New Delhi, Feb 1 (PTI): Softening the demonetisation blow, the Budget for 2017-18 today halved the tax to 5 per cent on incomes upto Rs 5 lakh but proposed a new surcharge of 10 per cent on incomes between Rs 50 lakh and Rs 1 crore and raised duties on cigarettes and pan masala while stepping up allocations for infrastructure, rural, agriculture and social sectors.

Breaking from the past, Finance Minister Arun Jaitley presented a historic Budget in which the railway budget has been merged and the date advanced by a month, retaining the 15 per cent surcharge on taxable income above Rs 1 crore.

While the surcharge alone would net Rs 2,700 crore a year, his give away on direct tax proposals will result in a loss of Rs 15,500 crore.

The change in the personal income tax rate for individual assessees between Rs 2.5 lakh and Rs 5 lakh income would reduce the tax liability of all persons below Rs 5 lakh to either to zero (with rebate) or 50 per cent of their existing liability.

In order to have duplication of benefit, the existing benefit of rebate available to them is being reduced to Rs 2,500 available only to assessees upto income of Rs 3.5 lakh.

While the taxation liability of people with income upto Rs 5 lakh is being reduced to half, all other categories of tax payers in the subsequent slabs will also get a uniform benefit of Rs 12,500 per person.

In the case of senior citizens above 60 years, there will be no tax upto Rs 3 lakh, while the exemption will be upto Rs 5 lakh in case of citizens above 80 years. Both the categories will attract income tax of 20 per cent on income between Rs 5 lakh and Rs 10 lakh and 30 per cent for income above Rs 10 lakh.

Against the backdrop of demonetisation intended to eliminate blackmoney and introduce clean transactions, the Budget barred any transaction in cash above Rs 3 lakh. As a measure of transparency in political funding, he lowered to one-tenth the donation that political parties can accept in cash to Rs 2000 per donor.

The Finance Minister expressed confidence that the pace of remonetisation has picked up and would soon reach comfortable levels with effects not expected to spillover into the next fiscal.

In view of the fact that the proposed GST is expected to be rolled out soon, he left indirect taxes largely untouched expect for some changes in duties on tobacco products, solar panels and circuit for mobile phones.

While excise duty on pan masala has been hiked to 9 per cent from 6 per cent currently and that on unmanufactured tobacco to 8.3 per cent from 4.2 per cent, the same on filter and non-filter cigaretes of all length was also hiked.

Mobile phones will be costlier with the Budget proposing a 2 per cent special auxillary duty on import of populated printed circuit boards (PCBs).

The Finance Minister ruled out abolition of Minimum Alternate Tax (MAT) on companies but allowed them a carry foward facility for 15 years instead of 10 years to allow them MAT credit.

In a bid to boost the rural and informal sectors hurt by the note ban, the Budget raised the target for agriculture credit during the coming year to a record Rs 10 lakh crore that will ensure flow of credit to under serviced areas.

The Budget provides for Rs 9000 crore under the Crop Insurance Scheme and proposed to set up a decidcated micro-irrigation fund under NABARD with an initial corpus of Rs 5,000 crore.

The Budget provisions under rural employement guarantee scheme MGNREGA has been increased from Rs 38,500 crore in the current year to Rs 48,000 crore in 2017-18, while Rs 19,000 crore has been given under the rural roads programme.

The total allocation for rural, agriculture and allied sectors has been pegged at Rs 187,223 crore, which is 24 per cent higher than the previous year.

In a bid to boost infrastructure spending, the Minister proposed a total of Rs 1,31,000 crore towards capital and development expenditure of railways which includes Rs 55,000 crore provided by the government.

The Railways will focus on four major areas of passenger safety, capital and development work, cleanliness and finance and accounting reforms. A passenger safety fund is being created with a corpus of Rs 1 lakh crore over five years and a plan for modernisation and upgradation of identified corridors.

Railway lines of 3,500 km will be commissioned in next fiscal as against 2,800 km in the previous year. Steps will be taken to dedicated trains for tourism and pilgrimages.

In the road sector, allocation for highways has been stepped up to Rs 64,900 crore against Rs 57,976 crore in Budget Estimates of 2016-17.

For the transportation sector as a whole, including rail, road and shipping, the Budget provides for Rs 2,41,387 crore in FY18. "This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities," Jaitley said.

Highlights

• Income Tax rate cut to 5 pc for individuals having income between Rs 2.5 lakh to Rs 5 lakh
• 10 pc surcharge on individual income above Rs 50 lakh and upto Rs 1 cr to make up for Rs 15,000 cr loss of due to cut in personal I-T rate
• 15 pc surcharge on income above Rs 1 cr to continue
• Direct tax collection not commensurate with income and expenditure pattern
• Revenue deficit reduced to 2.1 pc from 2.3 pc for 2016-17
• Govt pegs fiscal deficit target at 3.2 per cent for 2017-18 and 3 per cent for next year.
• Monetary policy to be expansionary in major economies
• More steps will be taken to benefit farmers and the weaker sections; budget being presented during weak global economy
• Pace of remonetisation has picked up; demonetisation effects will not spill over to next year
• Functional autonomy of the railways to be maintained
• Demonetisation will help in transfer of resources from tax evaders to government
• Merger of Railways Budget with General Budget brings focus on a multi-modal approach for development of railways, highways and inland water transport
• Only transient impact on economy due to demonetisation; long term benefit include higher GDP growth and tax revenue
• GDP will be bigger, cleaner after demonetisation
• Effects of demonetisation not expected to spill over to the next year, says Finance Minister
• Effects of demonetisation not expected to spill over to the next year, says Finance Minister
• Govt took two tectonic policy initiatives - passage of GST Bill and demonetisation
• Demonetisation was a bold and decisive strike in a series of measures to arrive at a new norm of bigger, cleaner and real GDP
• Committed to double farm income in 5 yrs
• Plan, non-plan classification of expenditure done away with in the Budget for 2017-18 to give a holistic picture
• Mini labs by qualified local entrepreneurs to be set up for soil testing in all 648 krishi vigyan kendras in the country
• Budget presentation advanced to help begin implementation of schemes before onset of monsoon
• We will continue the process of economic reform for the benfit of poor
• Spend more in rural areas, infra, poverty alleviation, while maintaining fiscal prudence as guiding principle of Budget
• Our agenda for next year is to transform, energise and clean India
• World Bank expects GDP growth rate at 7.6 pc in FY18 and 7.8 pc in FY19
• Allocation under MNREGA increased to 48,000 crore from Rs 38,500 crore. This is highest ever allocation
• Rs 9,000 cr higher allocation for payment of sugarcane arrears
• Target of agriculture credit fixed at Rs 10 lakh cr in 2017-18
• Tax administration honouring the honest is one of the 10 pillars of Budget 2017-18
• National Testing agency to conduct all examinations in higher education, freeing CBSE and other agencies
• 133-km road per day constructred under Pradhan Mantri Gram Sadak Yojana as against 73-km in 2011-14
• Govt to set up dairy processing fund of Rs 8,000 crore over three years with initial corpus of Rs 2,000 crore
• 1 cr households to be brought out of poverty under Antodya Scheme
• Participation of women in MNREGA increased to 55 pc from 45 pc in past
• Modern law on contract farming will be drafted and circulated to states
• Dedicated micro-irrigation fund to be created with a corpus of Rs 5000 crore
• Market reforms will be undertaken, states will be asked to denotify perishables from Essential Commodities Act
• Space technology to be used for monitoring MNREGA implementation
• Sanitation coverage in villages has increased from 42 pc in Oct 2016 to 60 pc, a rise of 18 pc, says FM
• We propose to provide safe drinking water to 28,000 arsenic and fluoride affected habitations
• To construct one crore houses by 2019 for homeless. PM Awas Yojana allocation raised from Rs 15,000 cr to Rs 23,000 cr
• 100 pc electrification of villages to be completed by May 2018
• 27,000 cr on to be spend on PMGSY; 1 cr houses to be completed by 2017-18 for houseless
• PM Kaushal Kendras will be extended to 600 districts; 100 international skill centres to be opened to help people get jobs abroad
• The allocation for rural agri and allied sector in 2017-18 is record Rs 1,81,223 crore
• In higher education, we will undertake reforms in UGC, give autonomy to colleges and institutions
• A system of annual learning outcome in schools to be introduced; innovation fund for secondary education to be set up
• Two new AIIMS to be set up Jharkhand and Gujarat
• New rules regarding medical devices will be devised to reduce their cost
• 1.5 lakh health sub centres to be converted to Health Wellness Centres
• National Housing Bank will refinance indiviual loans worth Rs 20,000 crore in 2017-18
• Rs 500 cr allocated to set up Mahila Shakti Kendras; Allocation raised from Rs 1.56 lakh cr to Rs 1.84 lakh cr for women & child welfare.
• Capital and development expenditure pegged at Rs 1.31 lakh cr for railways in 2017-18 from Budget
• Allocation for SCs increased from Rs 38,833 cr to Rs 52,393 cr, a rise of 35 per cent
• 35 pc increase in allocation for SC to Rs 52,393 cr
• For senior citizens, Aadhaar based health cards will be issued
• Model Shops and Establishment Bill to open up additional opportunities for employment of women
• New metro rail policy to be unveiled
• Railway tariffs to be fixed on the basis of cost, social obligation and competition
• Service charge on e-tickets booked through IRCTC will be withdrawn
• Delhi and Jaipur to have solid waste management plants and five more to be set up later
• Government proposes Coach Mitra facility to redress grievances related to rail coaches
• 500 stations will be differently abled by providing lifts and esca ..
• 500 stations will be differently abled by providing lifts and escalators
• Unmanned railway level crossings to be eliminated by 2020
• Railway line of 3,500 km will be commissioned in 2017-18 as against 2,800 km in 2016-17
• Total allocation for rural, agri and allied sectors for 2017-18 is a record Rs 1,87,223 cr, up 24 per cent from last year
• Rs 1 lakh cr corpus for railway safety fund over five years
• A scheme for senior citizens to ensure 8 per cent guaranteed returns
• Dedicated micro-irrigation fund to be set up by NABARD to achieve mission of Per Drop, More Crop
• Digi Gaon will be launched to promote tele-medicine and education
• Crude oil strategic reserves to be set up in Odisha and Rajasthan apart from 3 already constructed
• Coverage of Fasal Bima Yojana to go up from 30 pc of cropped area to 40 pc in 2017-18 and 50 per cent next year
• For transport sector, including railways, road and shipping, government provides Rs 2.41 lakh crore
• Allocation of Rs 10,000 cr for Bharat Net project for providing high-speed broadband in FY18
• Allocation for national highways stepped up to Rs 64,000 cr from Rs 57,676 cr
• Budget allocation for highways stepped up to Rs 64,000 crore ..
• Dispute resolution in infrastructure projects in PPP mode will be institutionalised
• Rs 2,74,114 crore allocated for defence expenditure, excluding pension; This includes Rs 86,000 crore for defence capital
• Govt to further liberalise FDI policy
• Over 90 per cent of FDI proposls are now processed through automatic route
• FIPB will be abolished
• Trade Infrastructure Export Scheme to be launched in 2017-18; total allocation for infra at record Rs 3.96 lakh cr
• Second phase of solar power development to be taken up with an aim of generating 20,000 MW
• After demonetisation on Nov 8 last year, deposit of between Rs 2 lakh and Rs 80 lakh made in 1.09 cr bank accounts at an average of Rs 5.03 lakh till Dec 30
• More funds beyond Rs 10,000 cr for recapitalisation of banks will be provided if needed
• The shares of railway CPSCs like IRCTC and IRFC to be listed on various stock exchanges
• We are largely a tax non-compliant society
• New ETF with diverse stocks will be launched in 2017-18
• Of 76 lakh individuals who reported income of over Rs 5 lakh, 56 lakh are salaried
• Integrated public sector oil major to be created to match global giants
• Govt will amend the Multi-state Cooperative Act to protect the poor and gullible investors
• Urgent need to protect poor from chit fund schemes, draft bill placed in public domain
• Computer emergency response team to be set for cyber security of financial sector
• Govt to introduce two new schemes to promote BHIM App - referal bonus for users and cash back for traders
• Govt doubles distribution target under Mudra Yojana to Rs 2.44 lakh crore for 2017-18
• Over Rs 80 lakh deposits in 1.48 lakh cr at an average of Rs 3.31 cr per account
• Customs duty on LNG halved to 2.5 pc
• FPI to be exempt from indirect transfer provisions
• Political parties can receive donations in cheque, electronic mode; electoral bonds to be issued by RBI
• Maximum amount of cash donation a political party can receive will be Rs 2000 from any one source as part of effort to clean political funding
• Capital expenditure stepped up by 25.4 pc in FY18 over previous year
• Total expenditure in FY18 at Rs 21.47 lakh cr
• Duty exempted on various POS machines and iris readers to encourage digital payments
• Rs 7,200 cr revenue loss due to reduction in tax on smaller companies
• Govt mulling introduction of legal changes to confiscate assets of offenders, including economic offenders, who flee the country
• Govt to set up a web-based interactive platform for defence pensioners
• Head post offices to issue passports
• Govt considering option to amend Negotiable Instruments Act to ensure that holders of dishonoured cheques get payment
• FRBM review committee has recommended 60 pc debt to GDP ratio; 0.5 pc of GDP deviation from stipulated fiscal deficit targets
• Payment regulatory board to be set up in RBI to regulate electronic payments, replacing Board for Regulation and Supervision in Payments and Settlements System
• 3 yr period for long-term capital gains tax on immovalble property reduced to 2 years; base year indexation shifted from 1.4.1981 to 1.4.2001
• A proposal to receive all government receipts beyond a certain threshold through e-modes under consideration