India Budget 2013- Highlights

Highlights - India Budget 2013-14 & Economic Survey 2012-13

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India Budget 2013- Highlights

HIGHLIGHTS OF INDIAN BUDGET 2013 PRESENTED BY HON'ABLE FINANCE MINISTER SHRI P. CHIDAMBARAM ON FEBRUARY 28, 2013 IN THE PARLIAMENT
BUDGET ESTIMATES 2012 -13 Gross Tax receipts are estimated at Rs. 12,359 billion and Non-tax revenue receipts are estimated at Rs. 1,722 billion. Total expenditure proposed at Rs. 16,652 billion. Plan expenditure of Rs. 5,553 billion and non-plan expenditure of Rs. 11,099 billion. Fiscal Deficit kept at 4.8% of GDP for 2013-14 as compare to 5.2% in 201213. Revenue Deficit kept at 3.3% of GDP for 2013-14 as compare to 3.9% in 201213. OVERVIEW OF THE ECONOMY Gross Domestic Product (GDP) estimated to have grown at 5% in 2012-13. Indias GDP growth in 2013-14 expected to be 6.1% to 6.7%. Food inflation is worrying but all possible steps to be taken to augment the supply side to meet the growing demand for food items.

OTHER HIGHLIGHTS Rs. 2 Billion allocated for Ministry of Women and Child Development to design scheme that will address the concern of women belonging to the most vulnerable groups including single women and widows. National Livestock mission to setup and Rs.3 billion allocated to mission. Rs. 100 billion allocated for National Food Security Act. Rs. 500 billion infrastructure tax free bond allowed to be issued in FY 201314. 3000 Kms of new road projects will be awarded in next six months of FY 2013-14. New road to be in North eastern states and connect them to Myanmar with assistance from WB & ADB. Delhi Mumbai Industrial Corridor (DMIC) to be provided additional funding during 2013-14 within share of Government of India. New Chennai Bengaluru Industrial corridor to be developed. Preparatory work has started for Bengaluru Mumbai Industrial Corridor. All branches of Public Sector Banks to have ATM by March 31, 2014.

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India Budget 2013- Highlights Proposed to set up Indias first Womens bank as a public sector bank and allocated Rs. 10 billion as initial capital. Insurance companies allowed to open branches in Tier II cities and below without prior approval of IRDA. Know your customer (KYC) of banks to be sufficient to acquire insurance policy. Small and Medium enterprises, to be permitted to list on the SME exchange without being required to make initial public offer. National Institute of sports coaching to be set up at Patiala at a cost of Rs. 2.5 billion. All cities having population of more than 1,00,000 will be covered by private FM radio services. A provision of 2037 billion made for Defence services including 867 billion for capital expenditure.

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India Budget 2013- Highlights

DIRECT TAX PROPOSALS

INCOME TAX No Major change in tax rates. Direct Tax Code (DTC) is work in process. PERSONAL INCOME TAX Tax slabs for Individuals/ HUF/ AOPs proposed to be revised as under: Existing Slab Rates Income (INR) Rate of Tax Up to Rs 200,000 NIL Rs. 200,001 to Rs. 500,000 10% Rs. 500,001 to Rs. 20% 1,000,000 Above Rs. 1,000,000 30% Proposed Slab Rates Income (INR) Rate of Tax NIL Up to Rs 200,000* Rs. 200,001 to Rs. 500,000 10% Rs. 500,001 to Rs. 1,000,000 20% Above Rs. 1,000,000 30%

* *

In case total income is upto Rs. 500,000, it shall be Rs. 220,000. Basic exemption in case of Senior Citizen is Rs. 250,000 and very senior citizen is Rs. 500,000.

Education cess continuous to be 3%. In case total income exceeds Rs.10 Million, surcharge of 10%. (earlier there was no Surcharge). TDS of 1% to be deducted on sale of land or building (Except Agriculture land) exceeding Rs. 5 million. INCENTIVES & TAX DEDUCTIONS One time deduction up to Rs. 100,000 (Over and above existing limit of Rs. 150,000) for individual for payment of interest on housing loan sanctioned in FY 2013-14 not exceeding Rs. 2.5 million and value of property not exceeding Rs. 4 million. Deduction under Rajeev Gandhi Equity Scheme : a. Extended to equity oriented Mutual fund b. Eligible limit for gross total income of investor increased to Rs. 1.2 million from Rs. 1 million c. Deduction available made available for continuous 3 years. CORPORATE INCOME TAX No change in the rate of corporate income tax, it continuous to be 30% for domestic companies and 40% for foreign companies (Plus education cess and surcharge). Surcharge on domestic companies increased to 10% from 5% if taxable income exceeds Rs. 10 Millions.

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India Budget 2013- Highlights Surcharge on foreign companies increased to 5% from 2% if taxable income exceeds Rs. 100 Millions. Surcharge on Dividend Distribution Tax for Domestic companies increased to 10% from 5%.

Particulars

Financial Year

Income Upto 10 Million Surcharge Effective rate 30.90% 30.90% 41.20% 41.20%

Domestic Company

2012-13 2013-14

Nil Nil Nil Nil

Income above 10 Million and upto 100 Million Surcharge Effective rate 5% 32.445% 5% 2% 2% 32.445% 42.024% 42.024%

Income above 100 Million Surcharge 5% 10% 2% 5% Effective rate 32.445% 33.99% 42.024% 43.26%

Foreign Company

2012-13 2013-14

Proposal to continue to allow repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 per cent up to March 31, 2014. Reduction in securities transaction tax in some transactions. Introduced Commodity Transaction Tax (CTT) in limited way on sale of commodity derivatives (other than agriculture commodities) at recognised association at rate of 0.01%. Withholding Tax at the rate of 20% on profit distributed by unlisted companies to shareholders through buy back of shares. Investment allowance at the rate of 15% to manufacturing companies that invest more than Rs. 1 Billion in plant and machinery during the period April 1, 2013 to March 31, 2015. Modified GAAR provisions will come into effect from April 1, 2016 Rules for Safe Harbour for number of sectors will be issued. Direct Tax proposals estimated to yield Net revenue of Rs. 133 Billion.

INTERNATIONAL TAX Proposal to increase the rate of tax on payments by way of royalty and fees for technical services to non-resident from 10% to 25%.

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India Budget 2013- Highlights

INDIRECT TAX PROPOSALS

GOODS & SERVICES TAX (GST) Work on draft GST Constitutional amendment bill and GST law expected to be taken forward. Rs. 90 Billion allocated towards the 1st instalment of the balance central sales tax compensation to states. SERVICE TAX No Change in Service Tax rate i.e. 12%; Following services included in negative list o Vocational Courses offered by institutes affiliated to the state council of vocational training o Testing activities in relation to agriculture produce Proposal to levy Service Tax on all air conditioned restaurant Abatement reduced to 70% from 75% in case of homes and flats with carpet area of 2,000 Sq. ft. or more or of a value of Rs. 10 Million. Introduction of one time Amnesty Scheme. EXCISE DUTY No Change in Excise Duty rates i.e. standard rates 12%, Merit rate 6% and the lower merit rate 2%. Excise duty on SUVs enhanced from 27% to 30%. Not applicable for SUVs registered as taxies. Excise Duty on marble increased to Rs. 60 per square meter from Rs. 30 per square meter. 6% duty on mobile phones priced at more than Rs. 2,000. Specific excise duty on cigarettes, cigars, cheroots and cigarillos increased by about 18%. Complete exemption from excise duty for specified ships, vessels and dredgers. Exemption from excise duty for branded readymade garments. Levy 4% excise duty on silver manufactured from smelting Zinc or lead. Exemption to handmade carpets and textile floor coverings of coir and jute. Branded medicaments of Ayurveda, Unani, Siddha, Homeopathy and biochemic systems of medicine subject to MRP based valuation.

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India Budget 2013- Highlights CUSTOM DUTY No change proposed in the peak rate of customs duty of 10 per cent on nonagricultural goods. Exemption for specified part of electric and hybrid vehicles extended upto March 31, 2015. Duty on specified machinery for manufacture of leather and leather goods including footwear reduced from 7.5% to 5%. Duty on pre-forms precious and semi-precious stones reduced from 10% to 2%. Export duty on de-oiled rice bran oil cake withdrawn. Duty of 10% on export of unprocessed ilmenite Duty of 5% on export on ungraded ilmenite. Concessions to air craft maintenance, repair and overhaul (MRO) industry. Duty on Set Top Boxes increased from 5% to10%. Duty on raw silk increased from 5% to 15%. Duties on Steam Coal and Bituminous Coal equalised and 2% custom duty and 2% 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 Rs. 50,000 from Rs. 10,000 in case of male passenger and Rs.1,00,000 from Rs. 20,000 in case of a female passenger. Indirect taxes estimated to result in net revenue gain of 47 billion.

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India Budget 2013- Highlights

HIGHLIGHTS OF ECONOMIC SURVEY 2012-2013 PRESENTED ON FEBRUARY 27, 2013 IN THE PARLIAMENT
GROWTH Indian economy estimated to grow at 5.00% in Financial Year 2012-13. WPI Inflation remained in the range of 7-8% during Financial Year 2012-13 may decline to 6.2-6.6%. Indian Economy likely to grow at 6.1-6.7% in 2013-14. Lower Inflation to create more room for rate cuts. Economic slowdown a 'wakeup' call for stepping up reforms.

INFLATION, FOOD PRICES & AGRICULTURE The moderation in growth is primarily attributable to weakness in industry. Industrial growth rate was 3.1% for 2012-13. Service sector growth was at mere 6.6% for 2012-13, a decline from 8.2% in the previous year. Strong Inflationary trend & slow Global economy responsible for economy slowdown. Low Corporate & infrastructure Investment also responsible for economy slowdown. The persistently elevated prices for animal products, cereals and vegetables were main factors for Inflationary trend. Increase in international prices of fertilizers (non-urea) and the increase in administered prices of diesel have also contributed to inflation. WPI is showing signs of declining trend towards end of the year. Rising trend in CPI inflation in the past couple of months due to higher food inflation Higher gap between WPI and CPI. Steep decline in Exports in the first half of 2012-13. Outlook for exports still uncertain. Diesel price hike to put upward pressure on Inflation. Trade deficit to more than 10 per cent of GDP is a cause of concern.

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India Budget 2013- Highlights Focus on curbing imports, by making oil prices more market determined, and curbing imports of gold. Growth optimists are confident in India's demographic dividend, the fact that India's dependency ratio, as measured by the share of the young and the elderly as a fraction of the population, will come down more sharply in the coming decades.

ON FISCAL FRONT Fiscal Deficit of 5.1% of GDP for 2012-13 as per BE and targeted Fiscal Deficit of 4.8% of GDP for 2013-14. Revenue Deficit seen 3.5% of GDP as per BE. Need to lower fiscal deficit. The Budget for 2012-13 envisaged a growth of 13.9 per cent in direct taxes over 2011-12 (RE). Gross tax revenue in April-December 2012 has grown year-on-year by 15%.

MONETARY FRONT The RBIs monetary policy stance has continued to focus on the twin objectives of containing inflation and facilitating growth. RBI reduced repo rates by 75 basis points from April, 2012 to January 2013 and reduced the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) to improve liquidity conditions.

INDUSTRY & SERVICES The rate of Growth in manufacturing sector was lower at 1.90% in 2012-13 Growth rate of service sector declined to 6.6% in 2012-13. The lower corporate profitability and moderation in the growth of credit flow to industry also had its impact of the performance of capital goods sector, which in turn affected overall industrial growth. Lower foreign direct investment inflows in key industry and infrastructure sectors during April-October 2012.

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India Budget 2013- Highlights EXTERNAL AFFAIRS Demand conditions in key markets like the US and Europe continued to remain sluggish. Inward FDI to India during H1 of 2012-13 decreased by 26.0 per cent compared to H1 of 2011-12. Recent measures taken by Government regarding liberalisation of FDI limits are likely to improve investment sentiment and to boost FDI flows into the Indian economy. Recently, Foreign Direct Investment (FDI) permitted in multi-brand retail trading. This will help consumers and farmers by improving the logistical facilities connecting the two

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India Budget 2013- Highlights

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