The Union Budget of India for the fiscal year 2017-18, presented by Finance Minister Arun Jaitley, introduced several significant changes and reforms aimed at stimulating economic growth, improving governance, and addressing various socio-economic issues.
1. Income Tax Reforms
a. Reduction in Corporate Tax Rate:
Change:
- The corporate tax rate was reduced from 30% to 25% for companies with a turnover of up to ₹50 crore.
Purpose:
- To encourage small and medium enterprises (SMEs) and foster a more favorable business environment for them.
Example:
- A company with a turnover of ₹45 crore now enjoys a reduced corporate tax rate of 25% instead of 30%, resulting in a lower tax liability.
b. Income Tax for Individuals:
Change:
- A reduction in income tax rates for individual taxpayers in the lower income brackets:
- Tax rate for income up to ₹2.5 lakh remained nil.
- For income between ₹2.5 lakh and ₹5 lakh, the tax rate was reduced to 5% from 10%.
- For income between ₹5 lakh and ₹10 lakh, the tax rate remained at 20%.
- For income above ₹10 lakh, the tax rate remained at 30%.
Purpose:
- To provide relief to middle-income groups and enhance disposable income.
Example:
- An individual earning ₹4 lakh per year now pays 5% tax on ₹1.5 lakh (₹4 lakh – ₹2.5 lakh), compared to 10% before the change.
2. GST Implementation
Change:
- The Budget emphasized the rollout of the Goods and Services Tax (GST), which was scheduled to come into effect on July 1, 2017.
Purpose:
- To replace multiple indirect taxes with a single, unified tax system to simplify compliance and create a more efficient tax structure.
Example:
- Businesses now pay a single GST rate on goods and services instead of multiple state and central taxes, which simplifies tax administration.
3. Financial Inclusion and Digital Payments
a. Push for Digital Transactions:
Change:
- Incentives for digital transactions and measures to promote a cashless economy, including:
- Cash withdrawal limit reductions from banks.
- Introduction of measures to encourage digital payments and improve financial inclusion.
Purpose:
- To increase transparency, reduce corruption, and make financial transactions more secure.
Example:
- The introduction of the Pradhan Mantri Jan Dhan Yojana (PMJDY) and mobile banking services to increase financial inclusion.
b. Ban on ₹500 and ₹1,000 Notes:
Change:
- The demonetization of ₹500 and ₹1,000 currency notes was announced in November 2016, with the impact carrying into the 2017 fiscal year.
Purpose:
- To curb black money, counterfeit currency, and promote a move towards a cashless economy.
Example:
- The withdrawal of high-value currency notes required individuals and businesses to exchange or deposit their old notes in banks, accelerating the transition to digital payments.
4. Infrastructure and Development
a. Investment in Infrastructure:
Change:
- Increased allocation for infrastructure development, including roads, railways, and ports.
- Allocation of ₹3.96 lakh crore for infrastructure projects.
- Focus on connectivity, including the Bharatmala project for road development and the Sagarmala project for port modernization.
Purpose:
- To boost economic growth by enhancing transportation and logistics.
Example:
- The Bharatmala project aimed to develop 83,000 km of roads across the country, improving connectivity and transportation efficiency.
b. Affordable Housing:
Change:
- The introduction of incentives for affordable housing, including tax benefits for developers and buyers.
- Interest subsidies for first-time home buyers.
Purpose:
- To make housing more affordable and accessible to the lower and middle-income groups.
Example:
- Interest subsidy schemes for home loans under the Pradhan Mantri Awas Yojana (PMAY) aimed at providing affordable housing to economically weaker sections.
5. Social Sector Initiatives
a. Health and Education:
Change:
- Increased spending on health and education sectors:
- Allocation of ₹1.5 lakh crore for the health sector, including a National Health Protection Scheme.
- Increased funding for educational institutions and skill development programs.
Purpose:
- To improve healthcare facilities and educational infrastructure.
Example:
- The National Health Protection Scheme aimed to provide health insurance coverage to over 10 crore families.
b. Rural Development:
Change:
- Enhanced funding for rural development programs and schemes, including:
- Increased allocation for MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act).
- Focus on improving rural infrastructure and sanitation.
Purpose:
- To improve the quality of life in rural areas and provide employment opportunities.
Example:
- Increased MGNREGA funding aimed to provide job opportunities and develop rural infrastructure.
6. Tax Administration Reforms
a. Introduction of New Tax Filing System:
Change:
- The introduction of a new, simplified tax filing system to improve compliance and ease of tax filing.
Purpose:
- To streamline the tax filing process and reduce the burden on taxpayers.
Example:
- The new system involved a simplified tax return format and electronic filing options.
Summary Table
| Component | Change | Purpose | Example |
| Income Tax Reforms | Reduction in corporate tax rate, lower income tax rates for individuals. | Encourage investment and provide relief to taxpayers. | Reduced corporate tax rate for companies with turnover up to ₹50 crore. |
| GST Implementation | Rollout of Goods and Services Tax (GST). | Simplify indirect tax structure. | Unified tax system replacing multiple indirect taxes. |
| Digital Payments | Incentives for digital transactions; demonetization of ₹500 and ₹1,000 notes. | Promote cashless transactions and reduce corruption. | Increased use of mobile banking and digital wallets. |
| Infrastructure Investment | Increased allocation for roads, railways, ports, and affordable housing. | Boost economic growth and improve connectivity. | Bharatmala project for road development. |
| Social Sector Initiatives | Increased funding for health, education, and rural development. | Improve healthcare, education, and rural infrastructure. | National Health Protection Scheme, increased MGNREGA funding. |
| Tax Administration Reforms | Introduction of new tax filing system. | Streamline tax compliance. | Simplified tax return format and electronic filing. |
Conclusion
The 2017 Budget in India introduced a series of impactful changes aimed at stimulating economic growth, promoting transparency, and improving governance. From tax reforms and digital payment incentives to infrastructure investment and social sector enhancements, these measures were designed to address various economic and social challenges and lay the foundation for sustainable development.
