Initiatives to Ensure Targetted Disbursement of Government Subsidies and Financial Assistance to Actual Beneficiaries

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Initiatives to Ensure Targetted Disbursement of Government Subsidies and Financial Assistance to Actual Beneficiaries 

            Three specific initiatives have been proposed to achieve the objective of targeted disbursement of Government subsidies and financial assistance to the actual beneficiaries. 

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that this is the critical component of minimum government and maximum governance.  The three initiatives are:
First, a bill for Targeted Delivery of Financial and other subsidies, benefits and services by using the Aadhar framework.  A social security platform will be developed using Aadhar to accurately target beneficiaries.

Second, Direct Benefit Transfer (DBT) is proposed to be introduced on pilot basis for fertilizer in a few districts across the country.
Third, of the 5.35 lakh Fair Price Shops in the country, automation facilities will be provided in 3 lakh Fair Price Shops by March, 2017. 

Companies Act 2013 to be amended to facilitate Ease of Doing Business

A Bill shall be introduced in the current Budget session of the Parliament in order to amend the Companies Act 2013. While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that this will remove the difficulties and impediments to ease of doing business. The Bill would also improve the enabling environment for start-ups. The registration of companies will also be done in one day.


A New Health Protection Scheme to provide health cover up to Rs.1 lakh per family announced

National Dialysis Services Programme to be launched

3000 Stores to be opened under Prime Minister’s Jan Aushadhi Yojana during 2016-17

The Minister for Finance and Corporate Affairs and Information and Broadcasitng, Shri Arun Jaitley has announced a New Health Protection Scheme in the Budget 2016-17. In his Budget address in the Parliament today, the Finance Minister expressed concern that a serious illness of family member(s) causes severe stress on the financial condition of poor and economically weak families, shaking the foundation of their economic security. In order to help such families, the Government will launch a new health protection scheme which will provide health cover up-to rupees one lakh per family, the Finance Minister said. For Senior citizens of the age 60 years and above belonging to this category, an additional top-up package up to Rs.30,000 will be provided.

The Finance Minister Shri Jaitley stated that making quality medicines available at affordable prices has been a key challenge. “We will reinvigorate the supply of generic drugs. 3,000 stores under Prime Minister’s Jan Aushadhi Yojana will be opened during 2016-17”, the Minister added.

About 2.2 lakh new patients of End Stage Renal Disease get added in India every year resulting in additional demand for 3.4 Crore dialysis sessions. With approximately 4,950 dialysis centres in India, largely in the private sector and concentrated in the major towns, the demand is only half met. Every dialysis session costs about Rs.2,000 – an annual expenditure of more than Rs. 3 lakh. Besides, most families have to undertake frequent trips, often over long distances, to access dialysis services, incurring heavy travel costs and loss of wages.

To address this situation, Shri Arun Jaitley proposed to start a ‘National Dialysis Services Programme’. Funds will be made available through PPP Mode under the National Health Mission, to provide dialysis services in all district hospitals. To reduce the cost, the Finance Minister proposed to exempt certain parts of dialysis equipment from basic customs duty, excise/CVD and SAD.


Reforms in FDI Policy in the Areas of Insurance and Pensions, Asset Reconstruction Companies, Stock Exchanges

100% FDI to be Allowed Through FIPB Route in Marketing Food Products Produced and Manufactured in India

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that to promote private participation in infrastructure projects, Public Utility (Resolution of Disputes) Bill will be introduced; and guidelines for renegotiation of PPP agreements will be issued, without compromising transparency. New credit rating system for infrastructure projects will also be introduced. Announcing changes in FDI Policy, Shri Jaitley said that reforms in FDI policy in areas of insurance and pensions, asset reconstruction companies and stock exchanges have been proposed. 100% FDI is to be allowed through FIPB route in marking of food products produced and manufactured in India. This will benefit farmers, give impetus to food processing industry and create vast employment opportunities.

He further said that guidelines for strategic disinvestment have been approved and will be spelt out. Individual units of CPSEs can be disinvested to raise resources for investment in new projects. We will encourage CPSEs to divest individual assets like land, manufacturing units, etc. to release their assts value for making investment in new projects. The NITI Aayog will identify the CPSEs for strategic sale, he said.


Finance Minister announces Rs. 2000 crore in the Budget to give LPG Connection to women member of poor households; Scheme to benefit 1.5 crore households below poverty line in the current year

Finance Minister expresses gratitude and appreciation for those households who voluntarily gave up cooking gas subsidy

National Scheduled Caste and Scheduled Tribe Hub to be set-up to provide support to SC/ST entrepreneurs Stand Up India Scheme to benefit 2.5 lakh SC/ST and Women entrepreneurs

            The Union Budget for the Financial Year 2016-17 contains several new measures for the Social Sector. Highlighting these measures in his Budget Speech in the Parliament here today, the Minister for Finance and Corporate Affairs and Information and Broadcasitng, Shri Arun Jaitley said that the Government has “decided to embark on a massive mission to provide LPG connection in the name of women members of poor households”. A sum of Rs.2,000 crore has been set aside in this year’s Budget to meet the initial cost of providing these LPG connections, the Finance Minister explained.

            The Finance Minister Shri Jaitley said this will benefit about 1.5 Crore households below the poverty line in 2016-17. The scheme will be continued for at least two more years to cover a total of 5 crore BPL households. This will ensure universal coverage of cooking gas in the country, the Minister added. This measure will empower women and protect their health. It will reduce drudgery and the time spent on cooking. It will also provide employment for rural youth in the supply chain of cooking gas, he said.

            The Finance Minister expressed his gratitude and appreciation for the 75 lakh middle class and lower middle class households who have voluntarily given-up their cooking gas subsidy, in response to the call given by the Hon’ble Prime Minister, Shri Narendra Modi.           In an another important announcement, Shri Arun Jaitley said that it is proposed to constitute a National Scheduled Caste and Scheduled Tribe Hub in the MSME Ministry in partnership with industry associations. This Hub will provide professional support to Scheduled Caste and Scheduled Tribe entrepreneurs to fulfil the obligations under the Central Government Procurement Policy 2012, adopt global best practices and leverage the Stand Up India initiative.

            The Finance Minster also announced the approval given by the Union Cabinet to the “Stand Up India Scheme” to promote entrepreneurship among SC/ST and women. Rs.500 Crore has been provided for this purpose. The Scheme will facilitate at least two such projects per bank branch, one for each category of entrepreneur. This will benefit at least 2.5 lakh entrepreneurs, the Minister elaborated. (pg10/para56)

Shri Jaitley said the schemes for welfare and skill development for Minorities such as Multi-Sectoral Development Programme and USTAAD shall be implemented effectively.


Promoting a tax-friendly regime through a new ‘Dispute Resolution Scheme’

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that litigation is a scourge for tax friendly regime and creates an environment of distrust. Litigation also leads to increasing the compliance cost of the tax payers and administrative cost for the Government. There are 3 lakh tax cases pending with the 1st Appellate Authority with disputed amount being 5.5 lakh crores. In order to reduce this number new dispute Resolution Scheme (DRS) is launched. Following are highlights of dispute resolution scheme:

• A taxpayer who has an appeal pending as of today before the Commissioner (Appeals) can settle his case by paying the disputed tax and interest up to the date of assessment.

• No penalty in respect of Income-tax cases with disputed tax up to Rs. 10 lakh will be levied.

• Cases with disputed tax exceeding Rs. 10 lakhs will be subjected to only 25% of the minimum of the imposable penalty for both direct and indirect taxes.

• Any pending appeal against a penalty order can also be settled by paying 25% of the minimum of the imposable penalty.

• Certain categories of persons including those who are charged with criminal offences under specific Acts are proposed to be barred from availing this scheme.

With special reference to Government’s assurance of not to create retrospectively of fresh tax liability, Union Finance Minister Shri Arun Jaitley reiterated this commitment to provide a stable and predictable taxation regime. He proposed one-time scheme of Dispute Resolution for past cases ongoing under retrospective amendment. One can settle the case by paying only the tax arrears in which case liability of the interest and penalty shall be waived. This is subject to agreeing to withdraw any pending case lying in any Court or Tribunal or any proceeding for arbitration, mediation etc. under BIPA.

Identifying that levy of heavy penalty as a cause of large number of disputes, Shri Jaitley proposed to modify the scheme of penalty by providing different categories of misdemeanor with graded penalty and thereby substantially reducing the discretionary power of the tax officers. The penalty rates will now be 50% of tax in case of underreporting of income and 200% of the tax where there is misreporting of facts. Remission of penalty is also proposed where taxes are paid and appeal is not filed.

Quantification of disallowance of expenditure relatable to exempt income in terms of Section 14A of the Income Tax Act is another issue led to number of disputes. Hence, it has been proposed to rationalize formula in Rule 8D governing such quantification.


Incentivising domestic value addition to help Make in India

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that customs and excise duty structure plays an important role in incentivizing domestic value addition towards Make in India campaign. He proposed to make suitable changes in customs and excise duty rates on certain inputs, raw materials, intermediaries and components and certain other goods and simplify procedures so as to reduce costs and improve competitiveness of domestic industry in sectors like Information Technology hardware, capital goods, defense production, textiles, mineral fuels & mineral oils, chemicals and petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling of aircrafts and ship repair, etc.


Plan – Non Plan Classification To Be Done Away from Fiscal 2017-18

The Plan and Non-Plan classification will be done away with from fiscal 2017-18. This was stated by the Union Finance Minister Shri Arun Jaitley while presenting the General Budget 2016-17 in Lok Sabha today.Shri Jaitley said that successive committees have questioned the merit in having Plan and Non-Plan classification of Government expenditure. A broad understanding over the years has been that Plan expenditures are good and Non-Plan expenditures are bad resulting in skewed allocations in the Budget. This needs to be corrected to give greater focus to Revenue and Capital classification of Government expenditure. Mr. Jaitley said that the Finance Ministry will closely work with the State Finance Departments to align Central and State Budgets in this matter.


Additional Resource Mobilization for agriculture, rural economy and clean environment

Krishi Kalyan Cess @ 0.5% on all taxable services for financing initiatives relating to improvement of agriculture and welfare of farmers

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that uniform application of Dividend Distribution Tax (DDT) to all investors distorts the fairness and progressive nature of taxes. He therefore proposed that in addition to DDT paid by the companies, tax at the rate of 10% of gross amount of dividend will be payable by the recipients, that is, individuals, HUFs and firms receiving dividend in excess of Rs. 10 lakh per annum.

The surcharge was increased from 12% to 15% on persons having income above Rs. 1 crore. The rate of Securities Transaction tax in case of ‘options’ was increased from 0.017% to 0.05%.

In order to tap tax on income accruing to foreign e-commerce companies from India, it was proposed that a person making payment to a non-resident, who does not have a permanent establishment, exceeding in aggregate Rs. 1 lakh in a year, as consideration for online advertisement, will withhold tax at 6% of gross amount paid, as Equalization levy. This levy will apply only on B2B transactions.

It was also proposed to collect tax at source at the rate of 1% on purchase of luxury cars exceeding value of Rs. 10 lakh and purchase of goods and services in cash exceeding Rs. 2 lakh.

Sh. Arun Jaitley proposed Krishi Kalyan Cess @ 0.5% on all taxable services. Its proceeds would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. It will come into effect from 1st June, 2016.

To tackle the pollution and traffic situation in the country, the Union Finance Minister proposed infrastructure cess of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs. The ‘Clean Energy Cess’ levied on coal, lignite and peat was proposed to be renamed as ‘Clean Environment Cess’. Its rate was increased from Rs. 200 per tonne to Rs. 400 per tonne.

To discourage consumption of tobacco and tobacco products, Sh. Arun Jaitley proposed to increase the excise duties on various tobacco products other than beedi by about 10 to 15%.

Also, an important proposal made was to amend the Finance Act 1994 so as to declare assignment by the Government of the right to use the radio-frequency spectrum and its subsequent transfers a service. This will help clarify that assignment of right to use the spectrum is a service leviable to service tax and not sale of intangible goods.


Increase of 15.3 percent in the Plan Expenditure over the current Financial Year

The total expenditure in the General Budget for 2016-17 has been projected at Rs.19.78 lakh crore, consisting of Rs.5.50 lakh crore under Plan and Rs.14.28 lakh crore under Non-Plan. The increase in Plan expenditure is in the order of 15.3% over current year BE. While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that Plan Allocations have given special emphasis to sectors like agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure, etc.


Simplification and Rationalization of Taxation

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that the Government has already accepted many recommendations of Tax Administration Reform Committee. He further proposed to accept a number of recommendations of Justice Easwar Committee in Budget 2016-17.

In order to reduce multiplicity of taxes, associated cascading and to reduce cost of collection, abolition 13 cesses, levied by various Ministries in which revenue collection is less than Rs.50 crore in a year, is proposed.

Measures to rationalize TDS provisions for Income Tax have been proposed to improve cash flow position of small tax payers who get their funds blocked due to current TDS provisions. Also, Non-residents without PAN are currently subjected to a higher rate of TDS, however with amendment to relevant provision will allow that on furnishing of alternative documents, such higher rate will not apply. The facility for revision of return hitherto available to service tax assesses only will be extended to Central Excise assesses also.

Additional options for reversal of input tax credits with respect to non-taxable services provided by banking companies and financial institutions, including NBFCs, by way of extending deposits, loans and advances are proposed in Budget 2016-17.

Government of India has taken steps to reduce the cargo release time and transaction costs of EXIM trade. Shri Jaitley also proposed to amend the Customs Act so as to provide for deferred payment of customs duties for importers and exporters with proven track record.

Indian Customs Single Window Project would be implemented at major ports and airports starting from beginning of next financial year. Also, customs baggage for international passengers are simplified as filing of baggage declaration will be required only for those passengers who carry dutiable goods.


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