Union Finance Minister Arun Jaitley on Monday asserted that the budget will take care of the people’s fear of taxation.
Addressing a post-budget press conference, Mr. Jaitley said: “The monumental change in the presumptive taxation regime will eliminate people’s fear of taxation …that takes care of the shopkeepers and small traders.”
The proposed extension of the simplified presumptive taxation regime to professionals including lawyers, doctors, architects and interior designers who report total gross receipts of less than Rs. 50 lakh under which profits will be deemed to be 50%, said Mr. Jaitley, will further reduce the compliance burden of the middle class.
The increased rent deduction from Rs. 24,000 to Rs. 60,000 and the higher ceiling for tax rebate under Section 87A from Rs. 2,000 to Rs. 5,000, he said, are all relief and benefits for the middle class.
“If I’d raised the income tax threshold that would have been a benefit also for the super rich but what I have done instead is to give relief to the middle class.”
Defending the reliance of the budget on new cesses, including the infrastructure cesses on cars and vehicles, Mr. Jaitley said that since the Government needs resources for building infrastructure it must opt for one of the available levies. “If I have to provide for new roads I can only levy a cess or raise the service tax rate or excise duties on petrol and diesel…the funds will have to come from somewhere.”
The Budget, he said, undertakes the largest ever simplification of taxes, proposes not only strategic disinvestment but also reallocation and recycling of government-owned assets.
“Why should a public sector unit not be allowed to say sell two of the 30 units it runs and then set up two new ones better-suited to its strategy…such readjustments will now be allowed.” In the estimates for non-tax receipts during 2016-17, the Government has budgeted Rs. 20,500 crore from Strategic Disinvestment.
Despite a 15% hike in the plan expenditure allocation for 2016-17, and significant additional provisioning for the outgoes towards the One Rank One Pension and the 7th Pay Commission awards, through efficient expenditure management, the fiscal deficit target for next year has been maintained at 3.5% of GDP.
The fiscal deficit for the current year, 2015-16, is also being kept within the target of 3.9% of GDP. “There are no slips or pauses in the fiscal deficit,” Mr. Jaitley said, turning to structural reforms. These, he said, include the proposal to introduce legislation in Parliament for giving a statutory backing to Aadhaar.
