New Budget here, but funds of old one still unspent

Ten ministries had not spent even half

of what was given to them last year till
December 2015, that is, in nine months. At the
other extreme are seven ministries that had
spent over 90% of their funds although one
fourth of the year was still remaining. These
figures refer to Plan spending, which does not
include payments of salaries, pensions and
other recurring expenditures. It includes all
capital expenditure.

BUDGET & BOURSE: HOW FMs SWAYED

THE MARKETS
The sensex's path is one of the quick measures of investor sentiment to Budgets.
Here's how the index reacted to six FMs' proposals in the last 25
years :

`Income tax rates moderate in

India'

Government Slaps Levy On New Car

Sales To Fight Pollution
In his annual Union Budget, Finance Minister Arun Jaitley imposed a sales
levy of up to 4 per cent on new passenger vehicles, effective
immediately, spurring a sell-off by investors in auto stocks like Maruti
Suzuki India Ltd and Tata Motors.
The budget proposes a 1 per cent tax on cars less than four metres in
length and with engines smaller than 1200cc that run on petrol, liquified
petroleum gas or compressed natural gas.
Small diesel cars less than 4 metres long and with engines below 1500cc
will be taxed at 2.5 per cent and bigger diesel vehicles at 4 per cent.
It is estimated that the tax will generateRs.3,000 crore in revenue for
the government.
The government, separately, plans to levy a luxury tax of 1 per cent on
sales of passenger vehicles priced higher thanRs.10 lakh.
While increasing taxes, India is also expected to spendRs.97,000 crore
over the next fiscal year on improving and building new roads and
highways, which car makers say could partially offset the negative
impact.

Defence Budget For FY17

The defence budget for 2016-17 was increased by 9.76 per

cent toRs.2.58 lakh crore as compared to the revised estimates
ofRs.2.33 lakh crore for 2015-16 even as military pension zoomed
toRs.82,000 crore mainly due to the One Rank One Pension
scheme.
The capital outlay for the three services, for modernization,
stood atRs.78,586.68 crore.
The defence budget accounts for nearly 17.2 per cent of the
total central government expenditure for the year 2016-17 which
isRs.19.78 lakh crore. This includes the pension budget along with
the defence budget.
The highest jump has been in the pension expenses. While
the revised estimate for the current fiscal wasRs.60,238 crore, it
has jumped toRs.82,332.66 crore for the coming financial year.

REAL ESTATE
The Budget 2016-17 has proposed an
additionalRs.50,000 deduction on interest
on loans for first home buyers and 100 per
cent deduction for profit on development of
affordable housing, besides exempting
REITs from dividend distribution tax.
The Finance Minister has taken the
right steps to boost housing sector and
ensure that 'Housing for All by 2022'
becomes reality, he added.

INFRASTRUCTURE
India's infrastructure output grew
2.9 per cent in January compared with
2.3 per cent a year ago, government
data showed on Monday.
Infrastructure accounts for nearly
38 per cent of India's industrial output.

Lower tax on patent income to

boost R&D
The Budget has introduced a special
royalty tax which lowers the effective
rate of tax on income earned from
patents. The objective is to encourage
indigenous R&D, and to make India an
innovation hub.

New dividend tax may not hit

promoters much
The government has not removed or reduced
the Dividend Distribution Tax (DDT) borne by
companies paying the dividend, which stands
at 20%. The additional 10% tax on dividend
income announced in the Budget would not
pinch many wealthy promoter groups after
all. Promoters of several blue chips hold only
a small stake in their individual capacity,
through HUFs & partnership firms controlled
by them, which come under the new tax.

Cos rush to pay dividend

to beat change in tax rule

The change in the taxation policy for

dividends has prompted companies to rush and
offer interim dividends to reduce tax liability
of promoters, at least for a year, since they will now have to face the
levy from April 1.
Those promoters who will be at the receiving end of this
announcement are likely to encourage companies to declare higher
dividends before March 31, 2016. The companies with high promoter
shareholding will also prefer advancing dividend payouts and may pay
most of it before March 31, 2016 so that they do not end up paying
10% tax on their dividend income. This could lead to a rise in dividend
distribution in the next one month. That once the 10% additional tax
comes into effect, companies may avoid declaring high dividends and
may opt for the more tax-effective buyback option.

`Google tax': Govt must balance earning tax with

attracting biz

India has taken the first step to tax the digital

economy . At present, the intent is to levy 6% only
on online advertisement payments exceeding Rs
1lakh.
The levy will impact the bottom lines of giants
such as Google, Yahoo and others, which earn ad
revenue from business entities in India. In
professional tax circles, it has been dubbed `Google
tax'.

For small biz & professionals, a way to

save money, and a tax headache

BIGGEST EVER POST-BUDGET RALLY

Year

Sensex
Close Day
After
Budget

Change Tuesdays 777-point

in points gain in the sensex is the
highest ever on dayafter-Budget trading

2016

23779

777

2011

18447

623

2010

16773

343

2007

13160

221

1992

3333

316

Highest rise in single-day

trading since May
18,2009,the day after UPA
was voted back for a second
term
In percentage terms, the
3.4% gain is the 7th highest
for a day-after-Budget
session

Rupee jumps 56p, years

biggest gain
The rupee registered the years biggest
single-day gain of 56 paise to close at a nearly
three-week high of 67.86 against the US dollar
up from its previous close of 68.42.
The rupee strengthened as market sentiment
turned positive on the back of the government
decision to stick to fiscal deficit targets.
The domestic currency would have gained
further on Tuesday (Mar 2,2016) had the RBI not
stepped in to buy dollars.

Expenditure: UPA-II & NDA-II

Tax Revenues: UPA-II & NDA-II

Budget Allocations on Select Heads