Union Budget 2017: Financial sector

The Union Finance Minister Arun Jaitley on 1 February 2017 presented the Union Budget 2017 in the Lok Sabha. In the independent India, this will be the 87th budget and the third of the Modi Sarkar.

The Budget 2017 is also unique in the sense that it is the first budget after introduction of three key changes to the budget process viz., merging of the Railway Budget with the General Budget, doing away with the classification of plan and non plan expenditure and most importantly advancing the budget presentation date by one month.

The Budget 2017 has identified financial sector as one of the key drivers of the economy. Accordingly, Arun Jailtley announced following initiatives:

• The Finance Minister announced that the Foreign Investment Promotion Board (FIPB) will be phased-out in the next fiscal. He added that a Bill will soon be tabled in Parliament to protect the poor and gullible investors.

• He informed that more than 90 per cent of the total FDI inflows are now through the automatic route.

• It is proposed that high net worth NBFCs can also now participate in IPOs just like the banks and insurance companies.

• It is also proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be categorised as Qualified Institutional Buyers (QIBs) by SEBI at par with the banks and insurance companies.

• A common application form for registration, opening of bank and demat accounts, and issue of PAN will be introduced for Foreign Portfolio Investors (FPIs).

• The commodities and securities derivative markets will be further integrated by combining the participants, brokers, and operational frameworks.

• The threshold limit for audit of business entities that opt for presumptive income scheme has been raised from Rs. 1 crore to Rs. 2 crore.

• The threshold for the maintenance of books for individuals and HUF is proposed to be increased from turnover of Rs. 10 lakhs to Rs. 25 lakhs or income from Rs. 1.2 lakhs to Rs. 2.5 lakhs.

• The Foreign Portfolio Investor (FPI) Category I & II will be exempt from indirect transfer provision under the IT Act.

• The individual insurance agents will be exempted from the TDS provision of 5 per cent being deducted from commission payable after filing a self-declaration that their income is below taxable limit.

• The shares of Railway Public Sector Enterprises (PSEs) like IRCTC, IRFC and IRCON will be listed in stock exchanges.

• The budget target under the Pradhan Mantri Mudra Yojana (PMMY) has been doubled to Rs. 2.44 lakh crores.

• Rs. 10000 crores has been earmarked for recapitalisation of Banks in 2017-18. The Finance Minister also assured need based additional allocation.

• It has been proposed to create an integrated public sector ‘oil major,’ which will be able to match the performance of international and domestic private sector oil and gas companies.