The document summarizes key aspects of the Indian budget for fiscal year 2016 presented by the government. It outlines proposed expenditures, reforms such as the rollout of a nationwide Goods and Services Tax and steps to curb black money. The budget also aims to boost infrastructure investment and reduce individual and corporate tax rates over the next four years. Gold-related measures including gold coins and sovereign bonds are introduced to reduce gold imports and monetize gold stocks.

1. Rustomjee
Business
School

2. Budget and its Importance
 A budget is an estimate of income and expenditure for a set period of
time i.e. it is an itemized summary of likely incomes and expenses
for a given period.
 A government budget is a government document presenting the
government's proposed revenues and spending for a financial year.
 It’s an invaluable tool to help you prioritize your spending and
manage your money.
 Budgeting is simply balancing your expenses with your income.
Current budget applicable for which Financial Year ??
Rustomjee
Business
School

3.  In 2015-16, Fiscal deficit will be 3.9% of GDP
 Current account deficit below 1.3 % of GDP
 Govt sees GDP at 8-8.5% in FY16
Fiscal deficit - When a government's total expenditures exceed the revenue
that it generates (excluding the money it has borrowed).
Current deficit - Current account deficit occurs when the country’s imports are
greater than the country’s exports of goods, services and transfers.
Gross Domestic Product - The monetary value of all the finished goods and
services produced within a country's borders in a specific time period, though
GDP is usually calculated on an annual basis
Deficit expectations in the budget
Rustomjee
Business
School

4.  GST ( Goods and Service Tax ) to be in place by April 1, 2016.
 FMC (Forward Markets Commission) to be merged with SEBI.
 It is the chief regulator of commodity futures markets in India
 To enact a comprehensive new law on black money.
 Defers GAAR (General Anti – Avoidance Rules) by 2 years i.e. to apply
prospectively from April 1, 2017
(The rules are aimed at minimizing tax avoidance for investments made by
entities based in tax havens.)
Status of the Various Enactments and/or Agencies
Rustomjee
Business
School

5.  Plan Expenditure spend Rs 4.65 trillion in FY 2016
 FY 2016 non plan expenditure Rs 13.12 trillion
 Plan Expenditure - Any expenditure that is incurred on programs
which are detailed under the current (Five Year) Plan of the center or
center's advances to state for their plans is called plan expenditure.
Provision of such expenditure in the budget is called Plan
Expenditure.
 Non – Plan Expenditure - This refers to the estimated expenditure
provided in the budget for spending during the year on routine
functioning of the government. Non- Plan expenditure is all
expenditure other than plan expenditure of the govt.
Plan and Non-Plan Expenditure
Rustomjee
Business
School

6.  To abolish Wealth Tax
 Increased the surcharge to 12% on individuals earning Rs 1 crore and above
annually and on firms with an annual income of Rs 10 crore or more.
 Introduced a surcharge of 7% on companies having an income between Rs 1
crore and Rs 10 crore
Financial Impact - These measures will lead to tax collection of Rs 9000 crores
whereas the wealth tax could earn only Rs 1008 crores.
Other Impact - There was no point in continuing the Wealth Tax as the cost of
collection was high. These measures will lead to tax simplification and
widening of the tax base.
Taxation on Super Rich
Rustomjee
Business
School

7.  Proposes to rationalize capital gains tax regime for Real Estate Investment
Trusts (REITs)
 No Capital Gains Tax on contribution to REITs
 Investment in infrastructure to go up by 70000 crores
 To start 5 ‘ultra mega’ power generation projects so as to end chronic power
shortages.
 Tax free infrastructure bonds for projects in rail, road and irrigation to be
introduced.
 Need to build additional 100,000 km of road
 Revitalizing the PPP (Public – Private Partnership) model for infrastructure
development
Impact on Real Estate and/or Infrastructure
Sector
Rustomjee
Business
School

8.  Proposes to increase service tax rate and education cess to 14% from
12.36%.
 This will increase the government treasury by 41000 crores i.e. from 1.68
lakh crores to 2.09 lakh crores
 Expensive – Cigarette, Tobacco, Drinks, Air fare, Restaurants, all sorts of
bills, Cement etc.
 Cheaper – Solar water heater, Tablets, LED, LCD Panels etc. due to
reduction in custom and excise duty
 Excise duty on footwear below Rs 1000 cut to 6%.
 To levy 2% Swatch Bharat Cess on services, if required
 Service tax exemption withdrawn on MF agents to AMC
Amendments in Service Tax
Rustomjee
Business
School

9.  Exemption for individual tax payers to continue.
 Proposes to reduce corporate tax rate from 30% to 25% over next 4 years.
 Income tax on royalty and technical fees reduced from 25% to 10%
 100% tax exemption in CSR (Corporate Social Responsibility) activities for Swatch
Bharat Kosh and Clean Ganga Fund
 Further tax exemption of Rs 50,000 under 80C for pension plan (Limit not
enhanced)
 Avoid retrospective tax provisions
 To include ‘Yoga’ in charitable purpose in Income Tax Act
 Quoting PAN must for over Rs 100,000 purchase
 Deduction for mediclaim u/s 80D increased by 10,000/-
Individual and Corporate Slab Rates
Rustomjee
Business
School

10.  Government to introduce Indian made Gold coins (with Ashok Chakra on its
face) to reduce demand for foreign coins.
 To launch sovereign gold bond with fixed interest rate as an alternative to
purchasing metal gold.
 To introduce a gold monetization scheme. The new scheme will allow the
depositors of gold to earn interest in their metal accounts and the jewelers to
obtain loans in their metal account. Banks/other dealers would also be able to
monetize this gold.
Gold for Budget 2015
Rustomjee
Business
School

11. The objective behind bringing these reforms was :
 To curb gold imports and
 Monetize(the conversion of an asset into money) large idle stocks of the precious
metal
Gold for Budget 2015
Rustomjee
Business
School

12.  To launch National Skills Mission to develop youth employability.
 To set up NRI fund for Ganga river conservation
 5 more AIIMS in J&K, Punjab, Tamil Nadu, Himachal and Assam
 IIMs in J&K and Andhra Pradesh
 IIT in Karnataka
Social Sector and Education
Rustomjee
Business
School

13.  Visa on arrival to citizens of 150 countries v/s 43 now
 10% TDS introduced for PF withdrawal before 5 years
 Transport allowance exemption increased to Rs 1,600/month
 Govt proposes to exempt special additional duty on all items
 Black money holders to be imprisoned up to 10 years
 300% penalty on concealing income
 To promote cashless transactions to curb black money (Exceptional
circumstances for paying off more than 20000 in cash removed)
Miscellaneous
Rustomjee
Business
School