offenders, fleeing the country to escape the reach of law.” The government, he said, is considering legal changes to confiscate the assets of such individuals.
As part of the effort to clean-up the political system, the cash donation limit for political parties from a single person was slashed from ₹20,000 at present to ₹2,000, with the Minister asserting this would bring transparency in electoral funding. Changes have also been mooted to the Reserve Bank of India Act to float electoral bonds that people could purchase from banks and can be redeemed by political parties who receive them.
While the bad bank for non-performing assets recommended in the Economic Survey found no space in the Budget, the FM permitted banks to claim higher provisions for non-performing assets in their tax computations. He also allocated ₹10,000 crore for recapitalisation of banks and mooted a tax on interest receivables on actual basis instead of accrual basis, which would help bank balance sheets.