BUDGET AND IT’S IMPACT
3
MET’s Mumbai.
ISHAN KELVALKAR 71 NINAD KHANVILKAR 73 PALLAVI KONDE 75 PRATIK KOTHARI 77 Institute of Management, MUNISH KUMAR 79
• An estimate of income and expenditure for a set period of time
• Union Budget
• Presented on last day on February • INDIA’s 82nd Budget • Presented by the Finance Minister
Budget
Revenue Budget
Capital Budget
Revenue Receipts
Revenue expenditure
Capital Receipts
Capital Expenditure
Total Revenue
Revenue
Capital
Tax Revenue
Non Tax Revenue
- Recovery of loans - Borrowings
- Market Loans
Direct tax (Income tax, Corporation tax etc)
Indirect Tax ( Customs and Excise)
- Interest & Dividend
- Other non tax revenue
Expenditure
Plan Expenditure
Non-plan Expenditure
Capital Account
- Defense - Loans to public Enterprise
Revenue Account
- Interest payments - Subsidies -Wages and salaries
- Loans to states and UTs
• REVENUE DEFICIT • BUDGET DEFICIT • FISCAL DEFICIT • PRIMARY DEFICIT
• EFFECTIVE REVENUE DEFICIT
Fiscal deficit for 2012-13 pegged at 5.2 per cent of GDP and estimated at 4.8 percent for 2013-14.
Revenue deficit for the current year at 3.9 per cent and for 201314 at 3.3 percent. Fiscal deficit to be brought down to 3 per cent, revenue deficit to 1.5 per cent and effective revenue deficit to zero per cent by 201617. Plan expenditure in 2013-14 will be 29.4 per cent more than the Revised Estimate of 2012-13.
? ? ? ? ? ? ?
Custom duty proposal: On leather and leather goods lowered to 5% from 7.5% while concessionary period on environmental friendly vehicles extended to FY2015 On pre forms of precious and semi precious stones duty lowered to 2% from 10% 10% duty imposed on export of raw limonite & 5% on upgraded limonite Excise duty proposal: Excise duty on cigarettes and cigars to be increased by 18% Duty on marble increased from Rs 30/sq mt to 60/sq mt Duty on mobile phones above rs. 2000 raised to 6% (1%) Branded alternate medicines to be taxed on MRP, Abatement of 35% to exist
• • • •
10% surcharge imposed on assesses with income of Rs. 1 crore and above Surcharge raised to 10% (5%) on domestic companies with taxable income above rs 10 crore. For foreign companies surcharge increased to 5% (2%) Donation to the National Children’s Fund eligible for 100% deduction Investment allowance of 15% on investment in plant & machinery of over rs. 100 crore provided.
•
With holding tax on interest paid on investment made through rupee denominated long term infrastructure bonds to NRIs reduced to 5% from 20%
• •
Investor protection fund set up by a depositary exempt from Income tax 1% TDS to be imposed on immovable property transactions above value of rs. 50 lacs. Agricultural land is however exempt To plug loop holes a withholding tax of 20% is top be imposed on unlisted companies who distribute profits through buy back of shares.
•
•
Tax rates on payment of royalties and fees for technical services to non-resident Indians hiked to 25% from 10%. However applicable rates to be as stipulated in the DTAA
Expectation: Maintain a status quo or decrease excise duties Budget Proposals: • Customs duty for automobiles are unchanged. • Non-taxi SUVs will face an excise duty of 30% up from 27% • Imported luxury cars will have a customs duty of 100%, up from 75%. Impact (Positive)
Expectation: Relief on the air turbine fuel (ATF) & manufacture, repair and overhaul (MRO) taxes. Budget Proposals: Provide a plan outlay of INR5,000 crore for the debt ridden Air India duty concessions for the aircraft manufacture, repair and overhaul (MRO) industry.
Impact (Moderate)
Expectations: The budget was expected to propose the recapitalization of stateowned banks for complying with Basel III regulations. Budget Proposals: In line with expectations, the budget proposes to recapitalize stateowned banks for complying with Basel III regulations with a package of INR2517 crore. Housing loans have also got a boost with the proposal of income tax benefit for first-time buyers and increase in the budget for the Rural Housing Fund to INR6000 crore. Impact (Moderate)
Expectations: For the critical power sector that stares fuel availability issues resulting in low plant load factors and delayed projects, the budget was expected to provide measures to revive the industry. Budget Proposals: The budget has proposed issuing tax-free bonds of INR50,000 crore and a credit enhancement scheme from IIFCL and ADB. It has also sought to extend the sunset clause to avail of the 10-year tax holiday by a year and increased the customs duty on imported steal coal to 2%. In addition, it has proposed generation-based incentives worth INR800 crore for wind energy projects. Furthermore, it has proposed that the PPP framework be adopted for coal production. Impact (Moderate)
Expectations: The budget was expected to address the issue of under-recoveries in the oil sector. Budget Proposals: The budget has proposed a shift from a profit-sharing to a revenuesharing exploration policy and sought a review of the natural gas policy. Impact (Moderate)
Expectations: For a sector that is fraught with delays and slowdown, there were many expectations from the budget on the investment and policy fronts. Budget Proposals: The budget has proposed an independent regulatory authority for the roads sector and that tax-free infrastructure bonds for up to INR50,000 crore be issued. 3000 km of highways are expected to be awarded. Two new major ports in West Bengal and Andhra Pradesh Impact (Positive)
Expectations: The retail sector was looking forward to more clarity on the roadmap for GST implementation, since GST is expected to significantly reduce the indirect tax burden on the sector by removing the cascading taxes.
Budget Proposals: The budget has proposed zero excise duty on readymade garments and a 6% duty on mobile phones costing more than INR2000. It has appealed for a consensus to facilitate the drafting of bills on constitutional amendment and GST legislation.
Impact (Moderate)
Expectations: Following the slowdown in demand in the global and domestic markets, the budget this year was expected to add measures that would increase demand. Budget Proposals: The budget has proposed to reintroduce zero excise duty on readymade garments, lower the customs duty on textile machinery and parts to 5% from 7.5%, and increase the customs duty on imported raw silk to 15%. It has also increased the budgetary allocation to INR4,631 crore and extended the Technology Upgradation Funds Scheme (TUFS) with an allocation of INR2400 crore. Impact (Positive)
Expectations: For a sector that is fraught with delays and slowdown, there were many expectations from the budget on the investment and policy fronts. Budget Proposals: The budget has proposed additional tax benefits for first-time buyers availing home loans of INR25 lakh, an Urban Housing Fund of INR2000 crore and increased allocation for the Rural Housing Fund by 50% to INR6000 crore. It has also proposed that service tax be reduced to 70% from 75% for homes and flats having a carpet area of 2,000 square feet or more, or value of INR1 crore or more.
Impact (Positive)
Expectations: Despite a slowdown in urban markets, the rural sector has seen an upswing, and the budget was expected to support this growth. Budget Proposals: The budget has proposed an increase in the allocation of resources for rural development. The excise duty on cigarettes has been increased by 18%. Impact (Negative)
Websites www.indiabudget.nic.com www.economywatch.com www.personalmoney.in www.indiainfoline.com www.thehindubusinessline.com Magazine and newspapers Competition success review Economic times Books Indian Economy by Ruddar Dutt & Sundharam Indian Economy by Mishra & Puri
doc_102456320.pptx
3
MET’s Mumbai.
ISHAN KELVALKAR 71 NINAD KHANVILKAR 73 PALLAVI KONDE 75 PRATIK KOTHARI 77 Institute of Management, MUNISH KUMAR 79
• An estimate of income and expenditure for a set period of time
• Union Budget
• Presented on last day on February • INDIA’s 82nd Budget • Presented by the Finance Minister
Budget
Revenue Budget
Capital Budget
Revenue Receipts
Revenue expenditure
Capital Receipts
Capital Expenditure
Total Revenue
Revenue
Capital
Tax Revenue
Non Tax Revenue
- Recovery of loans - Borrowings
- Market Loans
Direct tax (Income tax, Corporation tax etc)
Indirect Tax ( Customs and Excise)
- Interest & Dividend
- Other non tax revenue
Expenditure
Plan Expenditure
Non-plan Expenditure
Capital Account
- Defense - Loans to public Enterprise
Revenue Account
- Interest payments - Subsidies -Wages and salaries
- Loans to states and UTs
• REVENUE DEFICIT • BUDGET DEFICIT • FISCAL DEFICIT • PRIMARY DEFICIT
• EFFECTIVE REVENUE DEFICIT
Fiscal deficit for 2012-13 pegged at 5.2 per cent of GDP and estimated at 4.8 percent for 2013-14.
Revenue deficit for the current year at 3.9 per cent and for 201314 at 3.3 percent. Fiscal deficit to be brought down to 3 per cent, revenue deficit to 1.5 per cent and effective revenue deficit to zero per cent by 201617. Plan expenditure in 2013-14 will be 29.4 per cent more than the Revised Estimate of 2012-13.
? ? ? ? ? ? ?
Custom duty proposal: On leather and leather goods lowered to 5% from 7.5% while concessionary period on environmental friendly vehicles extended to FY2015 On pre forms of precious and semi precious stones duty lowered to 2% from 10% 10% duty imposed on export of raw limonite & 5% on upgraded limonite Excise duty proposal: Excise duty on cigarettes and cigars to be increased by 18% Duty on marble increased from Rs 30/sq mt to 60/sq mt Duty on mobile phones above rs. 2000 raised to 6% (1%) Branded alternate medicines to be taxed on MRP, Abatement of 35% to exist
• • • •
10% surcharge imposed on assesses with income of Rs. 1 crore and above Surcharge raised to 10% (5%) on domestic companies with taxable income above rs 10 crore. For foreign companies surcharge increased to 5% (2%) Donation to the National Children’s Fund eligible for 100% deduction Investment allowance of 15% on investment in plant & machinery of over rs. 100 crore provided.
•
With holding tax on interest paid on investment made through rupee denominated long term infrastructure bonds to NRIs reduced to 5% from 20%
• •
Investor protection fund set up by a depositary exempt from Income tax 1% TDS to be imposed on immovable property transactions above value of rs. 50 lacs. Agricultural land is however exempt To plug loop holes a withholding tax of 20% is top be imposed on unlisted companies who distribute profits through buy back of shares.
•
•
Tax rates on payment of royalties and fees for technical services to non-resident Indians hiked to 25% from 10%. However applicable rates to be as stipulated in the DTAA
Expectation: Maintain a status quo or decrease excise duties Budget Proposals: • Customs duty for automobiles are unchanged. • Non-taxi SUVs will face an excise duty of 30% up from 27% • Imported luxury cars will have a customs duty of 100%, up from 75%. Impact (Positive)
Expectation: Relief on the air turbine fuel (ATF) & manufacture, repair and overhaul (MRO) taxes. Budget Proposals: Provide a plan outlay of INR5,000 crore for the debt ridden Air India duty concessions for the aircraft manufacture, repair and overhaul (MRO) industry.
Impact (Moderate)
Expectations: The budget was expected to propose the recapitalization of stateowned banks for complying with Basel III regulations. Budget Proposals: In line with expectations, the budget proposes to recapitalize stateowned banks for complying with Basel III regulations with a package of INR2517 crore. Housing loans have also got a boost with the proposal of income tax benefit for first-time buyers and increase in the budget for the Rural Housing Fund to INR6000 crore. Impact (Moderate)
Expectations: For the critical power sector that stares fuel availability issues resulting in low plant load factors and delayed projects, the budget was expected to provide measures to revive the industry. Budget Proposals: The budget has proposed issuing tax-free bonds of INR50,000 crore and a credit enhancement scheme from IIFCL and ADB. It has also sought to extend the sunset clause to avail of the 10-year tax holiday by a year and increased the customs duty on imported steal coal to 2%. In addition, it has proposed generation-based incentives worth INR800 crore for wind energy projects. Furthermore, it has proposed that the PPP framework be adopted for coal production. Impact (Moderate)
Expectations: The budget was expected to address the issue of under-recoveries in the oil sector. Budget Proposals: The budget has proposed a shift from a profit-sharing to a revenuesharing exploration policy and sought a review of the natural gas policy. Impact (Moderate)
Expectations: For a sector that is fraught with delays and slowdown, there were many expectations from the budget on the investment and policy fronts. Budget Proposals: The budget has proposed an independent regulatory authority for the roads sector and that tax-free infrastructure bonds for up to INR50,000 crore be issued. 3000 km of highways are expected to be awarded. Two new major ports in West Bengal and Andhra Pradesh Impact (Positive)
Expectations: The retail sector was looking forward to more clarity on the roadmap for GST implementation, since GST is expected to significantly reduce the indirect tax burden on the sector by removing the cascading taxes.
Budget Proposals: The budget has proposed zero excise duty on readymade garments and a 6% duty on mobile phones costing more than INR2000. It has appealed for a consensus to facilitate the drafting of bills on constitutional amendment and GST legislation.
Impact (Moderate)
Expectations: Following the slowdown in demand in the global and domestic markets, the budget this year was expected to add measures that would increase demand. Budget Proposals: The budget has proposed to reintroduce zero excise duty on readymade garments, lower the customs duty on textile machinery and parts to 5% from 7.5%, and increase the customs duty on imported raw silk to 15%. It has also increased the budgetary allocation to INR4,631 crore and extended the Technology Upgradation Funds Scheme (TUFS) with an allocation of INR2400 crore. Impact (Positive)
Expectations: For a sector that is fraught with delays and slowdown, there were many expectations from the budget on the investment and policy fronts. Budget Proposals: The budget has proposed additional tax benefits for first-time buyers availing home loans of INR25 lakh, an Urban Housing Fund of INR2000 crore and increased allocation for the Rural Housing Fund by 50% to INR6000 crore. It has also proposed that service tax be reduced to 70% from 75% for homes and flats having a carpet area of 2,000 square feet or more, or value of INR1 crore or more.
Impact (Positive)
Expectations: Despite a slowdown in urban markets, the rural sector has seen an upswing, and the budget was expected to support this growth. Budget Proposals: The budget has proposed an increase in the allocation of resources for rural development. The excise duty on cigarettes has been increased by 18%. Impact (Negative)
Websites www.indiabudget.nic.com www.economywatch.com www.personalmoney.in www.indiainfoline.com www.thehindubusinessline.com Magazine and newspapers Competition success review Economic times Books Indian Economy by Ruddar Dutt & Sundharam Indian Economy by Mishra & Puri
doc_102456320.pptx