Amidst great expectations, the Indian Finance Minister has delivered the most awaited fiscal budget for the financial year 2016-17. The Current Indian budget reflects an overall positive outlook with GDP growth at 7.6%, CPI inflation at a 3 year low of 5.4% and a robust foreign exchange reserve of 350 billion US dollars. The Government's vision plan is to focus on agriculture, rural area development, promotion of education & skills, promotion of infrastructure & investment, develop social sector, enable ease of doing business and achieve fiscal discipline by carrying out tax and financial sector reforms.
Here's what got cheaper and costlier:
• Cost of services to go up as a new 'Krishi Kalyan Cess' at 0.5 percent is being introduced with effect from June 1, 2016. This levy will consequently increase effective rate of service tax from 14.5 percent to 15 percent.
• Automobile prices, especially motor cars segments to increase due to the levy of new Infrastructure Cess at 1 percent on small petrol, LPG, CNG cars, 2.5 percent on diesel cars of certain capacity and 4 percent on other higher engine capacity vehicles and SUVs.
• In health care segment, import of dialysis-related medical equipment has been exempted from customs.
• Insurance contracts with single premium annuity to become cheaper as service tax levy to be reduced from 3.5 percent to 1.4 percent.
• In FMCG, price of tobacco products set to increase as duties on these products would be increased by about 10 to 15 percent.
• Cost of online advertising through foreign e-commerce players set to increase based on the proposed 'Equalisation Levy' at 6 percent on B2B transactions.
• Real estate, especially housing sector to become cheaper due to proposed exemption of service tax on construction of affordable houses, excise duty exemption to ready mix concrete.- By Aravind S, partner, PwC India and Krishnakumar S, manager, PwC India. The views expressed are their own.
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