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Union Budget 2015-16 Decoded in 16 Easy Steps

Below we have decoded the Union Budget 2015-16 which was presented by Finance Minister Arun Jaitley on 28 Feb 2015:

Macro Economy
  • 2015-16 growth between 8-8.5%, double digit growth feasible
  • Retail inflation close to 5% by March, room for monetary policy easing
  • To achieve fiscal deficit of 3% of GDP by 2017-18
  • Fiscal Deficit target 3.9% in 2015-16, 3.5% in 2016-17
  • Revenue Deficit to be 2.8% in 2015-16
  • Current Account Deficit for 2014-15 to be below 1.3% of GDP
  • Sharp increase in outlays of roads and railways and introduction of a new fund called “National Investment and Infrastructure Fund (NIIF)”
Our View

Growth oriented with slightly aggressive fiscal deficit number which is needed for putting economy on growth path.

Buoyant Markets
  • To lower Corporate Tax to 25% over next four years
  • GAAR implementation deferred by 2 years to April 2017
  • Tax free bonds for roads, railways, irrigation projects
  • GST to be put in place by April 1, 2016
Our View

Long term positive for companies and equities with likelihood of attracting better FII flows due to clarity on policy front.

Personal Finance
  • No change in personal Income Tax
  • Health Insurance Premium deduction hiked from Rs 15,000  to Rs 25,000; for senior citizens to Rs 30,000
  • Additional 2% surcharge on people earning over Rs 1 cr; to fetch Rs 9,000 cr; Wealth tax abolished
  • Rs 50,000 deduction for contribution to New Pension Scheme
  • Service Tax rate hiked to 14%, from 12.36%. You can see online service tax filing procedure here. So eating out is costly including all services being used by you like mobile, dish tv etc as service tax has increased.
Our View

Additional money in hands of people to channelize towards long term savings and investments.

  • To introduce comprehensive law to deal with black money
  • Benami property transaction bill to tackle black money transaction in real estate soon
  • 100% deduction for contribution to Swachh Bharat, Clean Ganga projects
  • Internationally competitive direct tax regime to be put in place to incentivise saving
  • Incentivise use of credit, debit cards; disincentivise cash transaction to curb black money
Our View

Bold move to get black money back on country’s balance sheet and incentivising cashless economy.

Overall View

We feel that this budget has vision & clarity targeted towards long term economic growth. Emphasis has been made on developing infrastructure, more investments coming in through foreign investors, tourism, etc. Growth in our economy, reduction in corporate taxes and investment flow from foreign investors would help the equity markets perform better in long run.

Though there are no changes in the Income tax slabs for individuals, the effort has been put to ensure more savings in the hands of the individuals through the tax benefits in New Pension Schemes, Health Insurance deductions under sec 80D, etc. Overall, we feel that the budget has right intent to put Indian economy on fast track growth and now needs flawless implementation to turn this into reality!

Your take-away
  • Invest in equities and equity oriented mutual funds for long term wealth creation.
  • Take benefits of additional deduction available for Health Insurance and New Pension Scheme.
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