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  • Union Budget 2018 Highlights for Finance Bill

    Union Budget 2018 - Proposals made in the Finance Bill

    The Union Budget 2018 has been presented by Mr. Arun Jaitley, the Finance Minister of India, to the Parliament on 1 February 2018. This year’s budget is the last budget that will be presented before the general elections in 2019. Mr. Jaitley’s budget saw a wide range of reforms to various sectors of the Indian economy. A few things that have been proposed in the Finance Bill by, Mr. Arun Jaitley include:

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    • With the Goods and Services Tax (GST) being rolled out in 2017, Mr. Jaitley has proposed that the name of the Central Board of Excise and Customs (CBEC) should be changed to Central Board of Indirect Taxes and Customs (CBIC). The proposal of the required changes in law for the same have been proposed in the Finance Bill, as part of the Union Budget 2018.
    • An amendment has been made to the National Housing Bank Act to transfer its equities from the RBI (Reserve Bank of India) to the Government of India. Further, the Provident Fund Act, Indian Post Offices Act, and the National Saving Certificate Act will be amalgamated into one. Certain other measures to help the common man will also be introduced.
    • In order to provide the RBI (Reserve Bank of India) a tool to manage excess liquidity, the Reserve Bank of India Act will be amended in order to establish an Uncollateralized Deposit Facility. This proposal is made in the Finance Bill.
    • The Securities and Exchange Board of India Act, 1992, Depositories Act 1996, and the Securities Contracts (Regulation) Act, 1956, will be amended in order to streamline the adjudication process and in an effort to make provisions to provide penalties if infractions are made. A proposal for the same is also made in the Finance Bill.
    • In an effort to ascertain absolute credibility to the Government’s commitment towards the revised fiscal glide path, all the significant recommendations of the Budget Management Committee and the Fiscal Reform related to adopting the Debt Rule and reducing the Government’s Debt to GDP ratio to 40% have been accepted. The Central Government has also will also be using the Fiscal Deficit target as an operational parameter. Amendment proposals for these, too, are made a part of the Finance Bill.

    The Union Budget of India, which is also known as the Annual Financial Statement, is a financial declaration made by the Government of India that lists out the estimated expenditures and receipts of the government for a particular financial year. As per Article 110 (a) under the Constitution of India, a finance bill is to be mandatorily presented with the budget.

    What is a Finance Bill?

    By way of the Finance Bill, the government seeks to levy new taxes, make alterations in the current tax structure, or make proposals for the continuance of the present tax structure for a certain period of time beyond what was originally approved by the Parliament. The Parliament approves this bill for one fiscal year. Post getting approved, the Finance Bill becomes the Finance Act.

    Features of the Finance Bill

    • Finance Bills are divided into three classes – Finance Bill Category I, Finance Bill Category II, and the Money Bill.
    • Money Bills contain provisions related to regulation or borrowing, amendments to tax laws at the Union or the state level, withdrawal of money from a contingency or consolidated fund, etc.
    • Finance Bills, of both categories, contain provisions related to expenditure, taxation, or any other matter.
    • A Finance Bill will always be a Money Bill. However, a Money Bill need not necessarily be a Finance Bill.
    • The Finance Bill can only be introduced in the lower chamber of the Parliament or the Lok Sabha.
    • The Rajya Sabha can make recommendations to the bill. The bill will have to be returned by the Rajya Sabha within 14 days of receiving it, else it will be deemed as passed.
    • If the bill is returned without any recommendations to the Lok Sabha, the same will be presented to the President for his/her approval.
    • Even if the bill is returned with recommendations, the Lok Sabha has the power to accept or reject all of these recommendations. The Lok Sabha will have to inform the Rajya Sabha about the status of the recommendations.
    • Whether the Lok Sabha accepts all the recommendations or not, the bill will be deemed to have been passed by both the Houses.
    • For all other bills, the final passing of the said bill will happen at the Rajya Sabha. However, for Money Bills, the final passing will happen at the Lok Sabha. This will then be sent to the President of India for his/her assent.
    • The President cannot return a Money Bill will recommendations to the Lok Sabha, for any purpose.

    Changes in the Tax Structure

    • In the Union Budget 2017, the Finance Minister offered a small relief to taxpayers by marginally reducing the tax rate for certain income brackets. Likewise, a surcharge of 10% was also levied on individuals who earned an income between Rs.50 lakh and Rs.1 crore.
    • In the Union Budget 2016, the income tax ceiling was increased to Rs.2.5 lakh. The surcharge on annual incomes over Rs.1 crore was increased to 15%, against the 12% surcharge that was levied the previous year.
    • The Union Budget 2015 did not make provisions for an increase or decrease in the tax slab. However, several exemptions in the healthcare sector were introduced.

    With the Finance Minister of India, Mr. Arun Jaitley, set to present the Union Budget 2018 on 1 February 2018, the general public is hopeful of a change in the tax slabs and the tax exemption limits, especially considering the fact that it is the last Union Budget before the General Elections in 2019.

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