Although India has seen a decline of 13% in the monsoon during 2014 and 2015, the nation’s economy registered growth of 7.6% in 2015-16. Foreign investment reserves rose to a record value of US$350 billion. The Consumer Price Index (CPI) also came down from 9 to 5.4 during this period. The Finance Minister of India, Arun Jaitely, presented the Union Budget on February 29, 2016, with a special focus on income through taxes and foreign direct investment. There were many reforms included for finance companies in India as well. It also focused on the development of the agriculture and health care sectors. Here’s how the Union Budget could affect your finances and finance companies in India.
- If the cost of a house is not more than Rs 50 Lacs, then you can get an exemption of Rs 50,000 for home loans of up to Rs 35 Lacs.
- The existing income tax slabs were not changed, which was a big relief for the common man.
- There will be no service tax for construction of houses less than 60 sq m.
- A contribution of 8.33% from the government has been launched for all the new employees for the first 3 years.
- Rs 1,000 crores have been allocated for the Employee’s Provident Fund Scheme.
- 100% Foreign Direct Investment has been allowed in the food processing industry in India.
- Startups to get 100% exemption from tax.
- Amount sanctioned under ‘Pradhan Mantri Mudra Yogna’ increased to Rs 1,80,000 crore.
- Total investment of Rs 2,21,246 crore to be made on infrastructure.
- Rs 500 crore to be invested in promoting entrepreneurship amongst SC/STs.
- Tax on infrastructure and agriculture will be levied.
- Excise duty on tobacco products raised to 10 to 15 percent.
- For the purchase of luxury cars above the price of Rs 10 Lacs, 1% service tax needs to paid.
- 29% surcharge for companies with profit of less than Rs 5 crore.
- Rs 25,000 crore to be invested for recapitalization of public sector banks.
- Banking Board Bureau will be made operational as a major step.
- Insurance and finance companies in India to be listed on the stock exchange.
- A center for financial data management will be set up.
Other than these reforms in the finance sector, emphasis was given to government schemes like ‘Make in India’ and ‘Start up India‘ to promote trade and production in India, as well as to give a boost to young entrepreneurs. Rs 38,500 crores have been sanctioned for Mahatma Gandhi MNREGA, with an aim to create more jobs. The budget has received a mixed response from the people.