Indian budget 2013

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Budget 2013

Background

• Low growth of economy 5%/5.5%

• Weak Current Account

• Inflation

• Growing fiscal deficit – Now 5.2/ projected 4.8

• Tight monetary policy

• High Govt. borrowing

• Looming downgrading by rating agencies

INDIA’S GROWTH RATE

INDIA’S CURRENT ACCOUNT

INDIA’S INFLATION RATE

Actual

2011-12

(Rs. in cr.)

Revised

2012-13

(Rs. in cr.)

Increase 2013-14

(Rs. in cr.)

Increase

Corp. Tax 322,816 358,874 11% 419,520 17%

Other IT 164,485 199,930 21% 240,919 25%

Customs 149,327 164,853 10% 187,308 15%

Excise 144,900 171,315 19% 198,805 18%

Service tax 97,509 132,697 36% 180,141 37%

Revenue numbers

Budget

2012-13

(Rs. in cr.)

Revised

2012-13

(Rs. in cr.)

IncreaseUnderspent (-) /

overspent (+)

(Rs. in cr.)

2013-14

(Rs. in cr.)

Increase

- Revenue

- Capital

426,513

100,512

343,373

85,814

443,260

112,062

Total Plan Expenditure 521,025 429,187 -18% - 91,838 555,322 29%

Subsidy 190,015 257,654 36% 67,639 231,084 10%

Petroleum subsidy 43,560 96,880 123% 53,500

Health & welfare 30,477 24,894 -18% -5,583 32,745 32%

Human Resources 61,427 56,223 -9% -5,204 65,869 17%

Rural development 76,376 55,000 -29% -21,376 80,194 46%

Other critical numbers

Measures for growth of economy/investment

• Investment allowance - 15% on Plant & machinery

installed exceeding Rs. 100 crores between 1.4.13 to

31.3.15

• Attempt to discourage investment into Gold/real estate

• Tax free Bonds

• Inflation – indexed bonds

• High infrastructure spending 7-1-1 of GDP

• Plan expenditure – Rs. 5.5 lac crore - Growth of 29.4%

• New industrial corridors of Mumbai-Bengaluru + Bengaluru-Chennai

proposed

• High rural spending : Rs. 80,194 Cr.

• Regulatory authority for road sector

• Coal addressed

• Mass Housing : Rs. 1 lac additional deduction for first time buyer - cost

limit of Rs. 40 lacs / Loan Rs. 25 lacs

• Agricultural - Rs. 27049 Cr.

• Agricultural credit - Rs. 7 lacs Cr.

Measures for growth of economy/investment

• Surcharge at 10% on incomes above Rs. 1 crore - Total numbers.

42800

• Commodity Transaction tax

• S. C. on Corporate rates up from 5% to 10% on taxable incomes above

Rs. 10 crores

• Higher service tax on residential units above Rs. 1 crore or more than

2000 Sq. ft.

• Dining in AC Restaurants liable to Service-tax

• Divestment: Rs. 54000 Cr.

• Telecom sector: Rs. 41000 Cr.

• Dividends/profits: Rs. 44000 Cr.

• Plugging loopholes

Sources

• Expectation of high tax buoyancy and high

growth

• Reduction in subsidy 2.6% of GPD to 2% of GDP

• Expectations are that Capex is not compromised

as was done this year

Containing fiscal deficit

43CA:

• 50C applicable on transfer of immovable property as held as

stock-in-trade

Property related:

• 1% tax deduction on transfer of immovable property exceeding

Rs. 50 lacs

• Tax on property purchased for inadequate consideration( less

than stamp authority rate) – Rs. 50,000 diff. permitted

• “Tax due to” include penalty and interest

Plugging loopholes

• Swasthya Bim Yojana extended to rixa-pullers,auto & taxi

drivers, sanitary workers

• Drinking water

• Sarva Shiksha Abhiyan

Education / health

Giveaways

• Reduction in S. T. T.

• Tiny dot of Rs. 2000 to persons with incomes upto Rs. 5

lacs

• Improving savings rate and investment in financial savings

• Insurance

• Fl permitted to invest in currency futures

• Gold investment discouraged

• Garbage to energy

• Wind energy

• Skill development - Rs. 5 crore

• Service tax Amnesty Scheme

• 17 lac registration; 7 lac file returns

Other provisions

Other provisions

• G. S. T.

• D. T. code

• More required to encourage investment like

– Cutting red tape

– Expediting clearances

– Improving Governance

• GAAR continued to be deferred

Main Constants of the Indian Economy at present

• High Fiscal deficit.

• Reliance on foreign inflows.

• Lower savings and lower investment.

Reasons for current account weakness

• Excessive dependence on oil imports.

• High volumes of coal imports.

• Our passion for gold.

• Slow down in exports.

That’s why we need more FDI, FII and ECB.

Agriculture

• 3.6% annual growth achieved during 11th plan.

Total food grains production during 2012-13estimated at 250 million tones.

Minimum support price increased significantly.

Agriculture exports from April-December’12 at Rs.138403 crores.

Agriculture credit target of Rs. 575000 crores for2012-13 and Rs. 700000 crores for 2013-14.

Provision for agriculture research Rs. 3415 crores.

Investment Infrastructure & Industry

• 12th plan projects an investment of Rs. 5500000 croresin infrastructure.

• Private sector to share 47% of this.

• Ports-two major ports one in West Bengal and other inAndhra Pradesh.

• National waterways.

Suggested Tips

• The coal rates are going to increase by 2020 -2035. Focus on Solar Power Plant.

• Fiscal Deficit- When a government's total expenditures exceed the revenue that it generates (excluding money from borrowings). Deficit differs from debt, which is an accumulation of yearly deficits.

• Rather making ECONOMIC strong we are making the TAXstrong.

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