Budget - Investors

The 2017 Union Budget rewarded the honest taxpayers and the public most affected by demonetisation. Interestingly, the only people the Budget may not have satisfied are the politicians. The Budget was focussed on bringing about a sustainable change for the country by promoting a more digital economy, introducing measures to help the rural and agricultural sectors through NABARD and creating opportunities for the youth. Here are the key highlights for investors from this year’s Budget session.

• Reduction of income tax rate for people earning between Rs 2.5 lakh and Rs5 lakh to 5% from 10%
• More than 90% of FDI take place through a automatic route, the Foreign Investment Promotion Board (FIPB, body that approves all inbound FDI) has successfully done e-filing of FDI application and hence, the FIPB will be abolished. Investors will get a single-window clearance hereon
• Foreign Portfolio Investor (FPI) Category I & II will be exempt from taxation or indirect transfer provision under the Income Tax Act
• Foreign Institutional Investor (FII) has been increased from Rs 1.07 lakh crore to Rs 1.45 lakh crore.
• The government will extend a concessional withholding rate of 5% on interest earned by foreign entities in external commercial borrowings or in rupee denominated bonds and Government securities.
• Exemption of capital gains arising out of transfer of a rupee denominated bond by a non-resident to a non-resident
• Surcharge of 10% on individuals earning between Rs 50 lakh and Rs 1 crore to be levied while surcharge on those earning above Rs1 crore at 15% remains the same
• Sensex gained 1.76% or 485.68 points to close at 28,141.64 on Budget day. Investors did extremely well in the stock market
• Rs 10,000 crore to be pumped into public sector banks in the next fiscal which has already led to increase in share value of SBI, Bank of Baroda, Union Bank of India, etc.
• As a result, the rupee appreciating 34 paise to 67.53 against the US Dollar
• Shares of agricultural companies shot up due to the agriculture-friendly measures
• Real-estate investors will be able to exit properties at a faster rate due to the reduction of holding period for immovable property (land and building) from 3 years to 2 years for long-term capital gains tax
• As a result of affordable housing being tagged as ‘infrastructure’, real-estate developers can avail benefits of lower borrowing rates, tax concessions and increased flow of foreign and private capital. This should translate into lowering of cost on houses that can be beneficial to real-estate investors
• Unlike speculations, Jaitley made no mention of long-term capital gains tax on equities.
• This year’s SME friendly budget will lead to an increase in number of SME’s. This should help investors looking to invest in the industry

Overall, the 2017 Budget was a positive one for the vast majority with the introduction of notably bold reforms. And the government certainly has not disappointed the common man. This could mark the start of Achhe Din after all!