Finance Minister Arun Jaitley’s third Budget performed a delicate task of prioritisation: meeting additional spending burdens while staying on the previously announced path of fiscal consolidation. Jaitley kept infrastructure spending elevated while also addressing the slowdown in the rural economy; yet his estimates of increases in tax revenue were generally agreed to be reasonable, with the additional revenue coming from non-tax sources including disinvestment and spectrum auction receipts. This fiscal discipline will have increased pressure on the Reserve Bank of India to cut rates and spark an investment and growth recovery.
THE KEY ISSUES
Option for New manufacturing firms to be taxed at 25%; one-time dispute resolution for retro tax
Future deposits to be taxable in part when withdrawn
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