Highlights: Budget 2015

Fiscal deficit seen at 3.9 percent of GDP in 2015/16
Will meet the challenging fiscal target of 4.1 percent of GDP
Remain committed to meeting medium term fiscal deficit target of 3 percent of GDP
Current account deficit below 1.3 percent of GDP
Jaitley says have to keep fiscal discipline in mind despite need for higher investment

Expects consumer inflation to remain close to 5 percent by March, opening room for more monetary policy easing
Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 percent
“One of the achievements of my government has been to conquer inflation. This decline in my view represents a structural shift.”

Government targets 410 billion rupees ($6.7 billion) from stake sales in companies in 2015/16
Total stake sale in 2015/16 seen at 695 billion rupees
Sets stake sale target for 2016/17 at 550 billion rupees
Revises down stake sale target for 2014/15 to 313.5 billion rupees

Propose to merge commodities regulator with SEBI
To bring a new bankruptcy code
Jaitley says will move to amend the RBI act this year, and provide for a monetary policy committee
To set up public debt management agency
Proposes to introduce a public contract resolution of disputes bill
To establish an autonomous bank board bureau to improve management of public sector banks

To enact a comprehensive new law on black money
Propose to create a universal social security system for all Indians
To launch a national skills mission soon to enhance employability of rural youth
To raise visa-on-arrival facility to 150 countries from 43
Allocates 346.99 billion rupees for rural employment guarantee scheme
Raises threshold for application of transfer pricing rules to 200 million rupees from current 50 million rupees

To abolish wealth tax
Replaces wealth tax with additional 2 pct surcharge on super rich
Proposes to cut to 25 percent corporate tax over next four years
Corporate tax of 30 percent is uncompetitive
Net gain from tax proposals seen at 150.68 billion rupees
Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.
Proposes to rationalise capital gains tax regime for real estate investment trusts
Extends withholding tax concession on foreign debt purchases by two years
Expects to implement goods and services tax by April 2016
To reduce custom duty on 22 items
Basic custom duty on commercial vehicle doubled to 20 percent
Proposes to increase service tax rate and education cess to 14 percent from 12.36 percent
Plans to introduce direct tax regime that is internationally competitive on rates without exemptions
Exemptions for individual tax payers to continue
To enact tough penalties for tax evasion in new bill
Tax dept to clarify indirect transfer of assets and dividend paid by foreign firms

No revision of income tax brackets
Limit of deduction of health insurance premium increased to 25,000 rupees from 15,000 rupees; limit increased to 30,000 rupees from 20,000 rupees for the elderly
People aged above 80 and not covered by health insurance to be allowed deduction of 30,000 rupees for medical expenses
Additional deduction of 25,000 rupees for the disabled
Limit on deduction for contributions to pension fund and new pension scheme increased to 150,000 rupees from 100,000 rupees
Additional deduction of 50,000 rupees for contribution to new pension scheme under section 80CCD
Monthly transport allowance exemption doubled to 1,600 rupees

Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year
Plans to set up national investment infrastructure fund
Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects
Proposes 5 “ultra mega” power projects for 4,000 MW each
Second unit of Kudankulam nuclear power station to be commissioned
Will need to build additional 100,000 km of road
Ports in public sector will be encouraged to corporatise under Companies Act

Plan expenditure estimated at about 4.65 trillion rupees
Non-plan expenditure seen at about 13.12 trillion rupees
Allocates 2.46 trillion rupees for defence spending
Allocates 331.5 billion rupees for health sector
If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion rupees

Government to provide 79.4 billion rupees capital infusion to state-run banks
Propose to do away with different types of foreign investment caps and replace them with composite caps
To allow foreign investment in alternative investment funds
Public investment needed to catalyse investment

Raises excise duty on cigarettes by 25 percent for cigarettes of length not exceeding 65 mm
Raises excise duty by 15 percent for cigarettes of other lengths