Updated

New Delhi, Feb 29 (PTI): Cars, locally made mobiles, branded garments, air travel, aerated drinks, cigarettes and smart watches are the among items that will be costlier while footwear, solar lamps and routers are slated to cost less following changes in tax structure in the Budget 2016-17.

As a result of a new levy, Krishi Kalyan cess, on all services, activities including eating out, watching movies in theaters and payment of bills, will also become more expensive. Continuing the trend set by his predecessors, Finance Minister Arun Jaitley today came down heavily on smokers and tobacco consumers by imposing up to 15 per cent excise duty on all tobacco products.

"To discourage consumption of tobacco and tobacco products, I propose to increase the excise duties on various tobacco products other than beedi by about 10 to 15 per cent," Jaitley said in his Budget speech.

Potential car buyers will have to shell out more - from as low as Rs 3,000 to over Rs 1 lakh - on new purchases as the Finance Minister announced infrastructure cess of up to 4 per cent on vehicles.

"The pollution and traffic situation in Indian cities is a matter of concern. I propose to levy an infrastructure cess, of 1 per cent on small petrol, LPG, CNG cars, 2.5 per cent on diesel cars of certain capacity and 4 per cent on other higher engine capacity vehicles and SUVs," Jaitley said.
Petrol/LPG/CNG driven vehicles of length not exceeding 4 meters and engine capacity not exceeding 1,200cc would attract a cess of 1 per cent.

Diesel driven vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,500cc will attract a cess of 2.5 per cent, while other higher engine capacity and SUVs and bigger sedans would be levied at 4 per cent. Moreover, cars priced above Rs 10 lakh will also attract tax of 1 per cent at source.

"I also propose to collect tax at source at the rate of 1 per cent on purchase of luxury cars exceeding value of Rs 10 lakh and purchase of goods and services in cash exceeding Rs two lakh," Jaitley said.

After the Budget announcements, air travel will become expensive due increase in excise duty on aviation turbine fuel (ATF) to 14 per cent from 8 per cent besides the additional levy of Krishi Kalyan cess.

Soft drinks and mineral water will also be dearer as Jaitley proposed to hike excise duty on "water including mineral water, aerated water containing added sugar or sweetening matter" to 21 per cent from 18 per cent earlier.

Branded readymade garments costing Rs 1,000 or more will become costlier as the excise duty on them has been increased to 2 per cent without CENVAT credit from nil earlier. Customs duty on imported imitation jewelery has gone up from 10 per cent to 15 per cent while customs duty on industrial solar water heater has increased from 7.5 per cent to 10 per cent which will make these items costlier.

Locally manufactured mobiles will become costlier by about 1 per cent because government has imposed duty on imported circuit boards used in them. Availing of legal services through senior advocates or legal firms will cost more as such activity will no longer be exempted from service tax with Jaitley proposing a levy of 14 per cent.Traveling by hiring air-conditioned stage carriage will also become more expensive as it will now come under service tax with a rate of 5.6 per cent. Smart watches will also be dearer as they will now be subjected to retail sales price-based assessment of excise duty with an abatement of 35 per cent.

Hiring of agency to pack and move household items while shifting premises will also become expensive as it will now attract a service tax of 5.6 per cent as against 4.2 per cent earlier.
Imported golf cars will be dearer as customs duty on them has been hiked to 60 per cent from 10 per cent.

Lottery tickets will also become expensive as that will come in the service tax net, while imported e-reading devices will be dearer as it will now attract basic customs duty of 7.5 per cent as against nil earlier.

Other items that will become dearer include instruments for VoIP (Voice over Internet Protocol) and refined gold bars manufactured from gold dore bars.

On the other hand, footwear will become cheaper as excise duty on rubber sheets and resin rubber sheets for soles and heels have been cut to 6 per cent from 12.5 per cent. Solar lamps will also cost less as they have been exempted from excise duty. Earlier it was taxed at 12.5 per cent.

Router, broadband modems and set top boxes will become cheaper as excise duty on these products have been reduced to 4 per cent without CENVAT credit from 12.5 per cent earlier.Digital video recorder and CCTV cameras will also be cheaper as these items have been exempted from excise from 12.5 per cent earlier.

Hybrid electric vehicles are set to be cheaper as the engine will attract a lower excise duty of 6 per cent from 12.5 per cent earlier. In order to bring down the cost of kidney dialysis of patients suffering from end-stage renal disease, excise duty on disposable sterilised dialyser from been reduced to NIL from 12.5 per cent earlier.

Microwave ovens made in the country will become cheaper as customs duty on a key imported component -- magnetron of capacity 1 KW to 1.5 KW -- has been brought down to NIL from 10 per cent earlier.

Sanitary pads napkins and tampoons will also become cheaper as customs duties on key ingredients -- wood pulp and super absorbent polymer have been cut by 2.5 per cent.
Braille paper will also be cheaper as it has been exempted from customs duty. It was earlier subjected to 10 per cent import duty.

Low cost houses will also become even more affordable as Jaitley did away with service tax on construction services on dwelling units not exceeding 60 square metres under Pradhan Mantri Awas Yojana and any housing scheme of state government.

Earlier Update

Jaitley's budget focuses on small tax payers, rural economy

New Delhi, Feb 29 (IANS): Finance Minister Arun Jaitley on Monday gave relief to small tax payers, nudged the affluent to shell out more while focusing on the rural economy with much higher fiscal outlays, as he presented India's national budget for 2016-17 in the Lok Sabha.

He also said that people living in rented houses will be eligible for deductions of up to Rs.60,000 now -- up from Rs.24,000. He also said the ceiling of tax rebate for people with income up to Rs.500,000 per annum was being raised to Rs.5,000 from the present Rs.2,000.

But for larger tax payers, he said, the income tax surcharge of 12 percent at present was being hiked to 15 percent for incomes exceeding Rs.1 crore per annum. Suitable changes, Jaitley said, will also be made in customs and excise duty rates to push the "Make in India" programme.

"Tax evasion will be countered strongly," he warned.

Jaitley also said that the fiscal deficit target of 3.9 perecent of GDP for the current fiscal will be met, even as the target for next year has been fixed at 3.5. "Prudence lies in adhering to fiscal targets," he said.

But in a major departure from the past, where government expenditure could be demarcated between productive and administrative expenses, the finance minister said the classigication of plan and non-plan will be done away with from 2017-18.

The minister began his speech saying that India was a bright spot in the global economy in these difficult times. He later outlined his nine focus areas for this annual budget exercise in which rural development took the top slot.

"I am presenting the budget when the global economy is in crisis," Jaitley said in his first set of remarks, adding that India, despite the gloom in the world economy, was turning difficulties into opportunities.

He said India's growth has expanded 7.5 percent, despite slowdown in exports, even as inflation had eased, bringing big relief to the general public. He also said foreign exchange reserves were robust. "Indian growth is at an extraordinary high."

Jaitley said his budget will look at three pillars in right earnest: A prudent fiscal policy, raising domestic demand and carrying out reforms. He also said that farm, rural sector, infrastructure and social sector will be allotted more money.

"Recapitalization of banks also to be done during next fiscal year," he said, as much concern have emerged over the quantum of exposure of Indian scheduled banks in terms of gross non-productive assets, re-cast loans and write-offs, which amounts to Rs.9.5 lakh crore.

He said the nine pillars of this year's budget will be: agriculture, social programmes, rural development, education with skill development, infrastructure, financial reforms, policy reforms in terms of ease of doing business, fiscal discipline and tax reforms.

"A unified agriculture platform to be dedicated to the nation on the birth anniversary of Dr. B.R. Amebdkar," the finance minister said, amid applause from the benches.

He said the government had targeted agriculture credit of Rs.8.5 lakh crore in 2015-16, which was being enhanced to Rs.9 lakh crore in the next fiscal. He also said that Rs.19,000 crore will be allocated for rural roads development programme.

Overall, Rs.87,765 crore was being allocated for rural development as a whole.

At the same time, Rs.35,984 crore was being allocated for agriculture in the next fiscal. This apart, the outlay under the job guarantee programme was being enhanced to Rs.38,500 crore. These enhanced allocations are capable of transforming villages and towns, Jaitley said.

He said there was also the need to spread digital literacy in rural areas. In addition, Rs.8,500 crore was being allotted towards rural electrification, targeting 100 percent rural electrification by May 1, 2018.

Jaitley also assured that the government intended to double the income of farmers in five years, besides allotting Rs.35,984 crore towards welfare of farmers. The proposals also included universal coverage of cooking gas in the country, with a massive mission towards this aimed at the poor people.

In this regard, he said, the government appreciated the 75 lakh middle class and lower middle class families for willingly giving up cooking gas subsidy.

On health, he said, a new scheme will provide medical cover up to Rs.1 lakh per family,

Highlights

* Services provided by EPFO exempted from service tax

* Limited tax compliance window from June 1 - September 30 for declaring undisclosed income at 45 percent including surcharge and penalties

* Clean energy cess increased from Rs.200/tonne to Rs.400/tonne on coal, lignite and peat

* Moving towards a low tax regime with non-litigious approach

* Committed to provide a stable and predictable taxation regime

* Relief of Rs.3,000 per year to taxpayers with income below Rs.5 Lakh per year to benefit one crore taxpayers

* Surcharge on income tax for incomes exceeding Rs.1 crore per annum raised from 12 percent to 15 percent

* Service tax exempted for general insurance schemes under Niramayi Swasthya Bima Yojana

* Suitable changes to be made in customs and excise duty rates to improve competitiveness and boost Make In India

* Plan, Non-Plan distinction to be removed from 2017-18

* For income below Rs.5 lakh per annum, tax ceiling has been raised from Rs.2,000 to Rs.5,000

* Relief to those in rented houses: Deduction raised from Rs.24,000 to Rs.60,000 under Section 88G

* Corporate income tax: Incentives for new manufacturing companies and relatively small enterprise companies

* Fiscal deficit for 2016-17 targeted at 3.5 percent

* Committed to implementing General Anti-Avoidance Rules (GAAR) from April 1, 2017

* New policy for managing assets of public enterprises

* Comprehensive approach to be adopted for government investment in central public sector enterprises

* Three initiatives for better delivery of public services

* Increased allocation of Rs.1,80,000 crore under PM MUDRA Yojana

* Market Stabilization Fund for Pulses gets Rs.900 crore

* Financial Data Management Centre for integrated data collection and analysis

* RBI Act being amended to provide statutory basis for monetary policy framework

* 100 percent FDI to be allowed through FIPB route in food products produced and marketed in India

* Department of Disinvestment to be renamed Department of Investment and Public Asset Management

* Comprehensive plan being drawn up to be implemented in the next 15-20 years for exploiting nuclear energy

* Government to provide health insurance of up to Rs.1 lakh per family; 300 generic drug stores to be opened under PM Jan Aushadhi Yojana

* Roads and highways allocated Rs.55,000 crore, 50,000 km of state highways to be taken up for upgradaing to national highways

* Stand Up India scheme allocated Rs.500 crore for SCs, STs women entrepreneurs

* Government to incentivise gas production from deep sea and other unutilised deep sources

* Public Utility Resolution of Disputes Bill for resolution of infra sector disputes

* Pradhan Mantri Kaushal Vikas Yojan gets Rs.1,700 crore

* Digital depository for school leaving certificates

* Higher education financing agency to be set up with fund of Rs.1,000 crore

* National Skill Development Mission has imparted training to 76 lakh youth; 1,500 multi-skill training institutes to be set up

* Model Shops and Establishments Bill to be circulated for voluntary adoption by states

* Rs.2.87 lakh crore for rural and urban local bodies

* Animal welfare programme, animal health card, e-marketing platform for connecting breeders

* 100 percent village electrification to be achieved by May 1, 2018

* Appreciation for 75 lakh middle class and lower middle class families for willingly giving up LPG Subsidy

* Rs.8.5 lakh crore of agricultural credit targetted in 2015-16
   In 2016-17: Rs.9 lakh crore

* Rs.35,984 crore allocated for agriculture in 2016-17

* Five lakh acres to be brought under organic farming over three year period

* MGNREGA to get Rs.38,500 crore

* Recapitalization of banks during next fiscal

* Prudent fiscal policy needed, domestic demand should bhe raised, reforms need to be carried out

* Farm, rural sector, infra and social sector to get more funds

* Need to prioritize expenditure given recommendations of 7th Pay Commission and OROP implementation

* Nine pillars for reforming India, among them agriculturre, social sector, education, infra, fiscal discipline, tax reforms

* Proposal to dedicate irrigation fund worth Rs.20,000 crore

* Rs.19,000 crore allocated for PM Gram Sadak Yojana

* Presenting budget when global economy in a serious crisis

* Amidst global headwinds, the Indian economy has held its own

* Converted challenges we inherited into oppoortunities

* CPI inflation down to 5.4 percent from 9 percent plus, bringing big relief to the public

* Forex reserves at highest-ever level

* Current account deficit down to $14.4 bn: Jaitley

* Foreign exchange reserves at highest ever level

* India's GDP growth now at 7.6 percent

* India a bright spot in global economy: Jaitley

More details to be added