FPIs opting not to file tax returns in India may need to cough up more

Finance Minister Nirmala Sitharaman in her Budget brought in a new tax regime for individuals, abolished DDT and announced record spending in agriculture and infrastructure sectors to pull the economy out of its worst slowdown in more than a decade. The cut in income tax rates, which would help save Rs 1,820 to Rs 20,300 a year in tax for persons with annual income of above Rs 10 lakh, was however conditioned on foregoing current exemptions and deductions, including standard deduction for Rs 50,000 as well as the waiver earned on payment of up to Rs 1.5 lakh in tuition fee of children, and contribution towards insurance premium and provident fund. Alongside, the limit of insurance cover in case of bank failure on deposits was increased to Rs 5 lakh from Rs 1 lakh and a sale of government stake in the country's largest insurer Life Insurance Corporation (LIC) announced. The stock market, however, reacted negatively as the benchmark Sensex suffered its biggest single-day loss in over a decade on concerns over lack of growth boosting measures and fiscal discipline. For farm and rural sectors, she allocated Rs 2.83 lakh crore and fixed Rs 15 lakh crore target for giving agriculture credit. Another Rs 1.7 lakh crore spending was planned for transport infrastructure and Rs 40,740 crore allocation was made for the energy sector. In doing so, the government will miss its deficit target for the third year in a row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared to 3.3 per cent previously planned. The fiscal deficit target for the coming fiscal year starting April 1 has been fixed at 3.5 per cent.