1. Budget 2017: Hi-TEC and High-Touch
Arun Jaitley’s fourth Union budget is easily described: feel-good, with something for everyone. This probably explains the sharp rally in the stock markets seconds after the finance minister concluded his speech.
Jaitley stayed true to addressing the need for a step-up in social sector outlays, spending on infrastructure to jump-start growth, and incentivising the move to a “less-cash” economy.
The themes in this budget are not new: a reiteration of this government’s unabashed commitment to move away from the exception-based regime, which fostered crony capitalism and corruption, and facilitate India’s transition to a formal economy defined by globally accepted rules. In short, it is a budget which readies India for the future.
(Source: Livemint)
2. Amid Efforts to Widen Tax Base in Budget, Farm Income Untouched
The Union budget dwelled extensively on the low taxpayer base in India but did not once mention taxing agricultural households – one of the most crucial pieces of this missing taxpayer base.
In doing so, Jaitley has chosen to again ignore the suggestion made by his own chief economic adviser Arvind Subramanian who had suggested in last year’s economic survey that taxing the well-off in the agricultural segment would help increase the taxpayer base.
India has not taxed agriculture since the country became independent in 1947.
(Source: Livemint)
3. Budget Throws Up Clues About Demonetisation Deposits in Banks
One of the biggest expectations with Union Budget 2017 was that the government would divulge details of how much money has come back to the banking system after demonetisation. While the budget has disappointed in terms of giving overall statistics on this count, it does give an idea about the extent of money which has come in deposits of Rs 2 lakh and above.
This is what Arun Jaitley had to say in his budget speech: “After the demonetisation, the preliminary analysis of data received in respect of deposits made by people in old currency presents a revealing picture. During the period 8th November to 30th December 2016, deposits between Rs2 lakh and Rs80 lakh were made in about 1.09 crore accounts with an average deposit size of Rs5.03 lakh. Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs3.31 crores.”
(Source: Livemint)
4. What Impact Will Budget 2017 Have on the Economy?
The budget this year has come at a challenging time for the Indian economy. The tailwinds which supported the economy over the past few years, such as low oil and commodity prices, are gradually turning into headwinds now, even as legacy issues such as the pile of bad debt continue to delay a broad-based investment revival. And to top it all, the shock of demonetisation seems to have hit aggregate demand and consumer sentiment, necessitating palliatives.
Finance minister Arun Jaitley was therefore presented with the daunting challenge of aiding a recovery in new investments, growth, and jobs, without compromising macro-economic stability at a time of growing global uncertainties.
(Source: Livemint)
5. Budget Acknowledges Demonetisation Damage, Allows Time To Heal
For 93 days, since the demonetisation bomb was detonated on 8 November 2016, there has been an endless debate on whether that nuclear strike wrecked or reconstructed India’s economy. Today, the cat jumped out of the Budget (from a thoroughly chastised government)!
By presenting an ultra-cautious, safe and non-disruptive document, the government admitted that India would not survive another seismic shock – thereby proving that the 86 percent currency cancellation was a reckless move which shoved the economy into the critical care unit.
Even the lightest of blows could have now pushed the gasping patient into the morgue. So best to leave it untouched and prostrate, from where it could slowly recover its health and mojo.
(Source: BloombergQuint)
6. It’s Time To Action The Government’s Big-Bang Reforms, Says Revenue Secretary
The government has introduced enough big bang reforms in the last two and a half years, and these will now have to be implemented, Revenue Secretary Hasmukh Adhia told BloombergQuint in an interview.
“Now what we need to do is consolidate these reforms. Benefit of demonetisation has to be garnered now; expand the tax net with all the data we have, we have to see that our revenues increase. And as far as GST is concerned, the biggest task is implementing it…We have to roll it out by 1 July 2017… and be able to get some better revenue... and also hassle free revenue from trade and industry,” Adhia said
(Source: BloombergQuint)
7. Digital Payments Poised to Be the New Normal in 2017
Finance Minister Arun Jaitley has proposed a slew of measures designed to encourage more people to embrace digital transactions.
Digital payments companies hailed Jaitley’s Union Budget for 2017-18 for giving the industry a big thrust. The minister proposed creating a payments regulatory board within the Reserve Bank of India.
He also proposed to review the Payment and Settlement Systems Act, 2007. These were the key recommendations of the government-appointed Ratan Watal committee that was tasked with identifying ways to encourage digital payments.
(Source: The Economic Times)
8. To Give Money to Salaried, Arun Jaitley Dips Into Pockets of Rich
What the government gives one, it takes away from another — the affluent in this instance. To compensate for largesse to salaried earners at the lower end, a 10 percent surcharge is being imposed on tax on incomes between Rs 50 lakh and Rs 1 crore.
Someone with an annual taxable income of Rs 60 lakh will pay about Rs 1.55 lakh more in tax. About 1.5 lakh people fall into this, now seemingly broader, category of affluent taxpayers.
Tax professionals said the new surcharge was necessary to offset revenue foregone by the Rs 12,500 rebate extended to all taxpayers. Left unchanged is the 15 percent surcharge on tax for annual incomes over Rs 1 crore. In fact, taxpayers in that bracket will actually save about Rs 14,000 due to the rebate (as the surcharge will be proportionately reduced).
(Source: The Economic Times)
9. FM Jaitley's Assurance About GST Corroborates Govt's Intent for Earliest Rollout
No news is good news. This perhaps best summarises the indirect tax proposals presented in the budget. With GST round the corner, any significant changes in the excise/service tax regime would have caused undue hardship to the taxpayers, possibly with no commensurate benefits.
As expected, the finance minister did speak about the progress that has been made on all fronts around GST roll out. While he did not specifically mention July 2017 being the target implementation date, he provided enough assurance about GST being on track, with no major hurdles left to be crossed. In fact, the awareness sessions for taxpayers will commence from April, which further corroborates the intent of the government to roll out GST at the earliest.
(Source: The Economic Times)
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