UNION BUDGET

2014-15
INVESTMENT & TAXATION
VIEW POINT

Tall Expectations
from the Union Budget...
First government after 30
years, which has a clear
majority of its own.
First time in Indian history,
people of India voted for
development & growth.
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Tall Expectations
from the Union Budget...

India needed comprehensive action plan

in current economic environment.
But
Just 45 days to do this all !

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GDP Trends & Forecasts

Sector
2011 12 2012 13 2013 14 2014 15 *
Agriculture
5.0%
1.4%
4.7%
3.3%
Industries
7.8%
1.0%
0.4%
3.3%
Service
6.6%
7.0%
6.8%
7.0%
GDP
6.7%
4.5%
4.7%
5.4% - 5.9%
* Expected

Urgent need to bring the economy on track

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World GDP Trends

GDP of Gujarat has grown by 10% since 2001

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Shares of Various Sectors of

the economy in the GDP
Sector
Agriculture
Industries
Service

2010 11 2011 12 2012 13 2013 14

14.6%
14.4%
13.9%
13.9%
27.9%
28.2%
27.3%
26.0%
57.5%
57.4%
58.8%
59.9%

Sources : Central Statistics Office, RBI

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Inflation Rate
Year
Wholesale Price
Index
(WPI)
Consumer Price
Index
(CPI)

2011 12 2012 13 2013 14

8.9

7.4

6.0

8.4

10.4

9.7

Effects Interest Rate & Exchange rates.

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Savings Rate
Gross Domestic Savings as a % of GDP
2009 10 2010 11 2011 12 2012 13 2013 14
33.7
33.7
31.3
30.1
30.5
Unfortunately savings diverted to unproductive
assets like Gold & Real Estate...

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Foreign Exchange Reserve,

FDI & FII Flows
2010 - 11 2011 - 12 2012 - 13
Avg. Exchange
Rate (Rs.)
FDI
$ Million
FII
$ Million
Forex
Reserves
$ Billion

2013 - 14

45.56

47.92

54.4

60.5

11,834

22,061

19,819

21,564

30,293

17,170

26,891

4,822

304.8

294.4

292.0

304.2

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Stock Markets & FIIs

2009 10

2010 - 11

2011 - 12

2012 - 13

2013 - 14

July
2014 #

2014 15

Sensex

17258

19445

17404

18836

22386

25445

29685
?

Sensex PE

21

21

18

17

18

18

21
?

Market Cap *

62,61,787

69,07,788

62,45,365

64,16,268

75,21,057

89,98,036

Market Cap Rs. in Cr.

# as on July 09 2014

FII Holding In India as on date

INR (in crores)

$ 156 Billion
$ 35 Billion
$ 191 Billion

Equity
Debt
Total

9,36,000
2,10,000
11,46,000
Rs. 60 = 1 USD

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Foreign Trade
Current Account Deficit
2012 13 2013 14 2014 15
Year
As a % of
4.7%
1.7%
2.1%
GDP

Still remains a concern...

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Trends in global stock markets

Country
India
USA
Japan
UK
China

Index
Nifty
Dow Jones
Nikkei
FTSE
Shanghai

2010
17.3
9.4
-4.0
7.3
-13.4

2011 2012 2013 2014

-24.9 27.3 3.12 27.31
4.7
5.7 13.26 8.72
3.5
-18.7 21.4 33.9
5.47
-7.3
3.5
3.7
-22.9 4.6 -7.14 6.86

India the top performing market...

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We will have to decide

Should we allow this drift to carry on and
watch helplessly?
Should we allow our future to suffer
because of indecisiveness?
Should we be victims of more populisum
or wasteful expenditure?
- Finance Minister's Speech

Important
Announcements in the
Budget Speech
Retrospective amendments to be made with
extreme caution and judiciousness in
future.
Fresh cases to be referred before action to
a high powered committee formed by CBDT.
Existing cases shall go ahead as they are.
GAAR (General Anti Avoidance Rules)
deffered?

Important
Announcements in the
Budget Speech
Real Estate Investment Trusts (REITS),
Infrastructure Investment Trusts (INVITS) to
become operational.

Important
Announcements in the
Budget Speech
FDI at 49% in Insurance & Defence
with full Indian Management Control
through FIPB route.

Important
Announcements in the
Budget Speech
GST implementation to get priority.
DTC to be reviewed.

Important Announcements
in the Budget Speech
Kisan Vikas Patras to be
reintroduced banked &
unbanked savings.
PPF
investment
limit
extended to Rs. 1.5 lac.

Budget at a glance
Rs. Crore
1

Revenue receipts
2 Tax revenues (net to centre)
3 Non - tax revenue
4 Capital receipts (5+6+7)
5 Recoveries of loans
6 Other receipts
7 Borrowings and other liabilities
8 Total receipts (1+4)
9 Non - plan expenditure
10 On revenue account of which,
11 Interest payments
12 On capital account
13 Plan expenditure
14 On revenue account
15 On capital account
16 Total expenditure (9+13)
17 Revenue expenditure (10+14)
Of which, grants for creation of capital
18 assets
19 Capital expenditure (12+15)
20 Revenue Deficit (17-1)
21 Effective revenue deficit (20-18)
22 Fiscal Deficit (16-(1+5+6))
23 Primary deficit (22-11)

8,79,232
7,41,877
1,37,355
5,31,140
15,060
25,890
4,90,190
14,10,372
9,96,747
9,14,306
3,13,170
82,441
4,13,625
3,29,208
84,417
14,10,372
12,43,514

10,29,252
8,36,062
1,93,226
5,61,182
10,802
25,814
5,24,539
15,90,434
11,17,902
10,27,689
3,80,066
87,214
4,75,532
3,71,851
1,03,681
15,90,434
13,99,540

2014 - 15
Budget estimates
11,89,763
9,77,528
2,12,505
6,05,129
10,527
63,425
5,31,177
17,94,892
12,19,892
11,14,609
4,27,011
1,05,283
5,75,000
4,53,503
1,21,497
17,94,892
15,68,111

1,15,170

1,38,228

1,68,104

1,66,858,
3,64,282
(3.6)
2,48,572
(2.5)
4,90,190
(4.8)
1,77,020
(1.8)

1,90,894
3,70,288
(3.3)
2,32,060
(2.0)
5,21,539
(4.6)
1,44,473
(1.3)

2,26,781
3,78,348
(2.9)
2,10,244
(1.6)
5,31,177
(4.1)
1,04,166
(0.8)

2012 13

2013 14

Where Rupee comes from and

where it goes

Fiscal Deficit
Year
Fiscal
Deficit

2010 2011 2012 2013 2014 15

11
12
13
14 Estimated
4.9%

5.7%

4.9%

4.5%

4.1%

Share of Subsidies as it is,

whether it is BJP or Congress
Year

2007 2008 2009 2010 2011 2012 2013 2014

08 09 10 11 12 13 14 15

Share of
subsidy as
1.3% 2.2% 2.2% 2.2% 2.4% 2.6% 2.3% 1.9%
a % of
GDP

Defence Outlay
Total Capital Budget
Total Revenue Budget
Total Defence Budget

94,588
1,34,412
2,29,000

Huge opportunity for Indian Industry to tap

Defence Sector

Boost to Real Estate Sector

REITS to become operational.

FDI in Real Estate relaxed.

Cheaper credit to low cost housing.

Tax deduction limits for Housing Loan interest raised
from Rs. 1.5 to Rs. 2 lacs U/S 24.
Sec 80 C Limits from Housing Loan instalment
deduction raised.
Development of 100 Smart Cities.

Income Tax

Exemption limits for Indi. / HUF raised

From 2,00,000 to 2,50,000
From 2,50,000 to 3,00,000 (Person above 60 yrs.)
No change Rs. 5,00,000 (Person above 80 yrs.)
Dividend Distribution Tax increased from 15% to
17.64%.
Debt based Mutual Fund to qualify as long term
capital asset only if held for 36 months and shall
be taxed @ 20% after indexation.

Income Tax

Taxation of REITS shall be listed on stock exchange

will be taxed as Equity Shares.
Long term gain NIL Short term gain 15%
Dividend NIL Interest Taxable on slab rates.
Investment limit for deduction @ 15% U/S 32AC reduced
to 25 Cr from 100 Cr for investment in Plant & Machinery.
Limit for deduction U/S 80C raised from Rs. 1 lac to Rs.
1.5 lac.
Limit for deduction U/S 24 raised from Rs. 1.5 lac to Rs. 2
Lac.

Income Tax
U/S 40 (a) (i) for non deduction of TDS, only 30%
expenditure will be disallowed. All payments
where TDS is supposed to be made now
covered.
TDS defaults can be reopened parallel with
reopening of assessment proceedings.
Deductions U/S 54 & 54 F available only for
investment in residential house in India.

Income Tax
TDS from insurance policy payments which are
not exempt U/S 10 (10D) @ 2% on amount
exceeding Rs. 1,00,000/-.
Powers of the Income Tax Commissioners to
cancel the registration of the trust widened.
Benefit of 12AA
retrospectively.

registration

to

be

given

Income Tax
Capital gain exemptions in specified Bonds now
limited to Rs. 50 lacs. Cannot be split in 2 years
to claim Rs. 1 Cr deduction.
Under Section 145 method of computation (not
method of accounting) income shall be notified.
Where a survey is carried out to verify the
compliance of TDS, books of accounts cannot
be impounded nor inventory stock, cash
valuables can be made.

Income Tax
Advance Ruling Authority for resident tax payers
above a defined threshold.
To enlarge the scope of Settlement Commission.

No provision for the same in the Finance Bill

Sale of PSU shares to Retail

Public
Government Plans to sell shares of Public
sector undertakings to the tune of Rs.
43,425 Crores. Highest ever target.
Plans to sell shares of PSU Banks after
retaining 51% holding.

Interesting
allocations in
Budget
Budgetary
allocation to Indian
Space Research
Organisation
(ISRO) at Rs. 6000
Cr, up by 50%

What can derail the dream

Uncertain monsoon
Situation in Iraq
Global Economic disturbances

The Challenge
P. Chidambaram quoted
in his 2008 Budget speech Henry David Thoreau

If you have built castles in the

air, your work need not be lost
that is where they should be
Now put the foundations under
them.

In the words of the Shri Atal Behari Vajpayee quoted by

Shri Yashwant Sinha in his Budget speech 1999 2000.

With dreams of prosperity and marching at a stormy pace, the tide of

patriotism will not recede. Let the courageous come forward to join me.

Thank you