Finance Minister, Arun Jaitley on 29th February 2016, presented his third Union Budget 2016 – 17.

UNION BUDGET 2016 - 2017

UNION BUDGET 2016 – 2017


  • 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 two consecutive 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.


  • Risks of further global slowdown and turbulence
  • Additional fiscal burden due to 7th Central Pay Commission recommendations and OROP

Nine pillars of UNION BUDGET 2016 to transform India – Governance and ease of doing business, fiscal discipline, tax reforms, Agriculture and farmers welfare , Rural sector with focus on employment, social sector with healthcare, Educational skills and job creation, Infrastructure and investment & financial sector reforms.


  • Infrastructure and agriculture cess(tax) to be charged
  • 10 to 15 % Excise duty increased on tobacco products, other than beedis
  • Service charge of 1 % on buying luxury cars more than Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh
  • SUVs, Luxury cars will be more expensive. 4% high capacity tax for SUVs
  • Companies having turnover less than Rs 5 crore to be taxed at 29% plus surcharge
  • 1 % excise to be charged on articles of jewellery, excluding silver
  • 0.5 % Krishi Kalyan Cess(tax) to be chargedd on all services
  • Pollution cess of 1 % on small petrol, LPG and CNG cars; 2.5 % on diesel cars of certain specifications; 4 % on higher-end models
  • Dividend in excess of Rs. 10 lakh per annum to be taxed at additional 10 %
  • Limited tax compliance window from Jun 1 – Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties

Personal Finance

  • No changes in income tax slabs
  • Rs 1,000 crore allotted for new EPF (Employees’ Provident Fund) scheme
  • Govt. will pay EPF contribution of 8.33% for all new employees for first three years
  • Deduction for rent paid will be increased from Rs 20,000 to Rs 60,000 to benefit people living in rented houses
  • Surcharge of 15 % on income above Rs. 1 crore
  • Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, only if cost of house is not above Rs. 50 lakh
  • Exempted Service tax for housing construction of area less than 60 sq. m


  • Rs. 38,500 crore for Mahtma Gandhi MGNREGA for 2016-17
  • Rs.9,500 crores allocated to Swacch Bharat Abhiyan
  • Hub to support SC/ST entrepreneurs
  • With state support, Govt to launch a new plan to provide cooking gas to BPL families
  • LPG connections to be given under the name of women members of family: Rs 2000 crore allocated for 5 years for BPL families
  • 2.87 lakh crore granted to gram panchayats and municipalities – a quantum jump of 228%
  • Under Shyama Prasad Mukherji Rurban Mission, 300 urban clusters to be planned
  • For Animal welfare – 4 schemes will be introduced


  • Allocation for social sector including education and health care 1,51,581 crore
  • 2.2 lakh renal patients added every year in India. Basic dialysis equipment gets some relief
  • Health protection scheme to be introduced for health cover upto 1 lakh per family
  • National Dialysis Service Program to be startred through PPP mode to provide dialysis at all district hospitals
  • Senior citizens to get additional healthcare cover of Rs 30,000 under the new scheme
  • 3,000 Stores under Prime Minister’s Jan Aushadhi Yojana will be opened
  • 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 350 th Birth Anniversary of Guru Gobind Singh

Education and Skill Development

  • Rs.500 cr to be granted for promoting entrepreneurship among SC/ST
  • 10 public & 10 private educational institutions will be made to give world class teaching and research
  • Proposed to set up Digital repository for all school leaving certificates and College Degrees, Academic Awards and Mark sheets
  • Rs. 1,000 crore capital for higher education financing agency(HEFA) to be set up
  • National Skill Development Mission has imparted training to 76 lakh youth, 1500 multi-skill training institutes with Rs. 1,700 crore allocation
  • 62 new navodaya vidyalayas to provide quality education
  • Aim to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojna
  • Digital literacy scheme to be launched to cover 6 crore additional rural households
  • Entrepreneurship education and training to be given across schools, colleges through massive online courses


  • Rs. 3000 crore allocated for nuclear power generation
  • Govt drawing comprehensive plan to be implemented in next 15-20 years to invest in nuclear energy
  • To provide calibrated marketing freedom in order to encourage gas production from deep-water
  • Pre-determined ceiling price based on landed price of alternate fuels

Investments and infrastructure

  • Total investment in the road sector, including PMGSY allocation, would be 97,000 crore
  • India’s highest-ever kilometers of new highways were awarded in 2015 and India’s highest ever production of motor vehicles was achieved & nearly to approve 10,000 kms of national highways
  • Rs. 55,000 crore for roads and highways, `where 15,000 crore to be raised by NHAI through bonds
  • Total outlay for infrastructure is Rs. 2,21,246 crore
  • Amendments to be made in Motor Vehicles Act to open up the road transport sector in the passenger segment
  • Revival of unserved & underserved airports in partnership with State Govt
  • 100 per cent FDI in marketing of food products produced and manufactured in India
  • The Department of Disinvestment is being re -named as the “Department of Investment and Public Asset Management (DIPAM)”
  • Shops given choice to remain open all seven days in a week across markets
  • 65,000 eligible habitats to be connected via 2.23 lakh kms of road
  • Rs. 27,000 crore to be spent on roadways
  • Direct tax proposals result in revenue loss of Rs.1060 crore, indirect tax proposals result in gain of Rs.20,670 crore
  • New greenfield ports to be developed on east and west coasts
  • MAT to be applicable for startups that qualify for 100 per cent tax exemption

Agriculture and Rural sector

  • Rs 35,984 crores allocation for agriculture and farmer welfare
  • A sum of Rs 38,500 crore allocated for MGNREGS
  • 28.5 lakh hectares of land will be brought under irrigation
  • 100% village electrification by 1st May, 2018
  • 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
  • 300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission
  • Allocation under Prime Minister Fasal Bima Yojana 5,500 crore
  • Every block under drought and rural distress will be taken under the Deen Dayal Antyodaya
  • Mission` 850 crore for four dairying projects -‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E- Pashudhan Haat’ and National Genomic Centre for indigenous breeds
  • Soil Health Card scheme will cover all 14 crore farm holdings by March 2017
  • Dedicated irrigation fund in NABARD of Rs.20.000 cr
  • Nominal premium and highest ever compensation in case of crop loss under the PM Fasal Bima Yojna
  • New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of 655 crore


  • Process of transfer of government stake in IDBI Bank below 50% started
  • General Insurance companies will be listed in the stock exchange
  • Govt to increase ATMs, micro-ATMs in post offices in next three years
  • A Financial Data Management Centre to be set up
  • Allocation of 25,000 crore towards recapitalization of Public Sector Banks
  • Target of amount sanctioned under Pradhan Mantri Mudra Yojana increased to 1,80,000 crore

Governance and Ease of Doing Business

“Ek Bharat Shreshtha Bharat” Programme to link States and Districts in an annual programme which will connect people through exchanges in areas of language, trade, culture, travel and tourism.