Budget: Arun Jaitley proposes cutting tax for Rs 2.5 lakh-Rs 5 lakh income slab from 10% to 5%

Finance Minister Arun Jaitley on Wednesday presented the Union Budget in Parliament.

The demonetisation of high-value currency notes played a key role in the announcements. This was also the first time that the Union and railway budgets have been merged. The merger brought an end to the 92-year-old practice of having a separate railway budget.

Analysts expected a hike in the tax exemption limit and revision in tax slabs to balance the chaos caused by the currency ban. Nearly 95% of the 750 professionals surveyed by KPMG before the Budget had said they were hoping for tax relief, reported The Indian Express.

Here are extracts from the speech:

1.10 pm: The Sensex and Nifty surged after the Budget was presented.

12.59 pm: Lok Sabha adjourned after Jaitley concludes his Budget speech.

12.52 pm: Jaitley announces a 15% surcharge for those with incomes of over Rs 1 crore stands unchanged.

12.51 pm: Surcharge of 10% for those whose annual income is Rs 50 lakh to 1 crore.

12.49 pm: He proposes to reduce the existing rate of taxation of those with income between Rs 2.5 lakh to Rs 5 lakh – from 10% to 5%.

12.48 pm: Jaitley is announcing taxation rates. He says there is 0% tax liability for those with an income less than Rs 3 lakh.

12.46 pm: The Goods and Service Tax Council has finalised its recommendations, Jaitley says. The implementation of GST is likely to bring more taxes to the Centre and states.

12.45 pm: An amendment being proposed to RBI Act to enable the issuance of electoral bonds for political funding.

12.44 pm: Political parties will be entitled to receive donations by cheque or in the digital mode from their donors.

12.42 pm: Jaitley is speaking on transparency in political funding. As per an Election Commission recommendation, a maximum amount of cash donation will be Rs 2,000 from any one source, he says. This is down from a limit of Rs 20,000.

12.40 pm: “No cash transactions over Rs 3 lakh, as recommended by a committee on black money.”

12.36 pm: Holding period for long-term capital gains for immobile assets reduced from 3 years to 2 years; base year for indexation to be 2001.

12.35 pm: Income tax changes announced for small companies with an annual turnover of 50 crore. They will now to pay 25%, a 5% reduction.

12.34 pm: “The net tax revenue grew by 17% in 2015-16.”

12.32 pm: Demonetisation has led to 34.8% increase in personal tax, Jaitley says.

12.31 pm: “Capital gains tax to be exempted for persons holding land that was pooled for creating the state capital of Telangana”.

12.28 pm: Net tax revenue was Rs 11.38 lakh crore last year.

12.27 pm: “One of the government’s main priorities is to eliminate black money from the economy.... This approach will change the colour of money.” He says the Centre is committed to making tax rates “reasonable”.

12.25 pm: “When too many people evade taxes, the tax burden falls on those who are honest and tax-compliant. After demonetisation, preliminary data on money [in old noted] deposited show a revealing picture.”

12.19 pm: Fiscal deficit target at 3.2% of the GDP for 2017-18. The fiscal deficit target will be 3% of the GDP for 2018-19. Revenue deficit is pegged at 1.9.%.

12.17 pm: Total expenditure of Budget 2017-18 has been placed at Rs 21.47 lakh crore.

12.16 pm: Defence sector to get Rs 2.74 lakh crore.

12.14 pm: Jaitley says the Centre is looking at the introduction of a new law to confiscate assets of tax offenders who leave the country.

12.10 pm: 3.5 crore youth will be trained under the Sankalp programme launched by the government.

12.07 pm: The new Bharat Interface for Money app will unleash power of mobiles for digital payments. Twenty lakh Aadhaar-based payment machines will also be introduced.

12.06 pm: Jaitley says the Budget proposes to double the lending target of Pradhan Matri Mudra Yojana and set it up at Rs 2.44 lakh crore for 2017-18.

12.04 pm: Total allocation for infrastructure stands at a record level of Rs 3,96,135 crore. Rs 10,000 crore has also been allocated for recapitalisation of banks.

12.01 pm: Foreign Investment Promotion Board to be abolished to ease foreign investment.

12 pm: Transport sector allocated Rs 2.41 lakh crore and Bharat Net Project allocated Rs 10,000 crore. Jaitley also said that 20,000 MW solar power capacity will be set up. Strategic crude oil reserves to be set up in Odisha, Rajasthan. Rs 64,000 crore has been set aside for developing National Highways.

11.58 am: Airport Operation Management for tier-II airports via Public Private Partnership.

11.56 am: All service taxes for bookings via IRCTC to be withdrawn, the finance minister says. New Metro Rail policy to be framed. Unmanned railway crossings to be eliminated by 2020.

11.54 am: A rail safety fund with corpus of Rs 1,00,000 crore will be created over a period of five years... At least 25 stations to be redeveloped in 2017-18. “Our focus is Swachch Railways. All railway coaches will have bio-toilets by 2019.”

11.53 am: Railway lines of 3,500 km to be commissioned in 2017-2018. Railways gets Rs 55,000 crore.

11.51 am: Jaitley moves on to the Budget allocations in the railway sector. This is the first year since 1924 that there is no separate Railway Budget and it has been included in the Union Budget.

11.50 am: Allocation for Scheduled Castes raised to Rs 55,393 crore.

11.49 am: The total allocation to all women and children’s related schemes to rise from Rs 1.56 lakh crore to Rs 1.84 lakh crore, Jaitley says.

11.48 am: Two new AIIMS to be set up in Jharkhand and Gujarat... For senior citizens, Aadhaar cards citing their health conditions will be introduced.

11.47 am: Safe drinking water to cover 28,000 arsenic and fluoride affected habitations in the next four years.

11.45 am: Target elimination of tuberculosis by 2025... Mahila Shakti Kendra at village level for rural women empowerment to be initiated this financial year.

11.43 am: Quality education will energise youth, Jaitley says. He proposes to measure a system of annual learning outcomes in schools. Skill centres will be set up across the country to help youth seeking opportunities outside the country.

11.42 am: Jaitley has now moved on to spending in the education and health sectors, after speaking about rural spending.

11.40 am: The total allocation for rural, agricultural and allied sectors for 2017-18 is Rs 1,87,223 crore, which is 24% higher than last year.

11.38 am: Budget allocation to MNREGA increased to a record Rs 48,000 crore for 2017-18, from Rs 37,000 crore in 2016-17. Modi once called MNREGA a “monument to Congress failure.” Jaitley announces the biggest outlay to it ever.

11.37 am: Dedicated micro-irrigation fund will be set up by NABARD to achieve goal of “Per Drop More Crop”. Initial corpus will be Rs 5,000 crore. The participation of women in MNREGA has increased to 55% from less than 40%.

11.35 am: Government is looking at 100% electrification of villages by May 2018. Cabinet approves extension of tenure of loans under Credit Linked Subsidy Scheme of Pradhan Mantri Awas Yojana from 15 to 20 years.

11.33 am: The aim is to bring 1 crore rural households out of poverty, Jaitley says.

11.31 am: Dairy processing infrastructure fund will be set up under National Bank for Agriculture and Rural Development, with fund of Rs 2,000 crore.

11.30 am: As Jaitley presented the Budget, markets made marginal gains amid Budget expectations, but stocks are expected to fluctuate as Jaitley presents the proposals.

11.28 am: “Issuance of soil health cards have gathered momentum, we will set up a mini lab in Krishi Vigyan kendras.”

11.26 am: “My approach in preparing the Budget is to spend more on rural areas, infrastructure and poverty alleviation with fiscal prudence.” Fasal Bhima Yojana coverage will be increased to 40% in 2017-18 and 50% to 2018-19.

11.25 am: With a better monsoon, agriculture is expected to grow at 4.1% in the current year.

11.24 am: There are three distinct themes for Budget, says Jaitley. “Our agenda for 2017-18 is to transform, energise and clean India”.

11.20 am: “Pace of remonetisation has picked up and the effects of demonetisation will not spill over next year.” He also said that demonetisation has the potential to generate long-term benefits.

11.16 am: “Demonetisation was a bold and decisive measure. Tax evasion had become a way of life. Demonetisation seeks to create a new normal... the International Monetary Fund estimates that the world GDP will grow by 3.1% in 2016 and 3.4% in 2017.”

11.15 am: The focus will be on energising our youth, to reap benefits of growth and employment, Jaitley says.

11.10 am: Arun Jaitley begins presenting the Budget. “The underlying theme of good governance was good expectations....Inflation has been controlled. Sluggish growth has been replaced by high growth. We have launched a massive was on black money,” he says.

11.05 am: E Ahamed’s obituary reference is made in Parliament. “I would have adjourned the house, but today’s date was specifically chosen by the president to fulfil the Constitutional obligation of presenting the Budget,” she said, adding that the House will be adjourned on Thursday to pays respects to E Ahamed.

10.36 am: Lok Sabha Speaker Sumitra Mahajan has announced that the Budget will be presented in Parliament today, following speculation that it may be postponed after former Union minister E Ahamed died. He had suffered a cardiac arrest in Parliament on Tuesday.

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