UNION BUDGET 2013-14

Key Features of Budget 2013-2014

THE ECONOMY AND THE CHALLENGES

 ‰‰Getting back to potential growth rate of 8 percent is the challenge facing the country.
 Slowdown in Indian economy has to be seen in the context of slowing global economic growth from 3.9 per cent in 2011 to 3.2 per cent in 2012.
 However, no reason for gloom or pessimism. Of the large countries of the world only China and Indonesia growing faster than India in 2012-13. In 2013-14, only China projected to grow faster than India.
 Between 2004 and 2008, and again in 2009-10 and 2010-11 the growth rate was over 8 per cent and crossed 9 per cent in four of those six years.
 11th Plan period had average growth rate of 8 percent, highest during any Plan period, entirely under the UPA Government.

 High growth rate can again be achieved through cooperation.
‰‰ ‰‰ ‰ ‘Higher growth leading to inclusive and sustainable development’ to be the mool mantra.
‰‰ ‰‰ ‰ Government believes in inclusive development with emphasis on improving human development indicators specially of women, the scheduled castes, the scheduled tribes, the minorities and some backward classes. This Budget to be a testimony to that commitment.
Fiscal Deficit, Current Account Deficit and Inflation
‰‰The purpose of Budget to create economic space and find resources to achieve the objective of inclusive development.
Dr Vijay Kelkar Committee made its recommendations to Government in September 2012. A new fiscal consolidation path with fiscal deficit at 5.3 per cent of GDP this year and 4.8 per cent of GDP in 2013-14 announced by the Government.
Foreign investment in an imperative in view of the high current account deficit (CAD).  FII, FDI and ECB three main source of CAD Financing.  Foreign investment that is consistant with our economic objectives to be encouraged.
Development must be economically and ecologically sustainable and democratically legitimate.
Battle against inflation must be fought on all fronts. Efforts in the past few months have brought down headline WPI inflation to about 7 per cent and core inflation to about 4.2 percent.
2. Food inflation is worrying but all possible steps to be taken to augment the supply side to meet the growing demand for food items. Government expenditure has both good and bad consequences and trick is to find the correct level of Government expenditure.
‰‰ ‰‰ ‰ Faced with huge fiscal deficit, Government expenditure rationalised in 2012-13. Some economic space retrieved. Space to be used to further Government’s socio- economic objectives.
THE PLAN AND BUDGETARY ALLOCATIONS
‰‰ ‰‰ ‰ Revised Estimates (RE) of the expenditure in 2012-13 at 96 per cent of the Budget Estimates (BE) due to slowdown and austerity measures.
‰‰ ‰‰ ‰ During 2013-14, BE of total expenditure of ` 16,65,297 crore and of Plan Expenditure at ` 5,55,322 crore.
‰‰ ‰‰ ‰ Plan Expenditure in 2013-14 to grow at 29.4 per cent over Revised Estimates for the current year.
‰‰ ‰‰ ‰ All flagship programmes fully and adequately funded and sufficient funds provided to each Ministry or Department consistent with their capacity to spend funds.
‰‰ ‰‰ ‰ Budget for 2013-14 to have one overarching goal of creating opportunities for our youth to acquire education and skills that will get them decent jobs or self- employment.
SC, ST, Women and Children
‰‰ ‰‰ ‰ Allocations for Scheduled Caste Sub Plan and Tribal Sub Plan increased substantially over the allocations of the current year. Funds allocated to these Sub Plans cannot be diverted.
‰‰ ‰‰ ‰ ` 97,134 crore allocated for programmes relating to women and ` 77,236 crore allocated for programmes relating to children.
‰‰ ‰‰ ‰ Ministry of Women and Child Development to design schemes that will address the concerns of women belonging to the most vulnerable groups, including single women and widows. An additional sum of ` 200 crore proposed to be provided to the Ministry to begin work.
Minorities
‰‰ ‰‰ ‰ An increase of 12 per cent over the BE and 60 per cent over the RE of 2012-13 to Ministry of Minority Affairs.
‰‰ ‰‰ ‰ Allocation of ` 160 crore to the corpus of Maulana Azad Education Foundation to raise its corpus to ` 1,500 crore during 12th Plan period.
Disabled Persons
‰‰ ‰‰ ‰ A sum of ` 110 crore to the Department of Disablity Affairs for ADIP scheme in 2013-14 against RE 2012-13 of ` 75 crore.
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Health and Education
‰‰ ‰‰ ‰ Health for all and education to all remains priority.
‰‰ ‰‰ ‰ ` 37,330 crore allocated to the Ministry of Health & Family Welfare.
‰‰ ‰‰ ‰ New National Health Mission will get an allocation of ` 21,239 crore.
‰‰ ‰‰ ‰ ` 4,727 crore for medical education, training and research.
‰‰ ‰‰ ‰ ` 150 crore provided for National Programme for the Health Care of Elderly.
‰‰ ‰‰ ‰ Ayurveda, Unani, Siddha and Homoeopathy are being mainstreamed. Allocation of ` 1,069 crore to Department of AYUSH.
‰‰ ‰‰ ‰ ` 1,650 crore allocated for six AIIMS-like institutions.
‰‰ ‰‰ ‰ Allocation of ` 65,867 crore to the Ministry of Human Resource Development, an increase of 17 perent over the RE of the current year.
‰‰ ‰‰ ‰ ` 27,258 crore provided for Sarva Shiksha Abhiyaan (SSA).
‰‰ ‰‰ ‰ An increase of 25.6 per cent over RE of the current year for investments in Rashtriya Madhyamik Shiksha Abhiyan (RMSA).
‰‰ ‰‰ ‰ ` 5,284 crore allocated to Ministries/Departments in 2013-14 for scholarships to students belonging to SC, ST, OBC, Minorities and girl children.
‰‰ ‰‰ ‰ Mid Day Meal Scheme (MDM) to be provided ` 13,215 crore.
‰‰ ‰‰ ‰ Government committed to the creation of Nalanda University as a centre of educational excellence.
ICDS
‰‰ ‰‰ ‰ ` 17,700 crore allocated for ICDS in 2013-14 representing an increase of 11.7 per cent over 2012-13.
‰‰ ‰‰ ‰ Allocation of `300 crore in 2013-14 for a multi-sectoral programme aimed at overcoming maternal and child malnutrition. Programme to be implemented in 100 districts during 2013-14 to be scaled to cover 200 districts the year after.
Drinking Water
‰‰ ‰‰ ‰ ` 15,260 crore allocated to Ministry of Drinking Water and Sanitation.
‰‰ ‰‰ ‰ ` 1,400 crore provided for setting-up of water purification plants in 2000 arsenic - and 12000 fluoride-affected rural habitations.
Rural Development
‰‰ ‰‰ ‰ Allocation of `80,194 crore in 2013-14 for Ministry of Rural Development marking an increase of 46% over RE 2012-13.
‰‰ ‰‰ ‰ Proposal to carve out PMGSY-II and allocate a portion of the funds to the new programme that will benefit States such as Andhra Pradesh, Haryana, Karnataka, Maharashtra, Punjab and Rajasthan.
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JNNURM
‰‰ ‰‰ ‰ ` 14,873 crore for JNNURM in BE 13-14 as against RE of ` 7,383 crore.  Out of this, a significant portion will be used to support the purchase of upto 10,000 buses, especially by the hill States.
AGRICULTURE
‰‰ ‰‰ ‰ Average annual growth rate of agriculture and allied sector was 3.6% during XI Plan against 2.5% and 2.4% in IX and X plans respectively.
‰‰ ‰‰ ‰ In 2012-13, total food-grain production will be over 250 million tonnes. Minimum support price for every agricultural produce has increased significantly under the UPA Government.
‰‰ ‰‰ ‰ ` 27,049 crore allocated to Ministry of Agriculture, an increase of 22 per cent over the RE of current year.
‰‰ ‰‰ ‰ Agricultural research provided ` 3,415 crore.
Agricultural Credit
‰‰ ‰‰ ‰ For 2013-14, target of agricultural credit kept at ` 7 lakh crore.
‰‰ ‰‰ ‰ Interest subvention scheme for short-term crop loans to be continued scheme extended for crop loans borrowed from private sector scheduled commercial banks.
Green Revolution
‰‰ ‰‰ ‰ Bringing green revolution to eastern India a remarkable success. ` 1,000 crore allocated in 2013-14.
‰‰ ‰‰ ‰ ` 500 crore allocated to start a programme of crop diversification that would promote technological innovation and encourage farmers to choose crop alternatives.
‰‰ ‰‰ ‰ Rashtriya Krishi Vikas Yojana and National Food Security Mission provided ` 9,954 crore and ` 2,250 crore respectively.
‰‰ ‰‰ ‰ Allocation for integrated watershed programme increased from ` 3,050 crore in 2012-13 (BE) to ` 5,387 crore.
‰‰ ‰‰ ‰ Allocation made for pilots programme on Nutri-Farms for introducing new crop varieties that are rich in micro-nutrients.
‰‰ ‰‰ ‰ National Institute of Biotic Stress Management for addressing plant protection issues will be established at Raipur, Chhattisgarh.
‰‰ ‰‰ ‰ The Indian Institute of Agricultural Bio-technology will be established at Ranchi, Jharkhand.
‰‰ ‰‰ ‰ Pilot scheme to replant and rejuvenate coconut gardens implemented in some districts of Kerala and the Andaman & Nicobar extended to entire State of Kerala.
Farmer Producer Organizations
‰‰ ‰‰ ‰ Matching equity grants to registered Farmer Producer Organization (FPO) upto a maximum of `10 lakhs per FPO to enable them to leverage working capital from financial institutons.
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‰‰ ‰‰ ‰ Credit Guarantee Fund to be created in the Small Farmers’Agri Business Corporation with an initial corpus of ` 100 crore.
National Livestock Mission
‰‰ ‰‰ ‰ National Livestock Mission to be set up.
‰‰ ‰‰ ‰ A provision of ` 307 crore made for the Mission.
Food Security
‰‰ ‰‰ ‰ Additional provision of Rs. 10,000 crore for National Food Security Act.
INVESTMENT, INFRASTRUCTURE AND INDUSTRY
‰‰ ‰‰ ‰ Communication with investors to be improved to remove any apprehension or distrust, including fears about undue regulatory burden.
‰‰ ‰‰ ‰ Need of new and innovative instruments to mobilise funds for investment in infrastructure sector. Measures such as:
* Infrastructure Debt Funds (IDF) to be encourged, * IIFCL to offer credit enhancement. * Infrastructure tax-free bond of ` 50,000 crore in 2013-14, * Build roads in North eastern states and connect them to Myanmar with assistance from WB & ADB, * Raising corpus of Rural Infrastructure Development Fund (RIDF) to ` 20,000 crore and * ` 5,000 crore to NABARD to finance construction for warehousing.  Window to Panchayats to finance construction of godowns. Road Construction
‰‰ ‰‰ ‰ A regulatory authority for road sector.
‰‰ ‰‰ ‰ 3000 kms of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh will be awarded in the first six months of 2013-14.
Cabinet Committee on Investment
‰‰ ‰‰ ‰ The Cabinet Committee on Investment (CCI) has been set up. Decisions have been taken in respect of a number of gas, power and coal projects.
New Investment
‰‰ ‰‰ ‰ Companies investing `100 crore or more in plant and machinery during the period 1.4.2013 to 31.3.2015 will be entitled to deduct an investment allowance of 15 per cent of the investment.
‰‰ ‰‰ ‰ Incentives to semiconductor wafer fab manufacturing facilities, including zero customs duty for plant and machinery.
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Savings
‰‰ ‰‰ ‰ Need to incentivise greater savings by household sector in financial instrumnets. Following measures proposed:
™ Rajiv Gandhi Equity Savings Scheme to be liberalised.
™ Additional deduction of interest upto `1 lakh for a person taking first home loan upto ` 25 lakh during period 1.4.2013 to 31.3.2014
™ In consultation with RBI, instruments protecting savings from inflation to be introduced.
Industrial Corridors
‰‰ ‰‰ ‰ Plans for seven new cities have been finalised and work on two new smart industrial cities at Dholera, Gujarat and Shendra Bidkin, Maharashtra will start duing 2013-14
‰‰ ‰‰ ‰ Delhi Mumbai Industrial Corridor (DMIC) to be provided additional funds during 2013-14 within the share of the Government of India in the overall outlay, if required.
‰‰ ‰‰ ‰ Chennai Bengaluru Industrial Corridor to be developed.
‰‰ ‰‰ ‰ Preparatory work has started for Bengaluru Mumbai Industrial Corridor.
Leh-Kargil Transmission Line
‰‰ ‰‰ ‰ Government to construct a transmission system from Srinagar to Leh at a cost of ` 1,840 crore.
Ports
‰‰ ‰‰ ‰ Two new major ports will be established in Sagar, West Bengal and in Andhra Pradesh to add 100 million tonnes of capacity.
‰‰ ‰‰ ‰ A new outer harbour to be developed in the VOC port at Thoothukkudi, Tamil Nadu through PPP at an estimated cost of ` 7,500 crore.
National Waterways
‰‰ ‰‰ ‰ A bill to declare the Lakhipur-Bhanga stretch of river Barak in Assam as the sixth national waterway to be moved in Parliament.
‰‰ ‰‰ ‰ Preparatory work underway to build a grid connecting waterways, roads and ports.
Oil and Gas
‰‰ ‰‰ ‰ A policy to encourage exploration and production of shale gas will be announced.
‰‰ ‰‰ ‰ The 5 MMTPA LNG terminal in Dabhol, Maharashtra will be fully operational in 2013-14.
Coal
‰‰ ‰‰ ‰ In the medium to long term need to reduce our dependence on imported coal. One way forward is to devise a PPP policy framework with Coal India Limited as one of the partners.

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‰‰ ‰‰ ‰ Ministry of Coal to announce Government’s policies in due course.
Power
‰‰ ‰‰ ‰ Guidelines regarding financial restructuring of DISCOMS have been announced. State Government urged to prepare the financial restructuring plan, quickly sign MoU and take advantage of the scheme.
Micro, Small and Medium Enterprises
‰‰ ‰‰ ‰ Benefits or preferences enjoyed by MSME to continue upto three years after they grow out of this category.
‰‰ ‰‰ ‰ Refinancing capacity of SIDBI raised to ` 10,000 crore.
‰‰ ‰‰ ‰ Another sum of ` 100 crore provided to India Microfinance Equity Fund.
‰‰ ‰‰ ‰ A corpus of ` 500 crore to SIDBI to set up a Credit Guarantee Fund for factoring.
‰‰ ‰‰ ‰ A sum of ` 2,200 crore during the 12th Plan period to set up 15 additional Tool Rooms and Technology Development Centres with World Bank assistance.
‰‰ ‰‰ ‰ Ministry of Corporate Affairs to notify that funds provided to technology incubators located within academic Institutions and approved by the Ministry of Science and Technology or Ministry of MSME will qualify as CSR expenditure.
Textiles
‰‰ ‰‰ ‰ Technology Upgradation Fund Scheme (TUFS) to continue in 12th Plan with an investment target of ` 1,51,000 crore.
‰‰ ‰‰ ‰ Allocation of ` 50 crore to Ministry of Textile to incentivise setting up Apparel Parks within the SITPs to house apparel manufacturing units.
‰‰ ‰‰ ‰ A new scheme called the Integrated Processing Development Scheme will be implemented in the 12th Plan to address the environmental concerns of the textile industry.
‰‰ ‰‰ ‰ Working capital and term loans at a concessional interest of 6 per cent to handloom sector.
‰‰ ‰‰ ‰ Scheme of Fund for Regeneration of Traditional Industries (SFURTI) extended to 800 clusters during the 12th Plan.
Foreign Trade
‰‰ ‰‰ ‰ Support to measures to be taken to boost exports of goods and services.
FINANCIAL SECTOR
‰‰ ‰‰ ‰ A standing Council of Experts to be constituted in the Ministry of Finance to analyse the international competitiveness of the Indian financial sector.
Banking
‰‰ ‰‰ ‰ Compliance of public sector banks with Basel III regulations to be ensured. ` 14,000 crore provided in BE 2013-14 for infusing capital.
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‰‰ ‰‰ ‰ All branches of public sector banks to have ATM by 31.3.2014.
‰‰ ‰‰ ‰ Proposal to set up India’s first Women’s Bank as a public sector bank. Provision of ` 1,000 crore as initial capital.
‰‰ ‰‰ ‰ ` 6,000 crore to Rural Housing Fund in 2013-14.
‰‰ ‰‰ ‰ National Housing Bank to set up Urban Housing Fund. `2,000 crore to be provided to the fund in 2013-14.
Insurance
‰‰ ‰‰ ‰ A multi-pronged approach to increase the penetration of insurance, both life and general, in the country.
‰‰ ‰‰ ‰ Number of proposals finalised, in consultation with IRDA such as empowering insurance companies to open branches in Tier-II cities and below without prior approval of IRDA, KYC of banks to be sufficient to acquire insurance policies, banks to be permitted to act as insurance brokers, banking correspondent allowed to sell micro-insurance products and achieving the goal of having an office of LIC and an office of at least one public sector general insurance company in towns with population of 10,000 or more.
‰‰ ‰‰ ‰ Rashtriya Swasthya Bima Yojana to be extended to other categories such as rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers.
‰‰ ‰‰ ‰ A comprehensive social security package to be evolved for unorganised sector by facilitating convergence among different schemes.
Capital Market
‰‰ ‰‰ ‰ Proposal to amend the SEBI Act, to strengthen the regulator, under consideration.
‰‰ ‰‰ ‰ Number of proposal finalised in consultation with SEBI.
™ Designatged depository participants, authorised by SEBI, may register different classes of portfolio investors, subject to compliance with KYC guidelines.
™ SEBI will simplify the procedures and prescribe uniform registration and other norms for entry for foreign portfolio investors.
™ Rule that, where an investor has a stake of 10 per cent or less in a company, it will be treated as FII and, where an investor has a stake of more than 10 per cent, it will be treated as FDI will be laid.
™ FIIs will be permitted to participate in the exchange traded currency derivative segment to the extent of their Indian rupee exposure in India.
™ FIIs will also be permitted to use their investment in corporate bonds and Government securities as collateral to meet their margin requirements.
™ SEBI to prescribed requirement for angel investor pools by which they can be recognised as Category I AIF venture capital funds.
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™ Small and medium enterprises, to be permitted to list on the SME exchange without being required to make an initial public offer (IPO).
™ Stock exchanges to be allowed to introduce a dedicated debt segment on the exchange.
ENVIRONMENT
‰‰ ‰‰ ‰ Support to municipalities that will implement waste-to-energy projects.
‰‰ ‰‰ ‰ Government to provide low interest bearing fund from the National Clean Energy Fund (NCEF) to IREDA to on-lend to viable renewable energy projects.
‰‰ ‰‰ ‰ ‘Generation-based incentive’ reintroduced for wind energy projects and `800 crore allocated for this purpose.
OTHER PROPOSALS
Backward Regions Grant Fund
‰‰ ‰‰ ‰ New criteria for determining backwardness to be evolved and reflect them in future planning and devolution of funds.
Skill Development
‰‰ ‰‰ ‰ Target of skilling 50 million people in the 12th Plan period, including 9 million in 2013-14.
Defence
‰‰ ‰‰ ‰ Allocation for Defence increased to `2,03,672 crore including ` 86,741 crore for capital expenditure.
‰‰ ‰‰ ‰ Constraints not to come in the way of providing any addition requirement for the security of nation.
Science and Technology
‰‰ ‰‰ ‰ Despite constraints substantial enhancements given to Science and Technology, Space and Atomic Energy.
‰‰ ‰‰ ‰ ` 200 crore to be set apart to fund organisations that will scale up S&T innovations and make these products available to the people.
Institutions of Excellence
‰‰ ‰‰ ‰ A grant of ` 100 crore each made to 4 institution of excellence.
Sports
‰‰ ‰‰ ‰ National Institute of Sports Coaching to be set up at Patiala at a cost of ` 250 crore over a period of three years.
Broadcasting
‰‰ ‰‰ ‰ All cities having a population of more than 1,00,000 will be covered by private FM radio services.
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Panchayati Raj
‰‰ ‰‰ ‰ Augmentation in the Budget allocation of Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA) to ` 455 crore in 2013-14.  An additional ` 200 crore proposed to be provided.
Post Offices
‰‰ ‰‰ ‰ An ambitious IT driven project to modernise the postal network at a cost of Rs. 4,909 crore. Post offices to become part of the core banking solution and offer real time banking services.
Ghadar Memorial
‰‰ ‰‰ ‰ Government to fund the conversion of the Ghadar Memorial in San Francisco into a museum and library.
Central Schemes
‰‰ ‰‰ ‰ Centrally Sponsored Schemes (CSS) and Additional Central Assistance (ACA) Schemes to be restructured into 70 schemes. Central fund for the schemes to be given to the States as part of central plan assistance.
Three promises
‰‰ ‰‰ ‰ Promises made to woman, youth and poor.
™ We stand in solidarity with our girl children and women. And we pledge to do everything possible to empower them and to keep them safe and secure. A fund - “Nirbhaya Fund” - to be setup with Government contribution of ` 1,000 crore.
™ Youth to be motivated to voluntarily join skill development programmes. National Skill Development Corporation to set the curriculum and standards for training in different skills. ` 1000 crore set apart for this scheme.
™ To the poor of India direct benefit transfer scheme will be rolled out throughout the country during the term of the UPA Government with the motive “Äapka paisa aapke haath”.
Budget Estimates
‰‰ ‰‰ ‰ Plan expenditure is placed at ` 5,55,322 crore.
‰‰ ‰‰ ‰ Non Plan Expenditure is estimated at ` 11,09,975 crore.
‰‰ ‰‰ ‰ Fiscal deficit for the current year contained at 5.2 per cent and for the year 2013- 14 at 4.8 per cent.
‰‰ ‰‰ ‰ Revenue deficit for the current year at 3.9 per cent and for the year 2013-14 at 3.3 per cent.
‰‰ ‰‰ ‰ By 2016-17 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.
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PART B — TAX PROPOSALS
‰‰ ‰‰ ‰ Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution and independent judiciary for greater assurance is underlying theme of tax proposals.
‰‰ ‰‰ ‰ Tax Administration Reforms Commission to be set up.
‰‰ ‰‰ ‰ In short term need to reclaim peak of 11.9 per cent of tax GDP ratio achieved in 2007-08.
DIRECT TAXES ‰‰ ‰‰ ‰ Little room to give away tax revenues or raise tax rates in a constrained economy.
‰‰ ‰‰ ‰ No case to revise either the slabs or the rates of Personal Income Tax. Even a moderate increase in the threshold exemption will put hundreds of thousands of Tax Payers outside Tax Net.
‰‰ ‰‰ ‰ However, relief for Tax Payers in the first bracket of `2 lakhs to ` 5 lakhs. A tax credit of ` 2000 to every person with total income upto `5 lakhs.
‰‰ ‰‰ ‰ Surcharge of  10 percent on persons (other than companies) whose taxable income exceed ` 1 crore to augment revenues.
‰‰ ‰‰ ‰ Increase surcharge from 5 to 10  percent on domestic companies whose taxable income exceed ` 10 crore.
‰‰ ‰‰ ‰ In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 percent, if the taxabale income exceeds ` 10 crore.
‰‰ ‰‰ ‰ In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to  10  percent.
‰‰ ‰‰ ‰ Additional surcharges to be in force for only one year.
‰‰ ‰‰ ‰ Education cess to continue at 3 percent.
‰‰ ‰‰ ‰ Permissible premium rate increased from 10 percent to 15 percent of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments.
‰‰ ‰‰ ‰ Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.
‰‰ ‰‰ ‰ Donations made to National Children Fund eligible for 100 percent deduction.
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‰‰ ‰‰ ‰ Investment allowance at the rate of 15 percent to manufacturing companies that invest more than ` 100 crore in plant and machinery during the period 1.4.2013 to 31.3.2015.
‰‰ ‰‰ ‰ ‘Eligible date’ for projects in the power sector to avail benefit under Section 80- IA extended from 31.3.2013 to 31.3.2014.
‰‰ ‰‰ ‰ Concessional rate of tax of 15 percent on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.
‰‰ ‰‰ ‰ Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust.
‰‰ ‰‰ ‰ Investor Protection Fund of depositories exempt from Income-tax in some cases.
‰‰ ‰‰ ‰ Parity in taxation between IDF-Mutual Fund and IDF-NBFC.
‰‰ ‰‰ ‰ A Category I AIF set up as  Venture capital fund allowed pass through status under Income-tax Act.
‰‰ ‰‰ ‰ TDS at the rate of 1 percent on the value  of the transfer of immovable properties where consideration exceeds ` 50 lakhs. Agricultural land to be exempted.
‰‰ ‰‰ ‰ A final withholding tax at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares.
‰‰ ‰‰ ‰ Proposal to increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 percent to 25 percent.
‰‰ ‰‰ ‰ Reductions made in rates of Securities Transaction Tax in respect of certain transaction.
‰‰ ‰‰ ‰ Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will  be exempted.
‰‰ ‰‰ ‰ Modified provisions of GAAR will come into effect from 1.4.2016.
‰‰ ‰‰ ‰ Rules on Safe Harbour will be issued after examing the reports of the Rangachary Committee appointed to look into tax matters relating to Development  Centres & IT Sector and Safe Harbour rules for a number of sectors.
‰‰ ‰‰ ‰ Fifth large tax payer unit to open at Kolkata shortly.
‰‰ ‰‰ ‰ A number of administrative measures such as extension of refund banker system to refund more than ` 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.
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Indirect Taxes
‰‰ ‰‰ ‰ No change in the normal rates of 12 percent for excise duty and service tax.
‰‰ ‰‰ ‰ No change in the peak rate of basic customs duty of 10 perent for non-agricultural products.
Customs
‰‰ ‰‰ ‰ Period of concession available for specified part of electric and hybrid vehicles extended upto 31 March 2015.
‰‰ ‰‰ ‰ Duty on specified machinery for manufacture of leather and leather goods including footwear reduced from 7.5 to 5 percent.
‰‰ ‰‰ ‰ Duty on pre-forms precious and semi-precious stones reduced from 10 to 2 perent.
‰‰ ‰‰ ‰ Export duty on de-oiled rice bran oil cake withdrawn.
‰‰ ‰‰ ‰ Duty of 10 percent on export of unprocessed ilmenite and 5 percent on export on ungraded ilmenite.
‰‰ ‰‰ ‰ Concessions to air craft maintenaince, repair and overhaul (MRO) industry.
‰‰ ‰‰ ‰ Duty on Set Top Boxes increased from 5 to10 percent.
‰‰ ‰‰ ‰ Duty on raw silk increased from 5 to 15 percent.
‰‰ ‰‰ ‰ Duties on Steam Coal and Bituminous Coal equalised and 2 percent custom duty and 2 percent CVD levied on both kinds coal.
‰‰ ‰‰ ‰ Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts and similar vessels increased.
‰‰ ‰‰ ‰ Duty free gold limit increased to ` 50,000 in case of male passenger and `1,00,000 in case of a female passenger subject to conditions.
Excise duty
‰‰ ‰‰ ‰ Relief to readymade garment industry. In case of cotton, zero excise duty at fibre stage also. In case of spun yarn made of man made fibre, duty of 12 percent at the fibre stage.
‰‰ ‰‰ ‰ Handmade carpets and textile floor coverings of coir and jute totally exempted from excise duty.
‰‰ ‰‰ ‰ To provide relief to ship building industry, ships and vessels exempted from excise duty. No CVD on imported ships and vessels.
‰‰ ‰‰ ‰ Specific excise  duty on cigarettes increased by about 18 percent.  Similar  increase on cigars, cheroots and cigarillos.
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‰‰ ‰‰ ‰ Excise duty on SUVs increased from 27 to 30 percent. Not applicable for SUVs registered as taxies.
‰‰ ‰‰ ‰ Excise duty on marble increased from `30 per square meter to ` 60 per square meter.
‰‰ ‰‰ ‰ Proposals to levy 4 percent excise duty on silver manufactured from smelting zinc or lead.
‰‰ ‰‰ ‰ Duty on mobile phones priced at more than `2000 raised to 6 percent.
‰‰ ‰‰ ‰ MRP based assessment in respect of branded medicaments of Ayurveda, Unani, Siddha, Homeopathy and bio-chemic systems of medicine to reduce valuation disputes.
Service Tax
‰‰ ‰‰ ‰ Maintain stability in tax regime.
‰‰ ‰‰ ‰ Vocational courses offered by institutes affiliated to the State Council of Vocational Training and testing activities in relation to agricultural produce also included in the negative list for service tax.
‰‰ ‰‰ ‰ Exemption of Service Tax on copyright on cinematography limited to films exhibited in cinema halls.
‰‰ ‰‰ ‰ Proposals to levy Service Tax on all air conditioned restaurant.
‰‰ ‰‰ ‰ For homes and flats with a carpet area of 2,000 sq.ft. or more or of a value of `1 crore or more, which are high-end constructions, where the component of   services is greater, rate of abatement reduced from from 75 to 70 percent.
‰‰ ‰‰ ‰ Out of nearly 17 lakh registered assesses under Service Tax only 7 lakhs file returns regularly. Need to motivate them to file returns and pay tax dues.  A onetime scheme called ‘Voluntary Compliance Encouragement Scheme’ proposed to be introduced. Defaulter may avail of the scheme on condition that he files truthful declaration of Service Tax dues since 1st October 2007.
‰‰ ‰‰ ‰ Tax proposals on Direct Taxes side estimated to yield to `13,300 crore and on the Indirect Tax side `4,700 crore.
Good and Services Tax
‰‰ ‰‰ ‰ A sum of `9,000 crore towards the first instalment of the balance of CST compensation provided in the budget.
‰‰ ‰‰ ‰ Work on draft GST Constitutional amendment bill and GST law expected to be taken forward.

REFERENCE: http://www.indiabudget.nic.in/

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Union Budget 2012-13

   UNION BUDGET 2012-13

For the financial year 2012-2013 Mr. Pranab Mukherjee, the Finance Minister of India presented the budget in the parliament on 16^th March 2012. This was the seventh Union Budget presented by the Central Government.

·        Key Features of Budget 2012-2013

APPROACH TO THE BUDGET

·        For Indian economy, recovery was interrupted this year due to intensification of debt crises in Euro zone, political turmoil in Middle East, rise in crude oil price and earthquake in Japan.

·        GDP is estimated to grow by 6.9 per cent in 2011-12, after having grown at 8.4 percent in preceding two years.

·        India however remains front runner in economic growth in any cross-country comparison.

·        Monetary and fiscal policy response for better part of past 2 years aimed at taming domestic inflationary pressure.

·        Growth moderated and fiscal balance deteriorated due to tight monetary policy and expanded outlays.

·        Indicators suggest that economy is turning around as core sectors and manufacturing show signs of recovery.

·        At this juncture, it is necessary to take hard decision to improve macroeconomic environment and strengthen domestic growth drivers.

·        Twelfth Five Year Plan to be launched with the aim of “faster, sustainable and more inclusive growth”. Five objectives identified to be addressed effectively in ensuing fiscal year.

·        If India can build on its economic strength, it can be a source of stability for world economy and a safe destination for restless global capital.

OVERVIEW OF THE ECONOMY

·        GDP growth estimated at 6.9 per cent in real terms in 2011-12. Slowdown in comparison to preceding two years is primarily due to deceleration in industrial growth.

·        Headline inflation expected to moderate further in next few months and remain stable thereafter.

·        Steps taken to bridge gaps in distribution, storage and marketing systems have helped in more effective management of inflation.

·        Developments in India’s external trade in the first half of current year have been encouraging. Diversification in export and import market achieved.

·        Current account deficit at 3.6 per cent of GDP for 2011-12 and reduced net capital inflow in the 2nd and 3rd quarters put pressure on exchange rate.

·        India’s GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.

·        Deterioration in fiscal balance in 2011-12 due to slippages in direct tax revenue and increased subsidies.

     FRBM ACT

·        Introduction of amendments to the FRBM Act as part of Finance Bill, 2012.

·        Concept of “Effective Revenue Deficit” and “Medium Term Expenditure Framework” statement are two important features of amendment to FRBM Act in the direction of expenditure reforms.

·        Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets. This will help in reducing consumptive component of revenue deficit and create space for increased capital spending.

·        “Medium-term Expenditure Framework” statement will set forth a three-year rolling target for expenditure indicators.

·        Recommendations of the Expert Committees to streamline and reduce the number of centrally sponsored schemes and to address plan and non-plan classification to be kept in view while implementing Twelfth Plan.

·        Central Plan Scheme Monitoring System to be expanded for better tracking and utilization of funds.

        SUBSIDIES

·        Some subsidies, while being inevitable, may become undesirable if they compromise the macroeconomic fundamentals of economy.

·        Subsidies related to administering the Food Security Act will be fully provided for.

·        Endeavour to keep central subsidies under 2 per cent of GDP in 2012-13. Over next 3 year, to be further brought down to 1.75 per cent of GDP.

·        Based on recommendation of task force headed by Shri Nandan Nilekani, a mobile-based Fertilizer Management System has been designed to provide end-to-end information on movement of fertilisers and subsidies. Nation-wide roll-out during 2012.

·        All three public sector Oil Marketing Companies have launched LPG transparency portals to improve customer service and reduce leakage.

·        Endeavour to scale up and roll out Aadhaar enabled payments for various government schemes in at least 50 districts within next 6 months.

        TAX REFORMS

·        DTC Bill to be enacted at the earliest after expeditious examination of the report of the Parliamentary Standing Committee.

·        Drafting of model legislation for the Centre and State GST in concert with States is under progress.

·        GST network to be set up as a National Information Utility and to become operational by August 2012.

       DISINVESTMENT POLICY

·        Government has further evolved its approach to divestment of Central Public Sector Enterprises by allowing them a level playing field vis-à-vis the private sector in respect of practices like buy backs and listing at stock exchanges.

·        For 2012-13, Rs. 30,000 crore to be raised through disinvestment. At least 51 percent ownership and management control to remain with Government.

        STRENGTHENING INVESTMENT ENVIRONMENT

    Foreign Direct Investment

·        Efforts to arrive at a broad-based consensus in consultation with the State Governments in respect of decision to allow FDI in multi-brand retail up-to 51 per cent.

     Advance Pricing Agreement

·        Provision regarding implementation of Advance Pricing Agreement to be introduced in Finance Bill, 2012.

        Financial Sector

·        Rajiv Gandhi Equity Saving Scheme to allow for income tax deduction of 50 percent to new retail investors, who invest up-to Rs.50,000 directly in equities and whose annual income is below Rs.10 lakh to be introduced. The scheme will have a lock-in period of 3 years.

        Capital Market

·        Various steps proposed to be taken for deepening the reforms in the Capital markets, including simplifying process of IPOs, allowing QFIs to access Indian Bond Market etc.

       Legislative Reforms

·        Official amendment to “The Pension Fund Regulatory and Development Authority Bill, 2011”, “The Banking Laws (Amendment) Bill, 2011” and “The Insurance Law (Amendment) Bill, 2008” to be moved in this session.

·        Various Bills proposed to be moved in the Budget session of the Parliament to take forward the process of financial sector legislative reforms.

       Capitalisation of Banks and Financial Holding Company

·        To protect the financial health of Public Sector Banks and Financial Institutions, Rs.15,888 crore proposed to be provided for capitalization. Possibility of creating a financial holding company to raise resources to meet the capital requirements of PSU Banks under examination.

·        A central “Know Your Customer” depository to be developed in 2012-13 to avoid multiplicity of registration and data upkeep.

       Priority Sector Lending

·        Revised guidelines on priority sector lending to be issued after stakeholder consultation.

       Financial Inclusion

·        Out of 73,000 identified habitations that were to be covered under “Swabhimaan” campaign by March, 2012, about 70,000 habitations has been covered. Rest likely to be covered by March 31, 2012.

·        As a next step, Ultra Small Branches are being set up at these habitations.

·        In 2012-13, “Swabhimaan” campaign to be extended to more habitations.

       Regional Rural Banks

·        Out of 82 RRBs in India, 81 have successfully migrated to Core Banking Solutions and have also joined the National Electronic Fund Transfer system.

·        Proposal to extend the scheme of capitalization of weak RRBs by another 2 years to enable States to contribute their share.

       INFRASTRUCTURE AND INDUSTRIAL DEVELOPMENT

·        During Twelfth Plan period, investment in infrastructure to go up to Rs.50 lakh crore with half of this, expected from private sector.

·        More sectors added as eligible sectors for Viability Gap Funding under the scheme “Support to PPP in infrastructure”.

·        Government has approved guidelines for establishing joint venture companies by defence PSUs in PPP mode.

·        First Infrastructure Debt Fund with an initial size of `8,000 crore launched earlier this month.

·        Tax free bonds of `60,000 crore to be allowed for financing infrastructure projects in 2012-13.

·        A harmonised master list of infrastructure sector approved by the Government.

·        IIFCL has put in place a structure for credit enhancement and take-out finance for easing access of credit to infrastructure projects.

       National Manufacturing Policy

·        National Manufacturing Policy announced with the objective of raising, within a decade, the share of manufacturing in GDP to 25 per cent and creating of 10 crore jobs.

        Power and Coal

·        Coal India Limited advised to sign fuel supply agreements with power plants, having long-term PPAs with DISCOMs and getting commissioned on or before March 31, 2015.

·        External Commercial Borrowings (ECB) to be allowed to part finance Rupee debt of existing power projects.

      Transport: Roads and Civil Aviation

·        Target of covering a length of 8,800 kilometre under NHDP next year.

·        Allocation of the Road Transport and Highways Ministry enhanced by 14 percent to Rs.25,360 crore.

·        ECB proposed to be allowed for capital expenditure on the maintenance and operations of toll systems for roads and highways, if they are part of original project.

·        Direct import of Aviation Turbine Fuel permitted for Indian Carriers as actual users.

·        ECB to be permitted for working capital requirement of airline industry for a period of one year, subject to a total ceiling of US $ 1 billion.

·        Proposal to allow foreign airlines to participate upto 49 per cent in the equity of an air transport undertaking under active consideration of the government.

       Delhi Mumbai Industrial Corridor

·        In September 2011 central assistance of Rs.18,500 crore spread over 5 years approved. US $ 4.5 billion as Japanese participation in the project.

         Housing Sector

·        Various proposals to address the shortage of housing for low income groups in major cities and towns including allowing ECB for low cost housing projects and setting up of a credit guarantee trust fund etc.

       Fertilizers

·        Government has taken steps to finalise pricing and investment policies for urea to reduce India’s import dependence in urea.

        Textiles

·        Government has announced a financial package of Rs.3,884 crore for waiver of loans of handloom weavers and their cooperative societies.

·        Two more mega handloom clusters, one to cover Prakasam and Guntur districts in Andhra Pradesh and another for Godda and neighbouring districts in Jharkhand to be set up.

·        Three Weaver’s Service Centres one each in Mizoram, Nagaland and Jharkhand to be set up for providing technical support to poor handloom weavers.

·        Rs.500 crore pilot schemes announced for promotion and application of Geo-textiles in the North Eastern Region.

·        A powerloom mega cluster to be set up in Ichalkaranji in Maharashtra with a budget allocation of Rs.70 crore.

        Micro, Small and Medium Enterprises (M.S.M.E’s)

·        Rs.5,000 crore India Opportunities Venture Fund to be set up with SIDBI.

·        To enable greater access to finance by Small and Medium Enterprises (SME), two SME exchanges launched in Mumbai recently.

·        Policy requiring Ministries and CPSEs to make a minimum of 20 percent of their annual purchases from MSEs approved. Of this, 4 per cent earmarked for procurement from MSEs owned by SC/ST entrepreneurs.

     AGRICULTURE

·        Plan Outlay for Department of Agriculture and Co-operation increased by 18 percent.

·        Outlay for Rashtriya Krishi Vikas Yojana (RKVY) increased to Rs.9,217 crore in 2012-13.

·        Initiative of Bringing Green Revolution to Eastern India (BGREI) has resulted in increased production and productivity of paddy. Allocation for the scheme increased to Rs.1,000 crore in 2012-13 from Rs.400 crore in 2011-12.

·        Rs.300 crore to Vidarbha Intensified Irrigation Development Programme under RKVY.

·        Remaining activities to be merged into following missions in Twelfth Plan:

National Food Security Mission

·        National Mission on Sustainable Agriculture including Micro Irrigation

·       National Mission on Oilseeds and Oil Palm

·        National Mission on Agricultural Extension and Technology

·        National Horticultural Mission

·        National Mission for Protein Supplement

·        Rs.2,242 crore project launched with World Bank assistance to improve productivity in the dairy sector. Rs.500 crore provided to broaden scope of production of fish to coastal aquaculture.

        Agriculture Credit

·        Target for agricultural credit raised by Rs.1,00,000 crore to Rs.5,75,000 crore in 2012-13.

·        Interest subvention scheme for providing short term crop loans to farmers at 7 percent interest per annum to be continued in 2012-13. Additional subvention of 3 percent available for prompt paying farmers.

·        Short term RRB credit refinance fund being set up to enhance the capacity of RRBs to disburse short term crop loans to small and marginal farmers.

·        Kisan Credit Card (KCC) Scheme to be modified to make KCC a smart card which could be used at ATMs.

·        Agricultural Research

·        A sum of Rs.200 crore set aside for incentivizing research with rewards.

·        Irrigation

·        Structural changes in Accelerated Irrigation Benefit Programme (AIBP) being made to maximise flow of benefit from investments in irrigation projects.

·        Allocation for AIBP in 2012-13 stepped up by 13 per cent to Rs.14,242 crore.

·        Irrigation and Water Resource Finance Company being operationalized to mobilize large resources to fund irrigation projects.

·        A flood management project approved by Ganga Flood Control Commission at a cost of Rs.439 crore for Kandi sub-division of Murshidabad District.

·        National Mission on Food Processing

·        A new centrally sponsored scheme titled “National Mission on Food Processing” to be started in 2012-13 in co-operation with State Governments.

·        Steps taken to create additional food grain storage capacity in the country.

·        INCLUSION

·        Scheduled Castes and Tribal Sub Plans

·        Allocation for Scheduled Castes Sub Plan at Rs.37,113 crore in BE 2012-13 represents an increase of 18 per cent over BE 2011-12.

·        Allocation for Tribal Sub Plan at Rs.21,710 crore in BE 2012-13 represents an increase of 17.6 per cent.

·        Food Security

·        National Food Security Bill, 2011 is before Parliamentary Standing Committee.

·        A national information utility for computerization of PDS is being created. To become operational by December, 2012.

·        Multi-sectoral Nutrition Augmentation Programme

·        A multi-sectoral programme to address maternal and child malnutrition in selected 200 high burden districts is being rolled out during 2012-13.

·        Allocation of Rs.15,850 crore made for Integrated Child Development Service (ICDS) scheme, representing an increase of 58 per cent over BE 2011-12.

·        Rs.11,937 crore allocated for National Programme of Mid Day Meals in schools.

·        An allocation of Rs.750 crore proposed for Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, SABLA.

·        Rural Development and Panchayati Raj

·        Budgetary allocation for rural drinking water and sanitation increased from Rs.11,000 crore to Rs.14,000 crore representing an increase of over 27 per cent.

·        Allocation for PMGSY increased by 20 per cent to Rs.24,000 crore to improve connectivity.

·        Major initiative proposed to strengthen Panchayats through Rajiv Gandhi Panchayat Sashaktikaran Abhiyan.

·        Backward Regions Grant Fund scheme to continue in twelfth plan with enhanced allocation of Rs.12,040 crore in 2012-13, representing an increase of 22 percent over the BE 2011-12.

·        Rural Infrastructure Development Fund (RIDF)

·        Allocation under RIDF enhanced to Rs.20,000 crore. Rs.5,000 crore earmarked exclusively for creating warehousing facilities.

·        EDUCATION

·        For 2012-13, Rs.25,555 crore provided for RTE-SSA representing an increase of 21.7 percent over 2011-12.

·        6,000 schools proposed to be set up at block level as model schools in Twelfth Plan.

·        Rs.3,124 crore provided for Rashtriya Madhyamik Shiksha Abhiyan (RMSA) representing an increase of 29 percent over BE 2011-12.

·        To ensure better flow of credit to students, a Credit Guarantee Fund proposed to be set up.

·        HEALTH

·        No new case of polio reported in last one year.

·        Existing vaccine units to be modernised and new integrated vaccine unit to be set up in Chennai.

·        Scope of ‘Accredited Social Health Activist’ – ‘ASHA’ is being enlarged. This will also enhance their remuneration.

·        Allocation for NRHM proposed to be increased from Rs.18,115 crore in 2011-12 to Rs.20,822 crore in 2012-13.

·        National Urban Health Mission is being launched.

·        Pradhan Mantri Swasthya Suraksha Yojana being expanded to cover up gradation of 7 more Government medical colleges.

·        EMPLOYMENT AND SKILL DEVELOPMENT

·        MGNREGS has had a positive impact on livelihood security.

·        Need to bring about greater synergy between MGNREGA and agriculture and allied rural livelihoods.

·        Allocation of Rs.3,915 crore made for National Rural Livelihood Mission representing an increase of 34 percent.

·        To ease access to bank credit, corpus for ‘Women’s SHG’s Development Fund’ enlarged.

·        Proposal to establish Bharat Livelihoods Foundation of India through Aajeevika scheme.

·        Allocation for Prime Minister’s Employment Generation Programme increased by 23 percent to Rs.1,276 crore in 2012-13.

·        Skill Development

·        Projects approved by National Skill Development Corporation expected to train 6.2 crore persons at the end of 10 years.

·        Rs.1,000 crore allocated for National Skill Development Fund in 2012-13.

·        To improve the flow of institutional credit for skill development, a separate Credit Guarantee Fund to be set up.

·        “Himayat” scheme introduced in J&K to provide skill training to 1 lakh youth in next 5 years. Entire cost to be borne by Centre.

·        SOCIAL SECURITY AND THE NEEDS OF WEAKER SECTIONS

·        Allocation under NSAP raised by 37 percent to Rs.8,447 crore in 2012-13.

·        In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, pension amount to be raised from Rs.200 to Rs.300 per month.

·        Lump sum grant on the death of primary breadwinner of a BPL family, in the age group 18-64 years, doubled to Rs.20,000.

·        To enhance access under SWAVALAMBAN scheme, LIC appointed as an Aggregator and all Public Sector Banks appointed as Points of Presence (PoP) and Aggregators.

·        Special grant provided to various universities and academic instiutions.

·        Security

·        A provision of Rs.1,93,407 crore made for Defence services including Rs.79,579 crore for capital expenditure. Any further requirement to be met.

·        Rs.1,185 crore proposed to be allocated for construction of nearly 4,000 residential quarters for Central Armed Police Forces.

·        Rs.3,280 crore proposed to be allocated for construction of office building of Central Armed Police Forces.

·        Scheme to create National Population Register likely to be completed within next 2 years.

·        GOVERNANCE

·        UID-Aadhaar

·        Enrolment of 20 crore persons completed under UID mission. Adequate funds to be allocated to complete enrolment of another 40 crore persons.

·        Black Money

·        Proposal to lay a White Paper on Black Money in current session of Parliament.

·        Public Procurement Legislation

·        Bill regarding Public Procurement Legislation to be introduced in the Budget Session of the Parliament.

·        Legislative measures for strengthening anti-corruption framework are at various stages of enactment.

·        BUDGET ESTIMATES 2012-13

·        Gross Tax Receipts estimated at Rs.10,77,612 crore.

·        Net Tax to Centre estimated at Rs.7,71,071 crore.

·        Non-tax Revenue Receipts estimated at Rs.1,64,614 crore.

·        Non-debt Capital Receipts estimated at Rs.41,650 crore.

·        Temporary arrangement to use disinvestment proceeds for capital expenditure in social sector schemes extended for one more year.

·        Total expenditure for 2012-13 budgeted at Rs.14,90,925 crore.

·        Plan expenditure for 2012-13 at Rs.5,21,025 crore is 18 percent higher than BE 2011-12. This is higher than 15 percent projected in Approach to the Twelfth Plan.

·        99 percent of the total plan outlay met in the Eleventh Plan.

·        Non-plan expenditure estimated at Rs.9,69,900 crore.

·        Rs.3,65,216 crore estimated to be transferred to States including direct transfers to States and district level implementing agencies.

·        Entire amount of subsidy is given in cash and not as bonds in lieu of subsidies.

·        Fiscal deficit at 5.9 percent of GDP in RE 2011-12.

·        Fiscal deficit at 5.1 per cent of GDP in BE 2012-13.

·        Net market borrowing required to finance the deficit to be Rs.4.79 lakh crore in 2012-13.

·        Central Government debt at 45.5 percent of GDP in 2012-13 as compared to Thirteenth Finance Commission target of 50.5 percent.

·        Effective Revenue Deficit to be 1.8 per cent of GDP in 2012-13.

·        PART B — TAX PROPOSALS

·        DIRECT TAXES

·        Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST.

·        DTC rates proposed to be introduced for personal income tax.

·        Exemption limit for the general category of individual taxpayers proposed to be enhanced from Rs.1,80,000 to Rs.2,00,000 giving tax relief of Rs.2,000.

·        Upper limit of 20 percent tax slab proposed to be raised from Rs.8 lakh to Rs.10 lakh.

·        Proposal to allow individual tax payers, a deduction of up-to Rs.10,000 for interest from savings bank accounts.

·        Proposal to allow deduction of up-to Rs.5,000 for preventive health check-up.

·        Senior citizens not having income from business proposed to be exempted from payment of advance tax.

·        To provide low cost funds to stressed infrastructure sectors, rate of withholding tax on interest payment on ECBs proposed to be reduced from 20 percent to 5 percent for 3 years for certain sectors.

·        Restriction on Venture Capital Funds to invest only in 9 specified sectors proposed to be removed.

·        Proposal to continue to allow repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 percent upto 31.3.2013.

·        Investment link deduction of capital expenditure for certain businesses proposed to be provided at the enhanced rate of 150 percent.

·        New sectors to be added for the purposes of investment linked deduction.

·        Proposal to extend weighted deduction of 200 per cent for R&D expenditure in an in-house facility for a further period of 5 years beyond March 31, 2012.

·        Proposal to provide weighted deduction of 150 per cent on expenditure incurred for agri-extension services.

·        Proposal to extend the sunset date for setting up power sector undertakings by one year for claiming 100 percent deduction of profits for 10 years.

·        Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from Rs.60 lakhs to Rs.1 crore.

·        Exemption from Capital Gains tax on sale of residential property, if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.

·        Proposal to provide weighted deduction at 150 percent of expenditure incurred on skill development in manufacturing sector.

·        Reduction in securities transaction tax by 20 percent on cash delivery transactions.

·        Proposal to extend the levy of Alternate Minimum Tax to all persons, other than companies, claiming profit linked deductions.

·        Proposal to introduce General Anti Avoidance Rule to counter aggressive tax avoidance scheme.

·        Measures proposed to deter the generation and use of unaccounted money.

·        A net revenue loss of Rs.4,500 crore estimated as a result of Direct Tax proposals.

·        INDIRECT TAXES

·        Service Tax

·        Sevice tax confronts challenges of its share being below its potential, complexity in tax law, and need to bring it closer to Central Excise Law for eventual transition to GST.

·        Overwhelming response to the new concept of taxing services based on negative list.

·        Proposal to tax all services except those in the negative list comprising of 17 heads.

·        Exemption from service tax is proposed for some sectors.

·        Service tax law to be shorter by nearly 40 percent.

·        Number of alignment made to harmonize Central Excise and Service Tax. A common simplified registration form and a common return comprising of one page are steps in this direction.

·        Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution.

·        Utilization of input tax credit permitted in number of services to reduce cascading of taxes.

·        Place of Supply Rules for determining the location of service to be put in public domain for stakeholders’ comments.

·        Study team to examine the possibility of common tax code for Central Excise and Service Tax.

·        New scheme announced for simplification of refunds.

·        Rules pertaining to point of taxation are being rationalized.

·        To maintain a healthy fiscal situation proposal to raise service tax rate from 10 percent to 12 percent, with corresponding changes in rates for individual services.

·        Proposals from service tax expected to yield additional revenue of Rs.18,660 crore.

·        Other proposals for Indirect Taxes

·        Given the imperative for fiscal correction, standard rate of excise duty to be raised from 10 percent to 12 percent, merit rate from 5 percent to 6 percent and the lower merit rate from 1 percent to 2 percent with few exemptions.

·        Excise duty on large cars also proposed to be enhanced.

·        No change proposed in the peak rate of customs duty of 10 percent on non-agricultural goods.

·        To stimulate investment relief proposals for specific sectors - especially those under stress.

·        Agriculture and Related Sectors

·        Basic customs duty reduced for certain agricultural equipment and their parts.

·        Full exemption from basic customs duty for import of equipment for expansion or setting up of fertilizer projects up-to March 31, 2015.

·        Infrastructure

·        Proposal for full exemption from basic customs duty and a concessional CVD of 1 percent to steam coal till 31st March, 2014.

·        Full exemption from basic duty provided to certain fuels for power generation.

·        Mining

·        Full exemption from basic customs duty to coal mining project imports.

·        Basic custom duty proposed to be reduced for machinery and instruments needed for surveying and prospecting for minerals.

·        Railways

·        Basic custom duty proposed to be reduced for equipment required for installation of train protection and warning system and up-gradation of track structure for high speed trains.

·        Roads

·        Full exemption from import duty on certain categories of specified equipment needed for road construction, tunnel boring machines and parts of their assembly.

·        Civil Aviation

·        Tax concessions proposed for parts of aircraft and testing equipment for third party maintenance, repair and overhaul of civilian aircraft.

·        Manufacturing

·        Relief proposed to be extended to sectors such as steel, textiles, branded readymade garments, low-cost medical devices, labour-intensive sectors producing items of mass consumption and matches produced by semi-mechanized units.

·        Health and Nutrition

·        Proposal to extend concessional basic customs duty of 5 percent with full exemption from excise duty/CVD to 6 specified life-saving drugs/vaccines.

·        Basic customs duty and excise duty reduced on Soya products to address protein deficiency among women and children.

·        Basic customs duty and excise duty reduced on Iodine.

·        Basic customs duty reduced on Probiotics.

·        Environment

·        Concessions and exemptions proposed for encouraging the consumption of energy-saving devices, plant and equipment needed for solar thermal projects.

·        Concession from basic customs duty and special CVD being extended to certain items imported for manufacture for hybrid or electric vehicle and battery packs for such vehicles.

·        Proposal to increase basic customs duty on imports of gold and other precious metals.

·        Additional resource mobilisation

·        Proposals to increase excise duty on ‘demerit’ goods such as certain cigarettes, hand-rolled bidis, pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco.

·        Cess on crude petroleum oil produced in India revised to Rs.4,500 per metric tonne.

·        Basic customs duty proposed to be enhanced for certain categories of completely built units of large cars/MUVs/SUVs.

·        Rationalization measures

·        Excise duty rationalised for packaged cement, whether manufactured by mini-cement plants or others.

·        Levy of excise duty of 1 percent on branded precious metal jewellery to be extended to include unbranded jewellery. Operations simplified and measures taken to minimize impact on small artisans and goldsmiths.

·        Branded Silver jewellery exempted from excise duty.

·        Chassis for building of commercial vehicle bodies to be charged excise duty at an ad-valorem rate instead of mixed rate.

·        Import of foreign-going vessels to be exempted from CVD of 5 percent retrospectively.

·        Duty-free allowances increased for eligible passengers and for children of up-to 10 years.

·        Proposals relating to Customs and Central excise to result in net revenue gain of Rs.27,280 crore.

·        Indirect taxes estimated to result in net revenue gain of Rs.45,940 crore.

·        Net gain of Rs.41,440 crore in the Budget due to various taxation proposals.

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