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MASTER IN BUDGET 2016-17

The Union Minister for Railways, Shri Suresh Prabhakar Prabhu presented the Railway
Budget 2016-17, in New Delhi on February 25, 2016.
The Indian Railway Budget for 2016-17 spared passengers and goods movement from
any increase in tariffs while it announced introduction of three new superfast trains
and creation of dedicated north-south, east-west and east coast freight corridors by
2019.
Presenting his second Budget in the Lok Sabha, Railway Minister Suresh Prabhu
promised rationalising of the tariff structure by undertaking a review to
evolve competitive rates vis-a-vis other modes of transport and to expand
the freight basket as a means of additional revenue mobilisation.
Unlike last year when he tweaked freight rates, Prabhu made no changes
either in passenger fares or freight rates.
The three new superfast trains announced by him include 'Humsafar'
which will be a fully air-conditioned 3AC service with option of meals.
'Tejas' will showcase the future of train travel in India with speeds up
to 130 km per hour with onboard services such as entertainment, local
cuisine and wifi.
The two trains will ensure cost recovery through tariff and non-tariff
measures while 'Uday' will be an overnight double-decker along with
'Utkrishit' double-decker air-conditioned yatri express on the busiest
routes.
For improving quality of travel for unreserved passenger, a superfast
'Antyodya' express service would be introduced.
'Deen Dayalu' unreserved coaches with portable water and higher
number of mobile charging points would also be introduced.
He also announced setting up of a Rail Development Authority to enable fair pricing
of services, promote competition, protect customer interest and determine efficiency
standards. The draft Bill in this regard will be ready after holding extensive stakeholder
consultations.
Outlining the Budget estimates for the coming year, the Minister put the plan size at
Rs 1.21 lakh crore.
The focus will be on capital expenditure with a mix of various sources of funding in
order to ensure the projects are given assured funding.
Gross traffic receipts for the coming fiscal have been fixed at Rs 1.84 lakh crore with
passenger earning growth pegged at 12.4 per cent and earning target budgeted at Rs
51,012 crore.

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MASTER IN BUDGET 2016-17

The freight traffic is pegged at an incremental tariff of 50 million tons, anticipating a healthier growth in the core sector
of the economy.
Goods earning is accordingly proposed at Rs 1.17 lakh crore. Earnings on account of other coaching and sundries have
been projected at Rs 6,185 crore and Rs 9,590 crore respectively.
Pension outgo has been budgeted at Rs 45,500 crore in the coming year. Revenue generation has been targeted at Rs
1.84 lakh crore.
Financial performance for the current year has reflected a savings of Rs 8,720 crore, neutralising most of the revenue
shortfall.
Operating ratio has been targeted at 92 per cent for the coming year as against 90 per cent in 2015-16, restricting the
growth of ordinary expenses by 11.16 per cent after building in impact of 7th Pay Commission recommendation,
planned reduction in diesel and electricity consumption.
The three new freight corridors of North-South will connect Delhi and Chennai, East-West connecting Kharagpur to
Mumbai and East Coast from Kharagpur to Vijawada.
"It is proposed to put these three projects on high priority to ensure structuring, award and implementation in a timebound manner through innovative financing schemes including PPP," Prabhu said in his more than hour long speech.
Before the current financial year ends on March 31, almost all contracts for civil engineering work would have been
awarded.
Contracts worth Rs 24,000 crore have been awarded since he assumed office against Rs 13,000 crore worth of contracts
in the last six years.
Presenting his "vision", Prabhu promised that by 2020 long-felt desires of the common man will be fulfilled.
The objectives include reserved accommodation on trains on demand, time-tabled freight trains, high-end technology
to improve safety record, elimination of all unmanned level crossings, improved punctuality and higher speed of freight

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MASTER IN BUDGET 2016-17

trains and zero direct discharge of

human waste.
As part of improving customer
interface, the Budget proposed
interaction and feedback through
social media and dedicated
IVRS system and making travel
comfortable by generating over
65,000 additional berths and
installing 2,500 water vending
machines.
Wi-Fi facility has been provided at
100 station and 400 more will be
covered in the coming year.
As part of safety measures, 350
manned level crossings and 1000
unmanned level crossings have
been closed. 820 road over bridges
and rail under bridges have been
completed in the current year and
work is going on in 1,350 of them.
As a passenger-friendly measure,
IRCTC will manage catering
services in catering and stalls at
stations in a phased manner. It will
explore the possibility of making
catering services operational, adding 10 more IRCTC operated base kitchens.
As part of improving customer interface, work is underway on installation of a high-tech centralised network of
20,000 screens across 2000 stations for enabling real-time flow of information to passengers and also unlock huge
advertising potential.
Provision of passenger amenities and beautification of stations will be taken on priority in pilgrim centres like
Ajmer, Amritsar, Bihar Sharif, Chengannur, Dwarka, Gaya, Haridwar, Mathura, Nagapattinam, Nanded, Nasik, Pali,
Parasnath, Pri, Tirupati, Vailankanni, Varanasi and Vasco.
The Railway also intends to run 'astha' circuit trains to connect pilgrim centres.

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MASTER IN BUDGET 2016-17

Highlights of the

Railway Budget 2016-17

Theme of the Budget
# Overcoming challenges Reorganize, Restructure
Rejuvenate Indian Railways: Chalo, Milkar
Kuch Naya Karen
# Three pillars of the strategy i.e. Nav Arjan New
revenues, Nav Manak New norms, Nav Sanrachna
New Structures.
Financial Performance
# 2015-16- Savings of Rs. 8,720 crore neutralizing
most of the revenue shortfall, expected OR 90%;
# 2016-17- Targeted Operating Ratio (OR) - 92%,
restrict growth of Ordinary Working Expenses by
11.6% after building in immediate impact of 7th
PC, reductions planned in diesel and electricity
consumption, Revenue generation targeted at Rs.
1,84,820 crore.
Investments and Resources
# Process bottlenecks overhauled including delegation
of powers to functional levels; average capital
expenditure over 2009-14 is Rs. 48,100 crore,
average growth of 8% per annum.
# 2015-16 investment would be close to double of the
average of previous 5 years.
# 2016-17 CAPEX pegged at Rs. 1.21 lakh crore;
implementation through joint ventures with states,
developing new frameworks for PPP, etc.
Vision
# By 2020, long-felt desires of the common man to
be fulfilled i.e, reserved accommodation on trains
available on demand, time tabled freight trains, high
end technology to improve safety record, elimination
of all unmanned level crossings, improved
punctuality, higher average speed of freight trains,
semi high speed trains running along the golden
quadrilateral, zero direct discharge of human waste.
2015-16-Achievements

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# Action initiated on 139 budget announcements of

2015-16.
Project execution
# 2015-16 - assured funding through LIC;
commissioning of 2,500 kms Broad Gauge lines;
commissioning of 1,600 kms of electrification, highest
ever. In 2016-17 - targeted commissioning 2,800 kms
of track; commissioning Broad Gauge lines @ over 7
kms per day against an average of about 4.3 kms per
day in the last 6 years. Would increase to about 13
kms per day in 2017-18 and 19 kms per day in 201819; will generate employment of about 9 crore man
days in 2017-18 and 14 crore man days in 2018-19.
Outlay for railway electrification increased in 201617 by almost 50%; target to electrify 2,000 kms.
Dedicated Freight Corridor
# Almost all contracts for civil engineering works to
be awarded by March 31st 2016; Rs. 24,000 crore
contracts awarded since November 2014 as against
Rs. 13,000 crore contracts awarded in last 6 years;
propose to take up North-South, East-West & East
Coast freight corridors through innovative financing
including PPP.
Port connectivity
# Tuna Port commissioned and rail connectivity
projects to ports of Jaigarh, Dighi, Rewas and
Paradip under implementation; implementation of
rail connectivity for the ports of Nargol and Hazira
under PPP in 2016-17.
North East
# BG Lumding-Silchar section in Assam opened thus
connecting Barak Valley with rest of the country;
Agartala brought on to the BG network. States of
Mizoram and Manipur shortly to come on BG map
of the country with commissioning of the KathakalBhairabi and Arunachal-Jiribam Gauge Conversion
projects.
MASTER IN BUDGET 2016-17

Jammu and Kashmir

# Work on Katra-Banihal section of UdhampurSrinagar-Baramulla Rail Link Project progressing
satisfactorily- 35 kms of tunnelling out of total of 95
kms completed; Decongestion work on Jalandhar Jammu line in full swing and doubling of two bridges
to be commissioned by March 2016, while the other
two bridges will be completed by 2016-17.

Make in India: Finalised bids for two loco factories;

proposed to increase the current procurement of train
sets by 30%.

Capacity Building for the future through:

# Transparency initiated recruitments online
in 2015-16, process now being replicated for all
positions, social media being used as a tool to bring in
transparency, all procurement including procurement
of works moved to the e-platform, completed trial of
process leading to award of tender electronically and
to be rolled out on a Pan- India basis in 2016-17.

# Ticketing: Introduced 1,780 Automatic Ticket

Vending Machines, mobile apps & GoIndia
smartcard for cashless purchase of UTS and PRS
tickets, enhanced capacity of e-ticketing system from
2,000 tickets per minute to 7,200 tickets per minute
and to support 1,20,000 concurrent users as against
only 40,000 earlier.
# Social initiatives: One-time registration for availing
concessions while booking tickets online, online
booking of wheelchairs & Braille enabled new
coaches introduced for the Divyang, increased quota
of lower berths for senior citizens and women, middle
bays reserved in coaches for women.
# Wi-Fi provided in 100 stations, to be provided in 400
more.
# Stations being redeveloped financial bid received
for Habibganj, Bhopal; Cabinet approval for stations
to be taken up under PPP.
# Security through helplines & CCTVs.

# Governance - delegation led to compression of project

sanction time to 6-8 months from 2 years earlier, key
result areas identified to judge performance of GMs
and DRMs, performance related MOUs signed with
few Zones, to be replicated for all zones.

# Safety - 350 manned level crossings closed,

eliminated 1,000 unmanned level crossings, 820
ROB/RUB completed in the current year and work
going on in 1,350 of them.

# Internal audit measures - specialised teams

mandated to screen railway operations in specific
areas to detect inefficiencies and prevent wastages,
every zone preparing 2 reports by March 31, 2016.

# Energy: annualized savings of Rs. 3,000 crore to

be achieved in the next financial year itself, a year
earlier than announced; achieved by procuring power
directly at competitive rates using IRs status as
Deemed Distribution Licensee.

# Partnerships Cabinet approval for JVs with State

Governments, 17 consented and 6 MOUs signed with
State Governments. 44 new partnership works covering
about 5,300 kms and valuing about Rs. 92,714 crore
have been indicated in the Budget documents.
Customer Interface
# Interaction and feedback through social media &
dedicated IVRS system.

Other major achievements

# Rail University initially identified the National

Academy of Indian Railways at Vadodara.
# Digital India: application of Track Management System
(TMS) launched, inventory management module of
TMS has resulted in inventory reduction by 27,000 MT
resulting in saving of Rs.64 crore and scrap identification
of 22,000 MT equivalent to Rs.53 crore.

# Making travel comfortable by generating over

65,000 additional berths, installing 2,500 water
vending machines; introducing Mahamana Express
with modern refurbished coaches; 17,000 bio-toilets
in trains; worlds first Bio-Vacuum toilet developed.

The Way Ahead

# Improving punctuality operations audit for

Ghaziabad to Mughalsarai section.

# Deen Dayalu coaches unreserved coaches with potable

water and higher number of mobile charging points.

MASTER IN BUDGET 2016-17

@Mahendras

Improving quality of travel

For the unreserved passenger
# Antyodaya Express unreserved, superfast service.

For the reserved passenger

# Humsafar - fully air-conditioned third AC service
with an optional service for meals
# Tejas - will showcase the future of train travel in
India. Will operate at speeds of 130 kmph and above.
Will offer onboard services such as entertainment,
local cuisine, Wi-Fi, etc. through one service provider
for ensuring accountability and improved customer
satisfaction
# Humsafar and Tejas to ensure cost recovery through
tariff and non-tariff measures
# UDAY - overnight double-decker, Utkrisht DoubleDecker Air-conditioned Yatri Express on the busiest
routes, has the potential to increase carrying capacity
by almost 40%.
Ticketing: Sale of tickets through hand held terminals;
e- ticketing facility to foreign debit/credit cards; bar
coded tickets, scanners and access control on a pilot
basis. Expansion of Vikalp train on demand to provide
choice of accommodation in specific trains to wait
listed passengers. E-booking of tickets facility on the
concessional passes available to journalists; facility of
cancellation through the 139 helpline post verification
using One Time Password sent on registered phone
number, to improve tatkaal services CCTV cameras on
windows and periodic audit of PRS website.
Cleanliness - Clean my Coach service through SMS,
ranking of A1 and A stations based on periodic third
party audit and passenger feedback; waste segregation
and recycling centres; Awareness campaigns; additional
30,000 bio-toilets; providing portable structures with
biotoilets at all platforms of select stations for senior
citizens, Divyang and women travellers, plan to explore
innovative means of providing and maintaining toilets
such as advertisement rights, CSR, voluntary support
from social organizations.
Catering and stalls at stations - IRCTC to manage
catering services in a phased manner; explore possibility
of making catering services optional, adding 10 more
IRCTC operated base kitchens; to build local ownership
and empowerment, weightage will be given to district
domicile holders for commercial licenses at stations.
Stoppages: convert all operational halts into commercial
halts for the benefit of the common man.

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Rail Mitra Sewa: expanding Sarathi Seva in Konkan

Railway to help the old and disabled passengers,
strengthening the existing services for enabling
passengers to book battery operated cars, porter services,
etc. on a paid basis in addition to the existing pick up and
drop, and wheel chair services.
Measures for Divyang: all stations under redevelopment
accessible by Divyang; to provide at least one Divyang
friendly toilet at each platform in A1 class stations during
the next financial year and also ensure availability of
wheelchairs in sufficient numbers at these stations.
Travel Insurance to passengers - to offer optional travel
insurance for rail journeys at the time of booking.
Hourly booking of retiring rooms - will be handed over
to IRCTC.
Janani sewa: childrens menu items on trains, baby
foods, hot milk and hot water would be made available.
SMART (Specially Modified Aesthetic Refreshing
Travel) Coaches - design and layout of our coaches to
ensure higher carrying capacity and provision of new
amenities including automatic doors, bar-code readers,
bio-vacuum toilets, water-level indicators, accessible
dustbins, ergonomic seating, improved aesthetics,
vending machines, entertainment screens, LED lit boards
for advertising, PA system.
Mobile Apps - integrate all facilities into two mobile
apps dealing with ticketing issues and for receipt and
redressal of complaints and suggestions.
Improving customer interface- skilling our front-end
staff and those we employ through our service providers,
information boards in trains enumerating the on-board
services and also GPS based digital displays inside
coaches to provide real time information regarding
upcoming halts. Work underway on installation of a hightech centralized network of 20,000 screens across 2000
stations for enabling real time flow of information to
passengers and also unlock huge advertising potential. All
A1 class stations will be manned with duly empowered
Station Directors supported by cross functional teams; to
make one person accountable for all facilities on trains.
# Pilgrimage centres: to take up on priority the
provision of passenger amenities and beautification
on stations at pilgrimage centres including Ajmer,
Amritsar, Bihar Sharif, Chengannur, Dwarka, Gaya,
MASTER IN BUDGET 2016-17

Haridwar, Mathura, Nagapattinam, Nanded, Nasik,

Pali, Parasnath, Puri, Tirupati, Vailankanni, Varanasi
and Vasco; also intend to run Aastha circuit trains to
connect important pilgrim centres.
# Porters- intend providing them with new uniforms
and train them in soft skills, henceforth, to be called
sahayak.
# High Speed Rail: passenger corridor from
Ahmedabad to Mumbai being undertaken with the
assistance of the Government of Japan. SPV for
implementing high speed projects will be registered
this month. Prime benefit would be providing IR with
technology advancements and new manufacturing
capability.
# Entertainment: propose to invite FM Radio stations
for providing train borne entertainment; extend Rail
Bandhu to all reserved classes of travelers and in all
regional languages.
Passenger traffic - Suburban traffic: in-principle
approval for MUTP III received. Early award of tenders
for elevated suburban corridors between ChurchgateVirar and between CSTM-Panvel; revive Ring Railway
system in Delhi; launching a new investment framework
for developing suburban systems in partnership with State
Governments, development in Ahmedabad, Bangaluru,
Hyderabad Chennai and Thiruvananthapuram on the
anvil.
Winning back the lost modal share
Expanding the freight basket of IR - to start timetabled freight container, parcel and special commodity
trains on a pilot basis, container sector would be opened
to all traffic barring coal, specified mineral ores and partloads during the non-peak season. All existing terminals/
sheds would be granted access to container traffic, where
considered feasible.
Rationalising the tariff structure undertake review
of tariff policy to evolve a competitive rate structure vis
a vis other modes, permit multi-point loading/unloading
and apply differentiated tariffs to increase utilization of
alternate routes, explore possibility of signing long term
tariff contracts with our key freight customers using predetermined price escalation principles.
Building terminal capacity - proposed to develop Rail
side logistics parks and warehousing in PPP mode, 10

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goods sheds will be developed by TRANSLOC, the

Transport Logistics Company of India, in 2016-17. To
soon inaugurate Indias first rail auto hub in Chennai.
Encourage development of cold storage facilities on
vacant land near freight terminals. Local farmers and
fisherman would be given preferential usage of the
facility. A policy in this regard would be issued in the
next 3 months.
Nurturing customers - will appoint Key Customer
Managers to liaison with our major freight stakeholders;
each Zonal Railway will develop customer commitment
charter indicating service level commitments of IR, will
explore the feasibility of opening up leasing of general
purpose wagons.
Non fare revenues
# Station redevelopment; monetizing land along
tracks; monetizing soft assets website, data, etc;
advertising in 2016-17 target 4 times the revenue
of 2015-16; overhaul of parcel business - liberalize
the current parcel policies including opening the
sector to container train operators; revenues from
manufacturing activity - by 2020, aim at generating
annualised revenues of about Rs 4,000 crore.
Process Improvements
# EPC projects standard document finalized, will
implement at least 20 projects through this mode in
2016-17; by 2017-18, endeavour to award all works
valuing above Rs. 300 crore through EPC contracts.
# Performance output parameters based contracts
- to review service contracts to integrate them and
make them simpler and outcome focused.
# Leveraging technology for project managementintend to use the latest drone and Geo Spatial based
satellite technology for remotely reviewing the physical
progress across major projects; monitoring of DFC to
be operationalised through this mode in 2016-17.
# System-wide Information Technology integration
- initiated system wide integration, both horizontal
and vertical, akin to an ERP through innovative
partnership models.
Rail Development Authority
# To enable fair pricing of services, promote
competition, protect customer interests and
MASTER IN BUDGET 2016-17

determine efficiency standards; draft bill to be ready

after holding extensive stakeholder consultations.
Undertaking Navarambh a new beginning
# Navinikaran - Structural Interventions Organisational
Restructuring- proposed to reorganize the Railway
Board along business lines and suitably empower
Chairman, Railway Board. As a first step, cross
functional directorates to be set up in Railway
Board to focus on areas like non-fare revenues,
speed enhancement, motive power and information
technology; explore the possibility of unifying cadres
for fresh recruitment of officers; strengthen PPP cell
to improve ease of doing business with IR.

delivery. Annual outcome based performance targets

for the Mission would be announced and the Missions
will finalise the implementation plans for short,
medium and long terms and proceed accordingly
# Mission 25 Tonne for 25 tonne axle load, Mission Zero
Accident for safety, Mission PACE (Procurement
and Consumption Efficiency), Mission Raftaar for
higher speeds, Mission Hundred for commissioning
100 sidings/ freight terminals, Mission beyond bookkeeping for accounting reforms, Mission Capacity
Utilisation to prepare a blueprint for making use of
the capacity created once DFC is commissioned.

# Sashaktikaran Improving our planning practices

Sustainability and Social Initiatives: Human

Resources/ Skilling, Social initiatives, Environment

To set up a Railway Planning & Investment

Organisation for drafting medium (5 years) and long
(10 years) term corporate plans; identify projects
which fulfill the corporate goal. Prepare a National
Rail Plan to harmonise and integrate the rail network
with other modes of transport and create synergy
for achieving seamless multi-modal transportation
network across the country

# To tie up with the Ministry of Health for ensuring

an exchange between Railways hospitals and
Government hospitals; to introduce AYUSH
systems in 5 Railway hospitals; provide gang men
with devices called Rakshak for intimating them
about approaching trains, also reduce the weight of
the tools carried by them while patrolling. To provide
toilets and air-conditioning in cabs for our loco pilots.

# Aekikaran Consolidation: Forming a holding

company of companies owned by IR.

# Set up two chairs one C T Venugopal chair on Strategic

Finance, research and policy development and another
Kalpana Chawla chair on geo-spatial technology.

# Shodh aur vikas - Investing in the future: to set up a

R&D organization, a Special Railway Establishment
for Strategic Technology & Holistic Advancement,
SRESTHA. RDSO will now focus only on day to
day issues while SRESTHA would drive long term
research.

# For youth - open our organisation to 100 students

across Engineering and MBA schools for 2-6 months
internships each year.
# Partnering with Ministry of Skill Development - skill
development on IR premises.

# Vishleshan Analyzing data: a dedicated, cross

functional team called Special Unit for Transportation
Research and Analytics (SUTRA) would be set up for
carrying out detailed analytics leading to optimized
investment decisions and operations

# Undertaken energy audits for reducing energy

consumption in non-traction area by 10% to 15% - all
new light provisions will be LED luminaire and all
Railway stations to be covered with LED luminaire
in next 2 to 3 years.

# Navrachna Innovation: by setting aside a sum

of Rs. 50 crore for providing innovation grants to
employees, startups and small businesses.

# Action plan drawn up for environmental accreditation,

water management and waste to energy conversion. More
than 2,000 locations provided with Rain Water Harvesting
facility. In place of steel sleepers on steel bridges
environmentally friendly composite sleepers made of
recycled plastic waste will be used over all girder bridges.

Avataran - Seven Missions for the transformation of IR

# Missions will be headed by a Mission Director
reporting directly to the Chairman, Railway Board
and heading a cross functional team empowered
to take all relevant decisions for a timely targeted

@Mahendras

# 32 stations and 10 coaching depots have been

identified for installation of water recycling plants in
the coming years.
MASTER IN BUDGET 2016-17

Tourism

road-map of decongestion and enhance line-capacity

enhancement as detailed in 2015-16. The focus is on
enhanced CAPEX with a mix of various sources of
funding in order to ensure that the projects are given
assured funding.

# Partnering with State Governments for operating

tourist circuit trains; recent upgradation of National
Rail Museum, promotion of tourism through Railway
museums and UNESCO world heritage Railways.
# To spread awareness about our National Animal, the
Tiger, complete packages including train journey,
safaris and accommodation to cover the wildlife
circuit comprising Kanha, Pench and Bandhavgarh
will be offered.
Annex1 of the Speech details the financial performance
of the Indian Railways & the estimates of Receipts &
Expenditure.
FINANCIAL PERFORMANCE 2015-16:
# Net reduction in Gross Traffic Receipts by Rs 15,744
crore in RE 2015-16 compared to the BE target of
Rs 1,83,578 crore. Passenger earnings scaled down
keeping in view the persistent negative growth trend
since 2013-14 both in the suburban and non-suburban
non-PRS segment of travel.
# Freight earnings impacted mainly on account of low
demand from the core sector resulting in resetting the
target in R.E. 2015-16 to Rs 1,11,853 crore.
# Stringent economy and austerity measures adopted
to contain the Ordinary Working Expenses (O.W.E.)
due to which budgeted Ordinary Working Expenses
of Rs 1,19,410 crore decreased in the Revised
Estimates 2015-16 to Rs. 1,10,690 crore i.e. by Rs
8,720 crore.
# BE provided for an appropriation of Rs. 34,900 crore
to the Pension Fund. However, based on trend, the
pension outgo moderately decreased to Rs. 34,500
crore in RE.
# Internal resource generation diminished and
appropriation to DRF moderated to Rs. 5,500 crore
in RE from the BE 2015-16 provisioning of Rs. 7,900
crore. Excess of receipts over expenditure in RE
2015-16 stands at Rs. 11,402.40 crore.

# Gross Traffic Receipts kept at Rs 1,84,820 crore .

Passenger earnings growth has been pegged at 12.4
% and earnings target budgeted at Rs. 51,012 crore.
The freight traffic is pegged at incremental traffic of
50 million tonnes, anticipating a healthier growth
in the core sector of economy. Goods earnings is
accordingly proposed at Rs. 1, 17,933 crore. Other
coaching and sundries projected at Rs. 6,185 crore
and Rs. 9,590.3 crore respectively.
# OWE provides for the implementation of the 7th
CPC.
# Pension outgo budgeted at Rs 45,500 crore in 201617.
# Higher staff cost and pension liability impacts
the internal resource position of the Railways.
Accordingly, appropriation to DRF from revenue
placed at Rs 3,200 crore and that from Production
Units at Rs 200 crore. A withdrawal of Rs 3,160 crore
from DRF on net basis proposed though the gross
expenditure to be met from DRF in the Annual Plan
estimated at Rs 7,160 crore. Rs 5,750 crore proposed
to be appropriated to the Capital fund. With a drawdown of Rs 1,250 crore from previous balances in
the fund, plan requirement of Rs 7,000 crore for
repayment of principal component of lease charges
to IRFC met.
# Railways are preparing a Plan size of Rs. 1,21,000
crore in 2016-17.

Annex-2 of the speech details the Implementation

of Budget announcements 2015-16

All budget info. just a click away...

# Plan size for 2015-16 is currently estimated at

1,00,000 crore i.e. the BE level.
Budget Estimates 2016-17:
# The intention to improve revenues and ensure
appropriate investments which can continue the

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MASTER IN BUDGET 2016-17

Economic Survey 2015-16

The Economic Survey 2015-16, presented in the Parliament on Feb 26, 2016 by the Union Finance Minister Shri
Arun Jaitley, states that the social infrastructure scenario in the country reflects gaps in access to education, health
and housing amenities. Inclusive growth in India requires bridging gaps in educational outcomes and improved health
attainments across the population.
As India capitalizes on the demographic dividend, Economic Survey 2015-16 states that increasing investment
in human capital is a key requirement to improve productivity of the population says the Economic Survey. The
Economic Survey 2015-16 states that the total expenditure on Social Services including Education, Health, Social
Security, Nutrition, Welfare of SC/ST/OBC etc. during 2014-15 (RE) was 7 % of GDP while it was 6.5% during
2013-14.
On the education front, the declining educational outcomes reflected in lower reading levels in both public and private
sector schools are areas of concern. According to Annual Status of Education Report (ASER) 2014, there is sharp
decline between 2007 to 2014 in the number of children in Standard V who can read a textbook of Standard II, in both
government and private schools.

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MASTER IN BUDGET 2016-17

Economic Survey 2015-16 states that the Gender Parity Index (2013-14 Provisional) however, shows an improvement
in girls education, with parity having been achieved between girls and boys at almost all levels of education. The
Government has taken several steps to provide education to underprivileged, vulnerable and marginalized people
such as SCs, STs, other Backward Classes (OBC) including Minorities and other Economically Backward Classes
through various programmes of education. Digital Gender Atlas for Advancing Girls Education in India was
launched last year to help identify low-performing geographic pockets for girls, particularly from marginalized
groups. A number of scholarship schemes to encourage enrolment and learning levels among different groups
are in operation. National Scholarship Portal, a single window system for various types of scholarship schemes
administered by different Ministries/Departments has been introduced under Direct Benefit Transfer (DBT) mode.
During 2015-16, about 90 lakh Minority students are to be benefited under the Pre-matric, Post-matric and Meritcum-Means scholarship schemes, while about 23.21 lakh SC students benefited under Pre-matric, 56.30 lakh under
Post-matric and 3354 under the Rajiv Gandhi National Fellowship including the Top Class Education scholarship
scheme are to be assisted.
Another aspect of human capital is the health attainments of the population. The expenditure on health as a percentage
of total expenditure on social services increased from 18.6% in 2013-14 to 19.3% in 2014-15 (RE) and 19.5% in
2015-16 (BE).
The Economic Survey reports that the under five mortality has declined from 126 in 1990 to 49 in 2013. As per
NFHS-4, the percentage of children fully immunized in the age group (12-23 months) is above 80 per cent in Sikkim
and West Bengal. All the 12 states surveyed have more than 50 per cent children fully immunized. Similarly under
Mission Indradhanush, 352 districts of the country have been covered with 20.8 lakh children and 5.8 lakh pregnant
women immunized in the first phase. 17.2 lakh children and 5.1 lakh pregnant women have been immunized in
the second phase and 17 lakh children and 4.8 lakh pregnant women immunized in the third phase of the Mission
Indradhanush.
Besides continuing support to existing interventions, initiatives such as RashtriyaBalSwasthyaKaryakram
(RBSK) and RashtriyaKishorSwasthyaKaryakram (RKSK) have been launched in 2013 and 2014 respectively
under the NHM to provide comprehensive health care. Considering the rising incidence of Non-Communicable
Diseases (NCSs), the Government of India has initiated an integrated National Programme for Prevention and
Control of Cancers, Diabetes, Cardiovascular Diseases and Stroke (NPCDCS) jointly by the Ministry of Health
and Family Welfare and Ministry of AYUSH (Ayurveda, Yoga, Unani, Siddha and Homeopathy) on pilot basis
in six districts.
Economic Survey 2015-16 states that the immunization coverage of children, health of pregnant women, declining
role of public health delivery systems and the lack of adequate skilled personnel are the main challenges in the health
sector at present. Health and access to sanitation/housing amenities are closely related issues which can improve the
productivity and living environment of the population to a great extent. There are persistent regional disparities in
access to housing and sanitation facilities with some States lagging behind with less than 25 per cent coverage in
sanitation facilities.
The Way Forward
The Economic Survey 2015-16 points out the need to focus on the quality of education in both the public
and private sectors. There is need for professionally qualified and trained teachers to improve educational
outcomes. To strengthen the delivery of public health services and infrastructure facilities, both public
investments and leveraging of private investments are necessary. The adoption of technology platforms and
innovative models by leveraging Jan-Dhan-Aadhaar-Mobile (JAM) scheme can improve the efficiency in
delivery of services.

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12

MASTER IN BUDGET 2016-17

Following are the highlights of Economic Survey 2015-16, tabled in Parliament:

1. GDP growth next fiscal to be between 7-7.75%
2. Growth this fiscal to be 7.6%, long-term potential at 8-10% if exports grow rapidly.
3. India haven of stability amidst gloomy global landscape.
4. Crude oil prices to be about USD 35 a barrel next fiscal, as against USD 45 this year.
5. Projects retail inflation at 4.5-5% for 2016-17.
6. Low inflation takes hold, price stability has increased.
7. Pay Commission implementation not to destabilise prices.
8. Proposes widening of tax net from 5.5% of earning individuals to more than 20%
9. Challenging external environment to cast shadow on economic policies.
10. 3.9% fiscal deficit target achievable this year, coming year to be challenging.
11. Subsidy bill to be below 2% of GDP next fiscal.
12. Concerned over delay in GST Bill.
13. Balance sheets of corporate, banks remain stressed; need 4Rs: Recognition, Recapitalisation, Resolution and Reform.
14. PSU banks capital need at Rs 1.8 lakh crore by FY19.
15. Current account deficit at 1-1.5%, forex reserves at USD 351.5 bn in mid-Feb.
16. Services sector growth in 2015-16 seen at 9.2%
17. Suggests revival of domestic demand as foreign capital outflow likely.
18. Sees good performance by industrial, infrastructure, corporate sectors due to recent reform.
19. More investment in health, education; focus on agriculture.
20. Government tax revenues to be higher than budgeted.
21. Exports slowdown to continue; pick up in next fiscal.
22. India should resist protectionist measures in trade.
23. Suggests reform package for fertiliser sector.

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13

MASTER IN BUDGET 2016-17

Union Finance Minister Shri ArunJaitleypresented the General Budget 2016-17 in LokSabha on February 29, 2016.
Finance Minister ArunJaitley presented India's national budget for 2016-17 in the LokSabha on Monday, saying the
country was a bright spot of the global economy today, while outlining his nine focus areas in which rural development took the top slot.
"I am presenting the budget when the global economy is in crisis," Jaitley said in his opening remarks, adding that
India, however, remained the bright spot in this gloom, turning difficulties into opportunities.
He said India's growth has expanded 7.5 percent, despite slowdown in exports, even as inflation had eased, bringing
big relief to the general public. He also said foreign exchange reserves were robust. "Indian growth is at an extraordinary high."
Jaitley said his budget will look at three pillars in right earnest: A prudent fiscal policy, raise domestic demand and
carry out reforms. He also said farm, rural sector, infrastructure and social sector will be allotted more money.
"Recapitalization of banks also to be done during next fiscal year," he said, as much concern have emerged over the
quantum of exposure of Indian scheduled banks in terms of gross non-productive assets, re-cast loans and write-offs,
which amounts to Rs.9.5 lakh crore.
He said the nine pillars of this year's budget will be: agriculture, social programmes, rural development, education
with skill development, infrastructure, financial reforms, policy reforms in terms of ease of doing business, fiscal
discipline and tax reforms.
"A unified agriculture
platform to be dedicated to the nation on
the birth anniversary of
Dr.B.R. Amebdkar,"
the finance minister
said, amid applause
from the benches.
He said the government had targeted
agriculture credit of
Rs.8.5 lakh crore in
2015-16, which was
being enhanced to Rs.9
lakh crore in the next
fiscal. He also said
Rs.19,000crore will
be allocated for rural
roads development
programme.
Overall,Rs.87,765crores
was being allocated for
rural development as a
whole.
At the same Rs.35,984crore was being allocated for agriculture in the next fiscal. This apart, the outlay under the job
guarantee programme was being enhanced to get Rs.38,500crore. These enhanced allocations are capable of transforming villages and towns, Jaitley said.
He said there was also the need to spread digital literacy in rural areas. In addition, he added, Rs.8,500crore was being
allotted towards rural electrification, targeting 100 percent rural electrification by May 1, 2018.
Jaitley also assured that the government intended to double the income of farmers in five years, besides allotting
Rs.35,984crore towards welfare of farmers. The proposals also included universal coverage of cooking gas in the
country, with a massive mission towards this aimed at the poor people.
In this regard, he said, the government appreciated the 75 lakh middle class and lower middle class families for willingly giving up cooking gas subsidy.
On health, he said, a new scheme will provide cover upto 1.lakh per family.

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MASTER IN BUDGET 2016-17

Key Features of Budget

2016 - 2017
INTRODUCTION
#

Growth of Economy accelerated to 7.6% in 2015-16.

India hailed as a bright spot amidst a slowing global economy by IMF.

# Robust growth achieved despite very unfavourable global conditions and

twoconsecutive years shortfall in monsoon by 13%
#

Foreign exchange reserves touched highest ever level of about 350 billion US dollars.

Despite increased devolution to States by 55% as a result of the 14th Finance

Commission award, plan expenditure increased at RE stage in 2015-16 in contrast
to earlier years.

CHALLENGES IN 2016-17
#

Risks of further global slowdown and turbulence.

Additional fiscal burden due to 7th Central Pay Commission recommendations and
OROP.

ROADMAP & PRIORITIES

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'Transform India' to have a significant impact on economy and lives of people.

Government to focus on

ensuring macro-economic stability and prudent fiscal management.

boosting on domestic demand

continuing with the pace of economic reforms and policy initiatives to change
the lives of our people for the better.

Focus on enhancing expenditure in priority areas of - farm and rural sector, social
sector, infrastructure sector employment generation and recapitalisation of the
banks.

Focus on Vulnerable sections through:

Pradhan Mantri Fasal Bima Yojana

New health insurance scheme to protect against hospitalisation expenditure

facility of cooking gas connection for BPL families

Continue with the ongoing reform programme and ensure passage of the Goods and
Service Tax bill and Insolvency and Bankruptcy law

Undertake important reforms by:

giving a statutory backing to AADHAR platform to ensure benefits reach the

deserving.

freeing the transport sector from constraints and restrictions

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MASTER IN BUDGET 2016-17

 incentivising gas discovery and exploration by providing calibrated marketing

freedom

enactment of a comprehensive law to deal with resolution of financial firms

provide legal framework for dispute resolution and re-negotiationsin PPP

projects and public utility contracts

undertake important banking sector reforms and public listing of general

insurance companies undertake significant changes in FDI policy.

AGRICULTURE AND FARMERS WELFARE

#

Allocation for Agriculture and Farmers welfare is `35,984 crore

Pradhan Mantri Krishi Sinchai Yojana to be implemented in mission mode. 28.5

lakh hectares will be brought under irrigation.

Implementation of 89 irrigation projects under AIBP, which are languishingfor a

long time, will be fast tracked

A dedicated Long Term Irrigation Fund will be created in NABARD with an initial
corpus of about `20,000 crore

Programme for sustainable management of ground water resources with an estimated

cost of `6,000 crore will be implemented through multilateral funding

5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for
production of organic manure will be taken up under MGNREGA

Soil Health Card scheme will cover all 14 crore farm holdings by March 2017.

2,000 model retail outlets of Fertilizer companies will be provided with soil and seed
testing facilities during the next three years

Promote organic farming through Parmparagat Krishi Vikas Yojana and 'Organic
Value Chain Development in North East Region'.

Unified Agricultural Marketing ePlatform to provide a common e-market platform

for wholesale markets

Allocation under Pradhan Mantri Gram Sadak Yojana increased to `19,000 crore.
Will connect remaining 65,000 eligible habitations by 2019.

To reduce the burden of loan repayment on farmers, a provision of `15,000 crore has
been made in the BE 2016-17 towards interest subvention

Allocation under Prime Minister Fasal Bima Yojana `5,500 crore.

`850 crore for four dairying projects - Pashudhan Sanjivani, Nakul Swasthya
Patra, E-Pashudhan Haat and National Genomic Centre for indigenous breeds

RURAL SECTOR

@Mahendras

Allocation for rural sector - `87,765 crore.

`2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities
as per the recommendations of the 14th Finance Commission

Every block under drought and rural distress will be taken up as an intensive Block
under the Deen Dayal Antyodaya Mission

A sum of `38,500 crore allocated for MGNREGS.

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MASTER IN BUDGET 2016-17

300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission

100% village electrification by 1st May, 2018.

District Level Committees under Chairmanship of senior most Lok Sabha MP from
the district for monitoring and implementation of designated Central Sector and
Centrally Sponsored Schemes.

Priority allocation from Centrally Sponsored Schemes to be made to reward villages

that have become free from open defecation.

A new Digital Literacy Mission Scheme for rural India to cover around 6 crore
additional household within the next 3 years.

National Land Record Modernisation Programme has been revamped.

New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of `655 crore.

SOCIAL SECTOR INCLUDING HEALTH CARE

#

Allocation for social sector including education and health care `1,51,581 crore.

`2,000 crore allocated for initial cost of providing LPG connections to BPL families.

New health protection scheme will provide health cover up to `One lakh per family.
For senior citizens an additional top-up package up to `30,000 will be provided.

3,000 Stores under Prime Ministers Jan Aushadhi Yojana will be opened during 2016-17.

National Dialysis Services Programme to be started under National Health Mission

through PPP mode

Stand Up India Scheme to facilitate at least two projects per bank branch. This
will benefit at least 2.5 lakh entrepreneurs.

National Scheduled Caste and Scheduled Tribe Hub to be set up in partnership with
industry associations

Allocation of `100 crore each for celebrating the Birth Centenary of Pandit Deen
Dayal Upadhyay and the 350th Birth Anniversary of Guru Gobind Singh.

EDUCATION, SKILLS AND JOB CREATION

#

62 new Navodaya Vidyalayas will be opened

Sarva Shiksha Abhiyan to increasing focus on quality of education

Regulatory architecture to be provided to ten public and ten private institutions to

emerge as world-class Teaching and Research Institutions

Higher Education Financing Agency to be set-up with initial capital base of `1000 Crores

Digital Depository for School Leaving Certificates, College Degrees, Academic

Awards and Mark sheets to be set-up .

SKILL DEVELOPMENT

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Allocation for skill development `1804. crore.

1500 Multi Skill Training Institutes to be set-up.

National Board for Skill Development Certification to be setup in partnership with

the industry and academia

Entrepreneurship Education and Training through Massive Open Online Courses

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MASTER IN BUDGET 2016-17

JOB CREATION
#

GoI will pay contribution of 8.33% for of all new employees enrolling in EPFO for
the first three years of their employment. Budget provision of `1000 crore for this
scheme.

Deduction under Section 80JJAA of the Income Tax Act will be available to all
assesses who are subject to statutory audit under the Act

100 Model Career Centres to operational by the end of 2016-17 under National
Career Service.

Model Shops and Establishments Bill to be circulated to States.

INFRASTRUCTURE AND INVESTMENT

#

Total investment in the road sector, including PMGSY allocation, would be `97,000
crore during 2016-17.

Indias highest ever kilometres of new highways were awarded in 2015. To approve
nearly 10,000 kms of National Highways in 2016-17.

Allocation of `55,000 crore in the Budget for Roads. Additional `15,000 crore to be
raised by NHAI through bonds.

Total outlay for infrastructure - `2,21,246crore.

Amendments to be made in Motor Vehicles Act to open up the road transport sector
in the passenger segment

Action plan for revival of unserved and underserved airports to be drawn up in

partnership with State Governments.

To provide calibrated marketing freedom in order to incentivise gas production from

deep-water, ultra deep-water and high pressure-high temperature areas

Comprehensive plan, spanning next 15 to 20 years, to augment the investment in

nuclear power generation to be drawn up.

Steps to re-vitalise PPPs:

Public Utility (Resolution of Disputes) Bill will be introduced during 2016-17

Guidelines for renegotiation of PPP Concession Agreements will be issued

New credit rating system for infrastructure projects to be introduced

Reforms in FDI policy in the areas of Insurance and Pension, Asset Reconstruction
Companies, Stock Exchanges.

100% FDI to be allowed through FIPB route in marketing of food products produced
and manufactured in India.

A new policy for management of Government investment in Public Sector

Enterprises, including disinvestment and strategic sale, approved.

FINANCIAL SECTOR REFORMS

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A comprehensive Code on Resolution of Financial Firms to be introduced.

Statutory basis for a Monetary Policy framework and a Monetary Policy Committee
through the Finance Bill 2016.

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MASTER IN BUDGET 2016-17

A Financial DataManagement Centre to be set up.

RBI to facilitate retail participation in Government securities.

New derivative products will be developed by SEBI in the Commodity Derivatives

market.

Amendments in the SARFAESI Act 2002 to enable the sponsor of an ARC to hold
up to 100% stake in the ARC and permit non institutional investors to invest in
Securitization Receipts.

Comprehensive Central Legislation to be bought to deal with the menace ofillicit

deposit taking schemes.

Increasingmembers and benches of the Securities Appellate Tribunal.

Allocation of `25,000 crore towards recapitalisation of Public Sector Banks.

Target of amount sanctioned under Pradhan Mantri Mudra Yojana increased to

`1,80,000 crore.

General Insurance Companies owned by the Government to be listed in the stock

exchanges.

GOVERNANCE AND EASE OF DOING BUSINESS

#

A Task Force has been constituted for rationalisation of human resources in various
Ministries.

Comprehensive review and rationalisation of Autonomous Bodies.

Bill for Targeted Delivery of Financial and Other Subsidies, Benefits and Services
by using the Aadhar framework to be introduced.

Introduce DBT on pilot basis for fertilizer.

Automation facilities will be provided in 3 lakh fair price shops by March 2017.

Amendments in Companies Act to improve enabling environment for start-ups.

Price Stabilisation Fund with a corpus of `900 crore to help maintain stable prices of Pulses.

Ek Bharat Shreshtha Bharat programme will be launched to link States and

Districts in an annual programme that connects people through exchanges in areas
of language, trade, culture, travel and tourism.

FISCAL DISCIPLINE

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Fiscal deficit in RE 2015-16 and BE 2016-17 retained at 3.9% and 3.5%.

Revenue Deficit target from 2.8% to 2.5% in RE 2015-16

Total expenditure projected at `19.78 lakh crore

Plan expenditure pegged at `5.50 lakh crore under Plan, increase of 15.3%

Non-Plan expenditure kept at `14.28 lakh crores

Special emphasis to sectors such as agriculture, irrigation, social sector including

health, women and child development, welfare of Scheduled Castes and Scheduled
Tribes, minorities, infrastructure.

Mobilisation of additional finances to the extent of `31,300 crore by NHAI, PFC,

REC, IREDA, NABARD and Inland Water Authority by raising Bonds.

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MASTER IN BUDGET 2016-17

Plan / Non-Plan classification to be done away with from 2017-18.

Every new scheme sanctioned will have a sunset date and outcome review.

Rationalised and restructured more than 1500 Central Plan Schemes into about 300
Central Sector and 30 Centrally Sponsored Schemes.

Committee to review the implementation of the FRBM Act.

RELIEF TO SMALL TAX PAYERS

#

Raise the ceiling of tax rebate under section 87A from `2000 to `5000 to lessen tax
burden on individuals with income upto `5 laks.

Increase the limit of deduction of rent paid under section 80GG from `24000 per
annum to `60000, to provide relief to those who live in rented houses.

BOOST EMPLOYMENT AND GROWTH

#

Increase the turnover limit under Presumptive taxation scheme under section 44AD
of the Income Tax Act to `2 crores to bring big relief to a large number of assesseesin
the MSME category.

Extend the presumptive taxation scheme with profit deemed to be 50%, to

professionals with gross receipts up to `50 lakh.

Phasing outdeductionunderIncomeTax:

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Accelerated depreciation wherever provided in IT Act will be limited to

maximum 40% from 1.4.2017

Benefit of deductions for Research would be limited to 150% from 1.4.2017

and 100% from 1.4.2020

Benefit of section 10AA to new SEZ units will be available to those units
which commence activity before 31.3.2020.

The weighted deduction under section 35CCD for skill development will
continue up to 1.4.2020

Corporate Taxrate proposals:

New manufacturing companies incorporated on or after 1.3.2016 to be given

an option to be taxed at 25% + surcharge and cess provided they do not claim
profit linked or investment linked deductions and do not avail of investment
allowance and accelerated depreciation.

Lower the corporate tax rate for the next financial year for relatively small
enterprises i.e companies with turnover not exceeding `5 crore (in the
financial year ending March 2015), to 29% plus surcharge and cess.

100% deduction of profits for 3 out of 5 years for startups setup during April, 2016
to March,2019. MAT will apply in such cases.

10% rate of tax on income from worldwide exploitation of patents developed and
registered in Indiaby a resident.

Complete pass through of income-tax to securitization trusts including trusts of

ARCs. Securitisation trusts required to deduct tax at source.

Period for getting benefit of long term capital gain regime in case of unlisted
companies is proposed to be reduced from three to two years.

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MASTER IN BUDGET 2016-17

# Non-banking financial companies shall be eligible for deduction to the extent of 5%

of its income in respect of provision for bad and doubtful debts.
#

Determination of residency of foreign company on the basis of Place of Effective

Management (POEM) is proposed to be deferred by one year.

Commitment to implement General Anti Avoidance Rules (GAAR) from 1.4.2017.

Exemption of service tax on services provided under Deen Dayal Upadhyay

Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled
by Ministry of Skill Development & Entrepreneurship.

Exemption of Service tax on general insurance services provided under

Niramaya Health Insurance Scheme launched by National Trust for the Welfare
of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
Disability.

Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.

MAKE IN INDIA
#

Changes in customs and excise duty rates on certain inputs to reduce costs and
improve competitiveness of domestic industry in sectors like Information technology
hardware, capital goods, defence production, textiles, mineral fuels & mineral oils,
chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair
and overhauling [MRO] of aircrafts and ship repair.

MOVING TOWARDS A PENSIONED SOCIETY

#

Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the
case of National Pension Scheme (NPS). Annuity fund which goes to legal heir will
not be taxable.

In case of superannuation funds and recognized provident funds, including EPF, the
same norm of 40% of corpus to be tax free will apply in respect of corpus created
out of contributions made on or from 1.4.2016.

Limit for contribution of employer in recognized Provident and Superannuation

Fund of `1.5 lakh per annum for taking tax benefit. Exemption from service tax for
Annuity services provided by NPS and Services provided by EPFO to employees.

Reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to
1.4% of the premium paid in certain cases.

PROMOTING AFFORDABLE HOUSING

#

100% deduction for profits to an undertaking in housing project for flats upto30 sq.
metres in four metro cities and 60 sq. metres in other cities, approved during June
2016 to March 2019 and completed in three years. MAT to apply.

Deduction for additional interest of `50,000 per annum for loans up to `35 lakh
sanctioned in 2016-17 for first time home buyers, where house cost does not exceed
`50 lakh.

Distribution made out of income of SPV to the REITs and INVITs having specified
shareholding will not be subjected to Dividend Distribution Tax, in respect of
dividend distributed after the specified date.

Exemption from service tax on construction of affordable houses up to 60 square

metres under any scheme of the Central or State Government including PPP Schemes.

Extend excise duty exemption, presently available to Concrete Mix manufactured at

site for use in construction work to Ready Mix Concrete.

RESOURCE MOBILIZATION FOR AGRICULTURE, RURAL ECONOMY AND

CLEAN ENVIRONMENT
#

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Additional tax at the rate of 10% of gross amount of dividend will be payable by the
recipients receiving dividend in excess of `10 lakh per annum.

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MASTER IN BUDGET 2016-17

Surcharge to be raised from 12% to 15% on persons, other than companies, firms
and cooperative societies having income above `1 crore.

Tax to be deducted at source at the rate of 1 % on purchase of luxury cars exceeding

value of `10 lakh and purchase of goods and services in cash exceeding `2 lakh.

Securities Transaction tax in case of Options is proposed to be increased from

.017% to .05%.

Equalization levy of 6% of gross amount for payment made to non-residents

exceeding `1 lakh a year in case of B2B transactions.

Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016. Proceeds
would be exclusively used for financing initiatives for improvement of agriculture
and welfare of farmers. Input tax credit of this cess will be available for payment of
this cess.

Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of
certain capacity and 4% on other higher engine capacity vehicles and SUVs. No
credit of this cess will be available nor credit of any other tax or duty be utilized for
paying this cess.

Excise duty of 1% without input tax credit or 12.5% with input tax credit on articles
of jewellery [excluding silver jewellery, other than studded with diamonds and some
other precious stones], with a higher exemption and eligibility limits of `6 crores
and `12 crores respectively.

Excise on readymade garments with retail price of `1000 or more raised to 2%

without input tax credit or 12.5% with input tax credit.

Clean Energy Cess levied on coal, lignite and peat renamed to Clean Environment
Cess and rate increased from `200 per tonne to `400 per tonne.

Excise duties on various tobacco products other than beedi raised by about 10 to 15%.

Assignment of right to use the spectrum and its transfers has been deducted as a
service leviable to service tax and not sale of intangible goods.

PROVIDING CERTAINITY IN TAXATION

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Committed to providing a stable and predictable taxation regime and reduce black money.

Domestic taxpayers can declare undisclosed income or such income represented

in the form of any asset by paying tax at 30%, and surcharge at 7.5% and penalty
at 7.5%, which is a total of 45% of the undisclosed income. Declarants will have
immunity from prosecution.

Surcharge levied at 7.5% of undisclosed income will be called Krishi Kalyan

surcharge to be used for agriculture and rural economy.

New Dispute Resolution Scheme to be introduced. No penalty in respect of cases

with disputed tax up to `10 lakh. Cases with disputed tax exceeding `10 lakh to be
subjected to 25% of the minimum of the imposable penalty. Any pending appeal
against a penalty order can also be settled by paying 25% of the minimum of the
imposable penalty and tax interest on quantum addition.

High Level Committee chaired by Revenue Secretary to oversee fresh cases where
assessing officer applies the retrospective amendment.

One-time scheme of Dispute Resolution for ongoing cases under retrospective amendment.

Penalty rates to be 50% of tax in case of underreporting of income and 200% of tax
where there is misreporting of facts.

Disallowance will be limited to 1% of the average monthly value of investments

yielding exempt income, but not exceeding the actual expenditure claimed under
rule 8D of Section 14A of Income Tax Act.

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MASTER IN BUDGET 2016-17

Time limit of one year for disposing petitions of the tax payers seeking waiver of
interest and penalty.

Mandatory for the assessing officer to grant stay of demand once the assesse pays
15% of the disputed demand, while the appeal is pending before Commissioner of
Income-tax (Appeals).

Monetary limit for deciding an appeal by a single member Bench of ITAT enhanced
from `15 lakhs to `50 lakhs.

11 new benches of Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

SIMPLIFICATION AND RATIONALIZATION OF TAXES

#

13 cesses, levied by various Ministries in which revenue collection is less than `50
crore in a year to be abolished.

For non-residents providing alternative documents to PAN card, higher TDS not to apply.

Revision of return extended to Central Excise assesses.

Additional options to banking companies and financial institutions, including

NBFCs, for reversal of input tax credits with respect to non-taxable services.

Customs Act to provide for deferred payment of customs duties for importers and
exporters with proven track record.

Customs Single Window Project to be implemented at major ports and airports

starting from beginning of next financial year.

Increase in free baggage allowance for international passengers. Filing of baggage

only for those carrying dutiable goods.

TECHNOLOGY FOR ACCOUNTABILITY

#

Expansion in the scope of e-assessments to all assessees in 7 mega cities in the coming years.

Interest at the rate of 9% p.a against normal rate of 6% p.a for delay in giving effect
to Appellate order beyond ninety days.

e-Sahyog to be expanded to reduce compliance cost, especially for small taxpayers.

WEBSITE

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MASTER IN BUDGET 2016-17

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MASTER IN BUDGET 2016-17