IN D IAN FISCAL

PO LICY

G RO U P N O :7
NAME
PATEL KRISHNA
PATEL AVANI
PATEL VAYSHNAVI
PATEL SAPNA
VANKAR JIGNASA
PATEL MANSI
CHALKE NAMRATA
RAO SHIVANI
MAKWANA NIKITA

R.N.
06
11
17
22
23
24
25
34
60

FISCAL PO LICY

The fiscal policy of government

relates to government income and
expenditure. The main source of

government income is taxation.

It includes the taxation policy. To

raise revenue government increases the
taxes. Higher burden of tax will reduce
the consumption expenditure.

IN TRO D U CTIO N
Fiscal policy includes:1. Taxation
2. Public borrowing
3. Public expenditure

It is used by government for the purpose of

development .
.
In advanced countries the role of fiscal policy
is to stabilize the rate of growth.
.
In underdeveloped countries fiscal policy is to
increase the rate of capital formation.
.

O bjectives
To increase the rate of investment
To encourage socially optimal
investment
To increase employment opportunity
To promote economic stability
To control the inflation
To increase and redistribute national
income

Scope
Budgetary surplus & Deficit
Government expenditure
Taxation Direct & Indirect
Public debt
Deficit financing

U nion Budget
Indirect Tax:. Basic custom duty on commercial vehicles is being

increased from 10 % to 20%

. Excise duty of 2% without CENVAT credit or 6%

with CENVAT credit is being levied on peanut butter.

. Excise duty structure of NIL without credit or 12.5%

with credit is being prescribe for solar water heater

and system.

U nion Budget
. Excise duty on cigarettes is being increased

by 25% for cigarettes of length not exceeding

65 mm and by 15% for cigarettes of other
length.
. In service thx, rate is being increased from

12% plus education cesses to 14%.

. Clean energy Cess levied on coal, lignite and

peat is being increased from Rs. 100 per

tonne to Rs. 200 per tonne.

U nion Budget
Direct tax:. No change in the rate of personal income

tax and the rate of tax for companies in

respect if income earned in the FY 2015-16.
. LEVY SURCHARGE @12% on individuals,

HUFs, artificial juridical persons, firms,

cooperative societies having income
exceeding Rs. 1 cr.

U nion Budget
. In case of domestic companies having

income exceeding 1 cr. to 10 cr. to be

levied @7% and @12% is to be levied on
domestic companies having income
exceeding 10 cr.
. It is proposed to provide penalty on

repaid in case above 20000 for

immovable property transactions.

U nion budget
Government Borrowing,

lending and investment:. Low interest rates in the

international financial markets so

it is beneficial to borrow from
international financial market.

U nion Budget
Railway Budget. Government support of Gross budgetary support (GBS)

and return on this investment it is called dividend , is

paid every year and rate of dividend is 5%.
. Railways revenues earned through passenger and

freight. Some earnings are also contributed by

luggage/ parcels, advertisement paid by railways
PSUs. Remaining surplus id used to pay dividend and
balance is ploughed back as plan investment for
meeting safety and development.

U nion Budget
Investment in railways is funded through

GBS, internal resource and extra

budgetary resource(EBR). The 12th five
year plan for railways has been approved
at Rs. 5.19 lakh cr. targeting investment
of 1.94 lakh cr. Through GBS, 1.05 lskh
cr. of IR and Rs. 2.2. lakh cr of EBR.

Im portance
It applicable to the advanced and well to

do countries of Europe and it has little

relevance to underdeveloped economies.
To increase the rate of Saving and

Investment
Affecting the allocation of resource
Controlling inflation