3.

9%

25%

FISCAL DEFICIT
for FY16, 3% target
in three yrs not two

CORPORATE TAX RATE

to be achieved by FY19,
starting from FY17

69.5Kcr

SELLOFF TARGET for

FY16, includes `28.5K cr
in strategic sales

34.7Kcr

ALLOCATION FOR
MNREGA, FM says
may give `5Kcr more

THE ECONOMIC TIMES

Budget 2015 Rebooting India

BENNETT, COLEMAN & CO. LTD.

NEW DELHI | 38 PAGES | .` 6 ONLY

INVESTOR

TAXPAYER

P2

NO CAPITAL GAINS tax for

mutual fund investors in case
of scheme mergers

WHAT
IT MEANS
FOR...

SEBI GETS POWER over more

markets as commodities
regulator FMC is merged with it
FIIs, BIGGEST drivers of the
stock market, to cheer the fact
that they are out of MAT net

THE BIG
IDEAS

CONSUMER

P8

2% EXTRA surcharge for income

above `1 cr but wealth tax gone
MORE CHOICE FOR retirement
planning, employees can switch
from PF to equity-heavy NPS
`50K TAX DEDUCTION for NPS
investment & hike in mediclaim
deduction to `25k; transport
allowance rises to `1,600/month

ON DISINVESTMENT
ON INVESTMENT & GROWTH
Big public spend a booster. Plug &
The most ambitious selloff plan
play great idea for infra projects,
since reforms began. Strategic
`70,000 cr extra spend this year
sale of PSUs back on agenda

SUNDAY, 1 MARCH 2015

WWW.ECONOMICTIMES.COM

BUSINESS

P9

ECONOMY

P10

P14

PHONE BILLS, bank charges,

airfares, eating out etc will cost
more as service tax goes up

BIG COS to pay more tax & small

ones less thanks to 4-yr plan to cut
corporate tax & exemptions

NEW LAW ON black money;

stringent punishment for those
stashing funds globally & locally

SERVICE TAX may go up more if

FM Jaitley imposes 2% Swachh
Bharat cess later

BIG OPPORTUNITIES in infra and

manufacturing as govt spend rises
and Make in India gets a tax boost

GOI-RBI COMMITTEE, not just RBI,

to fix interest rates; govt commits
to 6% inflation

IMPORTED MOBILES, mineral

water/cold drinks, cigarettes will
be dearer on higher duties

CLARIFICATION THAT retro tax

will apply to only a few cases &
deferring GAAR a big relief

BIG MOVE TO LOWER gold

imports, unlock gold hoards via
bonds, loans and new gold coin

ON EASE OF DOING BUSINESS

Bankruptcy rule to help shutter
businesses. Permit raj to go &
best global tax norms coming

ON ENTREPRENEURSHIP
Small business gets big help via
new bank, MUDRA, and a fund
for incubating startups

ON AAM AADMI POLITICS

Retains but also refines
Congress welfare focus; bigger
allocations, better delivery

It Isnt Big, But its Full of Bang

On Global Road,
India Aims to Hit
Growth Milestone
SWAMINATHAN S
ANKLESARIA AIYAR
Its a Budget for growth and
global competitiveness. By
pledging to cut Indias corporate tax rate from 30% to 25%
within four years, in line with
Asean rates, Finance Minister
Arun Jaitley signalled his intention to create Competitive
India. This was a bigger conceptual breakthrough than his
big thrust in infrastructure,
aimed at kickstarting economic growth in the country.
His proposed public investment spree sent his fiscal deficit to 3.9% of GDP against the
3.6% promised last year, and
markets do not easily forgive
finance ministers who renege
within a year. But he pleaded
an exceptional circumstance
the Finance Commission
had increased the states share
of central taxes from 32% to
42%, leaving him short of
funds. Even after levying stiff
additional taxes on petroleum
products, coal, cigarettes and
services, he thought fit to dilute his fiscal thrust to finance
infrastructure, pledging to
reach the ultimate fiscal deficit
target of 3% of GDP in three
years rather than two.
He combined these with
measures to reduce tax terrorism, reduce and settle tax litigation, corporatise ports, create a new infrastructure
funding corporation, a new
holding company for public
sector banks to ease their recapitalisation, and a new PPP
infrastructure model in which
the government took over the
bulk of project risk. The introduction of GAAR will be postponed by two years, within
which a slew of confidencebuilding measures will be
brought in to reduce tax disputes and expedite settlements. Jaitley promised to
slash red tape and create a taxfriendly administration, aiming to make India among the
fastest-growing economies in
the world. All this adds up to a
formidable reforms platform
if fully implemented. He carried conviction with markets:
the Sensex gained 141 points.
Caveat: All the Budget projections assume that the economy
will roar along at between 8.1%
and 8.5% next year, up from

7.4% this year. But actual

trends in corporate profits, tax
collections, job growth, exports and other indicators suggest an economy struggling to
break free rather than one
soaring into the stratosphere.
Indeed, new orders for capital
goods and construction are at
dismal levels, and it is
far from certain that
the binding constraint
lies in infrastructure finance. Other hurdles include land acquisition,
forest and environmental
clearance, state-level clearances, NGO-led agitations
and activist court interventions. The Budget alone cannot overcome these many
hurdles, which will require action across the economic and
political spectrum.
If GDP growth fails to reach
the 8-8.5% assumed in the
Budget, all the revenue assumptions underpinning this
Budget will be at risk. Second,
the revenue deficit remains as
high as 2.8% of GDP, betraying
a poor quality of deficit. It is
simply not true that the fiscal
deficit has been kept high just
to raise investment: far too
much of the deficit is going towards administrative costs.
Interest payments as a proportion of central revenue have
shot up to a record 49.6%, signaling an urgent need to keep
the fisc under control.

Corp Tax Cut

to Torque
Up India Inc
Tax As A Proportion Of PBT
FY14

37.3

No reason to
depart from
the fiscal
consolidation
road map, says
former finance
minister.

18.5
6.5

INDUSIND BANK

NMDC

8.9

18.1

13.6

19.4

Hema.Ramakrishnan
@timesgroup.com

ET imaging: ARINDAM

EXCLUSIVE:
INDIA INC
CAPTAINS
WRITE FOR ET

STRINGENT LAW ON CARDS

Black Money Riders

Now Face Crackdown
10-year jail term on hiding overseas income

K V KAMATH

VISHAL SIKKA

ANIL AMBANI

KUNAL BAHL

Facing Heat

Sugata.Ghosh
@timesgroup.com

Shopping of

Mumbai: If you are caught

with a hidden bank account in
Jersey or cut a cash deal to buy
a property in Panvel, chances
are not just the taxman, even
the cops could come after you.
And if on a shopping binge you
end up blowing up more than
a lakh, the store will ask for
your PAN to leave a trail for
the tax office.
Existing laws will be tightened and new ones enacted
to make life miserable for
anyone with black money.
Individuals being hounded by
the government for stashing
away money in HSBC Geneva
and Liechtenstein would also
be covered by the stringent
laws with the income-tax department completing assessments and slapping prosecution notices.

`1 lakh

or more to
alert taxman

New law to give

last chance to
evaders to
declare foreign
assets

LOCAL PROPERTY
COULD BE CONFISCATED
Estimated
No cash
advance to
builders for
property
deals

$2 trillion
(`120 lakh cr)
black money
stashed
overseas

But thanks to the abolition

of wealth tax, companies may
be tempted to hold more cash
in hand and might even find
themselves on a stronger footing if a cache of currency bills
is found on the premises.
Govts Harshness Stunning XX 16

SENSEX SWINGS WILDLY TO FM TUNE

It was a rollercoaster day in the stock market, with indices
gyrating wildly to the Budget proposals before ending modestly
higher. The Sensex closed 0.48%, or 141 points, up at 29,361, but
not before it swung as much as 678 points. While private banks,
drugmakers and auto firms were propelled higher, index
heavyweight ITC fell 8.27%, punished by a 15-25% increase in
excise on cigarettes. The NSE volatility index fell 13.3%. XX 3

Tough Rules on Black Money XX 16

ITS JUST NOT FUEL PRICE HIKE: CONSUMER TO ALSO FEEL THE PINCH AS JAITLEY RAISES DUTIES AND SERVICE TAX

Bill Attached: FM Tugs at Purse Strings

Ratna Bhushan & Gulveen Aulakh

YOUR BILL JUST WENT UP, MAAM!

34.2
22.6

GRASIM INDS ULTRATECH CEM. AMBUJA CEM.

A NEW PLAY

Given poor collections and

administrative hassles, Jaitley
abolished the wealth tax
(which yielded under `1,000
crore) and instead levied a 2%
surcharge on the incomes of
the super-rich.

34.9

28

THE DIVIDING LINE

XX COMMENT

The Centre will auction big

infra projects with ready
clearances & linkages, so
firms can bid, win & start
building them straightaway.
Plug & play indeed! XX 4

FY13

AXIS BANK

EXCLUSIVE

PCs Take on
Jaitley Budget

88.4

(In %)

New Delhi: Middle-class consumers need to brace themselves for a

steady drain of daily pennies as the
proposals in FM Arun Jaitleys
Budget on excise duties and service
tax will make a multitude of products ranging from mineral water,
aerated drinks and mobile phones
and several services including
phone, food and bank bills, holidays and beauty treatments a trifle
more expensive.
At the same time, Finance
Minister Arun Jaitley has incentivised greater investments in health

insurance and pension plans encouraging taxpayers to invest more

in these instruments.
The net impact of both higher
daily expenses and greater savings
is likely to squeeze consumers,
leaving them with lesser discretionary spend. The save more
spend less message the Budget is
sending out to middle-class India
may be a dampener on consumption, in the short run at least.
The Budget is doing nothing to
help consumption, said Kishore
Biyani, CEO of Future Group. We
have been working harder in the
past few months to attract consumers and things like (increase in)

service tax will derail it further.

In another unrelated development, oil firms raised petrol prices
by `3.18 per litre in Delhi and diesel
by `3.09 from Sunday, to align fuel
rates with global trends and the
rupee-dollar exchange rate. This is
one of the steepest hikes in recent
times. Prices are being raised for
the second time in two weeks as international oil prices that had more
than halved since June last year
began climbing back this month.
Middle-class consumers will feel a
daily pinch as price hikes resulting
from tax rate changes kick in.
Service Tax may Rise Further XX 16

THE WORLD, AT
HOME IN INDIA
PM Modi dreams of a
$20-trillion economy. As
the Budget revs up India
and makes it competitive
globally, the world is all agog.
ETs stylised visuals cheer
the Power of India.

New Delhi: In lowering the basic

rate of corporate tax to 25% from
30% in four years, Finance Minister
Arun Jaitley made clear his intent
to adhere to the path of direct tax
reform while keeping in step with
global trends and moving away from
an exemption-based regime that allows for wide variations.
The effective collection of corporate tax is about 23%, FM Jaitley
pointed out in his Budget speech on
Saturday. We lose out on both
counts, i.e., we are considered as
having a high corporate tax regime
but we do not get that tax due to excessive exemptions. A regime of exemptions has led to pressure groups,
litigation and loss of revenue. It also
gives room for avoidable discretion, he added.
Overall Tax Burden Higher XX 16