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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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