The rate of tax for income within the range of Rs 2.5 lakhs to Rs 5 lakhs has been reduced from 10 per cent to five per cent.
The Union Budget presented on Wednesday is expected to bridge the gap between the present, which is marred by multiple indirect taxes, and the future of indirect taxation, aka Goods and Service Tax (GST). In view of the approaching GST regime in next few months, the rate of service tax (15 per cent) and excise (12.50 per cent), has been maintained. However, this Budget proposes to make smoking costlier and silver jewellery costlier. Let’s understand how.
Direct Tax: The rate of tax for income within the range of Rs 2.5 lakhs to Rs 5 lakhs has been reduced from 10 per cent to five per cent. This is a welcome move and a much-awaited respite for taxpayers as it will reduce their tax outgo and keep more money in their hands. It appears that the government expects this saved tax money will be spent by taxpayers, helping increased circulation of money and remonetisation.
Customs: This year, in case your friend from abroad sends you chocolate worth less than Rs 1,000 through postal parcels or pockets or letters, then the same will not attract any customs duty.
Given demonetisation, nowadays buyers insist on acceptance of digital currency, including cards, wallets etc pushing use of micro-ATMs, POS cards. Acknowledging this fact and to ensure that micro ATMs and POS card readers are available to shopkeepers at a cheaper rate, the Budget proposes to exempt these products from customs and excise duty.
Manufacturing solar panels in India may get cheaper as the Budget has proposed exemptions for solar tempered glass used to build solar panels.
However, in case you love imported cashew nuts, then be ready to shell out more as basic customs duty on cashew nuts (roasted, salted etc) is being increased from 30 per cent to 45 per cent.
Excise: Last year a few sectors, such as jewellery, which were not under the excise net, were brought under the ambit of excise duty. This year an exemption has been removed on branded silver coins of purity of 99.9 per cent and above. A similar exemption is removed on silver jewellery other than studded with diamond, rubies, etc. Thus, in view of the Budget 2017 changes, in the days to come, women can expect silver jewellery to get costlier.
Like every year, smoking will get costlier this year too with increased excise duty/health cess on cigarettes, cigars, bidis, jarda, gutkha, etc.
Duty on vehicles carrying 10-13 seater vehicles is reduced from 27 per cent to 12.5 per cent. This will certainly help the rural transport sector where these vehicles are used for passenger transportation.
Honour the honest: Finance minister Arun Jaitley candidly agreed that honest taxpayers were a troubled lot as the authorities issue them frivolous notices, whereas dishonest ones are not hassled a lot as they are getting repeated red carpet treatment through the Income Disclosure Scheme (IDS), Garib Kalyan Yojana, etc. Given this, now the government intends to go all the way to ensure that compliant people don’t get troubled and are in fact spelled incentivised for being honest. However, how this will be achieved was not out in the Budget speech, and thus it appears that the honest will have to wait as usual.
GST journey: The government appears to be gung-ho about the proposed GST and is likely to launch a nationwide GST extensive reach-out efforts to trade and industry programme from April 1, 2017. The GST outreach is certainly a very welcome move as this will disseminate apt knowledge about GST as well as dispel the concerns of trade and industry.
Given the heightened buzz around GST in the past few months and with the GST regime approaching in the next few months, industry was expecting a detailed roadmap for GST, which may be shared on February 18 (at the GST Council meeting). It goes without saying that the government and industry will have to work on a war footing as only 150 days are left for the introduction of GST (considering July 1, 2017 as the date of introduction of GST).