Cabinet approves merger of rail budget with general budget

Press Information Bureau
Government of India
Ministry of Finance

21-September-2016 15:59 IST

Cabinet approves merger of rail budget with general budget;

advancement of budget presentation and merger of plan and non-plan classification in budget and accounts  

The Union Cabinet has approved the proposals of Ministry of Finance on certain landmark budgetary reforms relating to (i) the merger of Railway budget with the General budget, (ii) the advancement of the date of Budget presentation from the last day of February to the 1st of February and (iii) the merger of the Plan and the Non-Plan classification in the Budget and Accounts. All these changes will be put into effect simultaneously from the Budget 2017-18.

Merger of Railway Budget with the General Budget:

The arrangements for merger of Railway budget with the General budget have been approved by the Cabinet with the following administrative and financial arrangements-

(i)  The Railways will continue to maintain its distinct entity -as a departmentally run commercial undertaking as at present;

(ii) Railways will retain their functional autonomy and delegation of financial powers etc. as per the existing guidelines;

(iii)The existing financial arrangements will continue wherein Railways will meet all their revenue expenditure, including ordinary working expenses, pay and allowances and pensions etc. from their revenue receipts;

(iv)The Capital at charge of the Railways estimated at Rs.2.27 lakh crore on which annual dividend is paid by the Railways will be wiped off. Consequently, there will be no dividend liability for Railways from 2017-18 and Ministry of Railways will get Gross Budgetary support. This will also save Railways from the liability of payment of approximately Rs.9,700 crore annual dividend to the Government of India;

The presentation of separate Railway budget started in the year 1924, and has continued after independence as a convention rather than under Constitutional provisions.

The merger would help in the following ways:

· The presentation of a unified budget will bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government.

· The merger is also expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance.

· Consequent to the merger, the appropriations for Railways will form part of the main Appropriation Bill.

Advancement of the Budget presentation:

The   Cabinet   has   also   approved, in principle, another   reform   relating   to   budgetary   process,   for advancement of the date of Budget presentation from the last day of February to a suitable date.  The exact date of presentation of Budget for 2017-18 would be decided keeping in view the date of assembly elections to be held in States.

This would help in following ways:

· The advancement of budget presentation by a month and completion of Budget related legislative business before 31st  March would pave the way for early completion of Budget cycle and enable Ministries and Departments to ensure better planning and execution of schemes from the beginning of the financial year and utilization of the full working seasons including the first quarter.

· This will also preclude the need for seeking appropriation through 'Vote on Account' and enable implementation of the legislative changes in tax; laws for new taxation measures from the beginning of the financial year.

Merger of Plan and Non Plan classification in Budget and Accounts:

The third proposal approved by the Cabinet relates to the merger of Plan and Non Plan classification in Budget and Accounts from 2017-18, with continuance of earmarking of funds for Scheduled Castes Sub-Plan/Tribal Sub-Plan. Similarly, the allocations for North Eastern States will also continue.

This would help in resolving the following issues:

· The Plan/Non-Plan bifurcation of expenditure has led to a fragmented view of resource allocation to various schemes, making it difficult not only to ascertain cost of delivering a service but also to link outlays to outcomes.

· The bias in favour of Plan expenditure by Centre as well as the State Governments has led to a neglect of essential expenditures on maintenance of assets and other establishment related expenditures for providing essential social services.

· The merger of plan and non-plan in the budget is expected to provide appropriate budgetary framework having focus on the revenue, and capital expenditure.

Vote on Account for Expenditure of the Central Government (Excluding Railways)

To view, please CLICK HERE.
 

Highlights of Union Budget 2016-17

Following are the highlights of Union Budget 2016-17 presented by Finance Minister Arun Jaitley in Parliament on Monday:

* No change in personal Income Tax slabs

* 4-month Compliance Window for domestic black money holders; tax, interest on them at 45%

* Relief for tax payers who earn below Rs 5 lakh; ceiling of rebate u/s 87A raised to Rs 5,000 from Rs 2,000

* House rent deduction raised from Rs 20,000 to Rs 60,000

* One-time dispute resolution scheme for retro taxcases, penalty, interest waived

* High level committee headed by Revenue Secretary to oversee creation of fresh liability using retro tax law

* Corporate Tax for new manufacturing units fixed at 25%

* Clean energy cess increased from Rs 200/ton to 400/ton on coal, lignite and peat

To read news published on The Times of India, please CLICK HERE. 

7th CPC: Central government employees' salary hikes not before June?

New Delhi: Government is likely to accept the recommendations of the 7th Pay Commission and offer salary hikes to Central Government Employees not before June  2016.

Though, the matter may become clearer when Finance Ministry announces the details on implementation, and that is expected to happen before Budget 2016-17 in February.

Then there are Assembly elections expected in Pondicherry, Assam, Tamil Nadu, West Bengal, and Kerala. So the implementation of salary hike is also expected only when the State Assembly elections are over by June/July.

Also, as per reports, seven states: UP, Punjab, West Bengal, Tamil Nadu, Odisha, Tripura and Sikkim, have requested the Centre to delay implementation of salary hikes due to the financial burden 7th CPC recommendations are likely to cast on the state exchequer. 

Source :http://zeenews.india.com/

Budget 2016: Hoping for a relief in income tax this year? It may not happen

The government is unlikely to offer any major relief on personal income taxes in the 2016-17 budget due to lack of fiscal space, senior officials have said.

Discussions on the crucial budget, which will be unveiled in February, are under way and the numbers are being worked on. But a tight fiscal situation may prevent the government from being populist at any level. "The room on the fiscal front is very limited. Therefore, it is unlikely that there will be any major concessions on the personal income tax side," a government official, who did not wish to be identified, told TOI, adding that some relief may be in store for taxpayers.But he did not elaborate.

The government is faced with a very challenging fiscal situation in the current financial year as well as in 201617. Several factors have narrowed the fiscal space. The first is the impact from the rollout of the 7th Pay Commission recommendations. In November, the Pay panel had recommended an increase in pay and allowances of 23.6%, a 24% rise in pensions and onerank-one-pension for central government employees and paramilitary personnel.

These changes are estimated to cost over Rs 1lakh crore to the government in 2016-17, according to finance ministry estimates. The government is examining the proposals and they are likely to be implemented soon. While low global crude oil prices have provided much needed breathing space, the possibility of an increase in prices next year will prompt the government to be cautious.

The economy , which has shown signs of a rebound, needs support through public nvestment as private investments have not yet picked up o the desired level. The midyear review of the economy ,a half-yearly report card on the state of the economy , has backed appropriate fiscal and monetary policies to boost public investment. The government has already signal ed its strong commitment to stick to the fiscal deficit target and this is likely to make he budget a tight rope walk.

In his 2015-16 budget, finance minister Arun Jaitley had extended a string of benefits to middle class taxpayers, including raising the limit of deduction on health insurance premium from Rs 15,000 to Rs 25,000 and for senior citizens the limit was hiked to Rs 30,000 from the existing Rs 20,000. Jaitley had promised to do more for individual taxpayers. "As and when my fiscal capacity improves, individual taxpayers will have a lot to look forward to," he had said in his budget speech.

 .The FM had unveiled the plan to reduce the rate of corporate tax from 30% to 25% over the next 4 years to boost investment, growth and jobs.He had also called for rationalization and removal of various kinds of tax exemptions and incentives for corporate taxpayers, which account for a large number of tax disputes.

Source:-The Economic Times