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Finance Minister Arun Jaitley announced the Union Budget for 2016-17 today at Parliament. Mixed reactions came out after the budget speech, even as stock market suffered heavily as Sensex lost 500 points by the time FM Arun Jaitley’s budget speech ended.

Here are some major highlights from the budget:

Products/Services which became expensive:

  • Cigarettes and other tobacco products (Excise duty hiked by 10-15%)
  • Completely built imported commercial vehicles (Tariff rate hiked to 20%; Service charge of 1% on vehicles costing Rs 10 lakh+)
  • SUVs (4% high capacity tax only for SUVs)
  • Cement
  • Aerated, flavoured drinks and packaged water (Excise duty increased to 18% from 17.5%)
  • Plastic bags and sacks (Excise duty increased to 15% from 12%)
  • Business and executive class air travel (Subsidy on executive class travel reduced from 60% to 40%)
  • Visit to amusement and theme park (Service tax + Education cess increased to 14%)
  • Music concerts
  • Liquor, chit fund and lottery

Products/Services which became cheap:

  • Leather footwear which are priced above Rs. 1,000 per pair
  • Make in India mobile phones, LED/LCD panels, LED lights and LED Lamps
  • Solar Water heater Pacemakers, ambulance and ambulance services
  • General insurance plans/schemes
  • Braille paper
  • Computer tablets
  • Agarbattis
  • Microwave ovens
  • Refrigerator compressors
  • Peanut butter, packaged fruits and vegetables
  • Visit to museum, zoo and national park

Other prominent highlights include:

  • Total outlay for infrastructure in Budget 2016 now stands at Rs. 2,21,246 crore
  • Total allocation for agriculture and farmer welfare at Rs 35984 crores
  • Companies with revenues less than Rs 5 crore to be taxed at 29% + surcharge
  • Limited tax compliance window from Jun 1 – Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties
  • 1% excise duty imposed on Silver (and other jewelries except Gold)
  • Rs 60,000 crore for recharging of ground water recharging as there is urgent need to focus on drought hit areas cluster development for water conservation.
  • Limited tax compliance window from Jun 1 – Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties (part of tax reforms)
  • Banks get a big boost: Rs 25,000 crore towards recapitalisation of public sector banks
  • 5 per cent Krishi Kalyan Cess to be levied on all types of services
  • Dividend in excess of Rs 10 lakh/year will now attract an additional tax of 10%
  • No changes to existing tax slabs
  • Service tax exempted for housing construction of houses less than 60 sq. m
  • 15 per cent surcharge on income above Rs. 1 crore
  • Total of Rs 38,500 crore for Mahtma Gandhi MGNREGA for 2016-17; highest till date
  • Cooking gas would be provided to BPL families; Rs 2000 crore allocated for 5 years under this scheme
  • 87 lakh crore grants to gram panchayats and municipalities, which is a jump of 228%
  • 300 urban clusters to be set up under Shyama Prasad Mukherji Rurban Mission
  • A new health scheme worth Rs 1 lakh for all families
  • Senior citizens to get Rs 30,000 as additional cover under insurance scheme
  • Special Rs 500 crore fund for promoting SC/ST entrepreneurs
  • 1,700 crore for 1500 multi-skill development centres.
  • Digital literacy scheme to be launched to cover 6 crore additional rural households
  • Objective to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojna
  • National Skill Development Mission has imparted training to 76 lakh youth. 1500 Multi-skill training institutes to be set up.
  • 65 eligible habitats to be connected via 2.23 lakh kms of road. Current construction pace is 100 kms/day

Markets Fall Flat; Entrepreneurs React

Issues related with taxation and excise duty was not received well by investors and businessmen. As soon as the budget updates started coming, BSE and NSE experienced heavy trading, and soon both the markets fell flat.

While Sensex lost 600 points, Nifty lost 200 points during intra-day trading (till 2 PM)

Here are some reactions from the business community:

  • Chandrajit Banerjee, Director, CII: “Its a well balanced budget. We find mention of all that we expected.”
  • Sunil Munjal, Chair, Hero Corporate Service Limited: “All major CII recommendations have been covered in #Budget2016”
  • Rahul Bajaj, Chairman, Bajaj Auto Limited: “Its  a good budget.”
  • Sumant Sinha, Founder Chairman & CEO, Renew Power welcomed the budget
  • Shobana Kamineni, VP, CII welcomed the budget by stating that MSME sector will get several advantages
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