INDIA BUDGET 2014-FOREIGN DIRECT INVESTMENT HIGHLIGHTS

The Finance Minister Mr. Arun Jaitley, has set himself a daunting task to maintain the FY15 fiscal deficit target of 4.1 %, is trying to bring back the interest of foreign institutional investors by increasing the FDI limit in some sectors and abolishing the controversial retrospective tax.

•  FDI in defence sector: Finance Minister Arun Jaitley in his maiden Budget said that the government is looking at raising foreign direct investment (FDI) in the defence sector to 49 % from 26 %.  
•  FDI in insurance sector: The government has increased FDI in insurance up to 49 % from 26 % earlier. It would enable many promoters of Indian companies to sell their shares as well as infuse new capital in the firms. 
•  No retrospective tax: The government plans to do away with the retrospective tax. All cases of retro taxes after 2012 will be pushed to the higher panel. The minister said he hopes foreign companies will appreciate the move on retrospective tax. 
• FDI in ecommerce sector: Liberalisation of FDI in the ecommerce sector will provide much-needed certainty to foreign players and to a sector that has the promise to provide increased commerce and generate employment in the country. The move will also provide boost to the sector and create healthy competition so as to benefit all the constituents in the ecosystem - consumers, government, ecommerce players and retailers in general. 
•  FDI in health insurance sector: This budget provisions to enhance both financial and physical access of healthcare for the country.

Through broadband in rural area, telemedicine will increase the accessibility of qualified doctors and specialists into rural area and increased FDI in health insurance to 49 per cent will help increase the financial accessibility of population.

OTHER UNION BUDGET 2014 – HIGHLIGHTS

• Government will not bring any retrospective amendment which is unfair to the tax payers. 
•  Five more Indian Institute of Management (IIMs) to be set up. 
•  Four more Indian Institute of Technology (IITs) to be set up. 
•  Rs. 100 crores for Metro in Lucknow and Ahmedabad. 
•  Allocates Rs. 400 crores to incentivize the development of low cost housing. 
•  Rs 500 crores for solar power development project in Tamil Nadu and Rajasthan. 
•  Uniform Know Your Customer (KYC) norms for entire financial sector. 
•  Finance Minister Proposes liberalization of American Depository Receipt (ADR)/Global Depository Receipt (GDR) regime. 
•  Accounting Standards for Banks and Insurance sector would be notified separately.
• Taxation issues for foreign funds with Indian managers to be clarified. 
•  Finance Minister proposes one Demat account for all financial products. 
•  Special small saving scheme to be introduced for the education of girl child. 
•  Public Provident Fund (PPF) annual ceiling enhanced to 1.5 lacs. 
•  Maximum exemption limit raised to Rs. 2.5 lacs for an individual. 
•  Senior Citizen are not liable to pay tax on income upto Rs. 3,00,000. 
•  Investment limit under Section 80C increased to Rs. 1.5 Lacs. 
•  Deduction for Interest on Housing Loan increased to Rs. 2,00,000. 
•  No change in tax rates for corporate tax payers. 
•  Concessional rate of tax on dividend from foreign subsidiaries continues. 
•  No sunset date for concessional rates for foreign dividends. 
•  Concessional rate of 5% on interest extended to all types of bonds. 
•  Government shall consider public comments received on DTC. 
•  10 year tax holiday for power companies starting production and distribution on or before March 31, 2017. 
•  To boost manufacturing sectors - customs duty reduced on certain inputs such as fatty acids, etc. 
•  Import duty on steel increased from 5% to 7.5%. 
•  Government to provide investment allowance at 15% for 3 years to manufacturing company investing more than Rs. 25 crores. 
•  Portfolio income of Foreign Institutional Investor (FIIs) to be treated as capital gain. 
•  Imported electronics goods to cost more. A cess to be introduced. 
•  Income of funds from portfolio investments shall be deemed as capital gains. 
•  Controversy over categorization of income of foreign investor funds as capital gains or business income shall end with this proposal. 
•  Customs duty reduced on certain types of coals. 
•  Government reduces basic customs duty on LCD/LED televisions. 
•  Customs duty cut to nil on import of LCD, LED Panels below 19 inch. 
•  TV sets, Solar power units, computers, oil products, soaps becomes cheaper. 
•  Footwear to go cheaper - excise duty reduced from 12% to 6%. 
•  Sugary carbonated drinks to get dearer. 
•  Cigarettes, Cigars, Pan Masala, Gutka and other tobacco product to attract more excise duty. 
•  Basic rates of customs duty @ 10%, excise duty @ 12% and service tax @ 12% remains intact. 
•  Excise duty hiked on aerated waters with sugar content.

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