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Synopsis of Union Budget 2013-14

CA Nitesh Kumar More 
on 28 February 2013

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Synopsis Of Union Budget 2013 Has Been Covered In The Following Ten Categories:

A. Fiscal Deficit & Revenue Deficit:

a.  Fiscal deficit seen at 5.2 % of GDP in 2012/13.

b.  Fiscal deficit seen at 4.8 % of GDP in 2013/14.

c.  Faced with huge fiscal deficit, India had no choice but to rationalise expenditure.

d. FY14 revenue deficit at 3.3%

B. Growth:

a.  Indian economy faces challenge of getting back to its potential growth rate of 8%. India must unhesitatingly embrace growth as highest goal.

b.  GDP growth in the 11th Plan averaged 8% each year

C. Spending:

a. Total budget expenditure seen at 16.65 trillion rupees in 2013/14.

b.  India's 2013/14 plan expenditure seen at 5.55 trillion rupees.

c.  Non-plan expenditure estimated at about 12 trillion rupees in 2013/14.

d.  Revised estimate for total expenditure is 14.3 trillion rupees in 2012/13, which is 96 % of budget estimate.

e.  Set aside 100 billion rupees towards spending on food subsidies in 2013/14.

f.  Rs 1630825 crore total expenditure, Rs 555322 crore plan expenditure

g.  17 per cent hike in education, 22 per cent in agriculture, 46 per cent for rural development

D. Revenue:

a. Expect 133 billion rupees through direct tax proposals in 2013/14.

b.  Expect 47 billion rupees through indirect tax proposals in 2013/14.

E. Current account deficit:

India's greater worry is the current account deficit - will need more than $75 billion this year and next year to fund deficit.

F. Core Inflation & Food Inflation:

Core inflation is down to 4.2 per cent. Food inflation remains a worry will take all steps to augment supply side.

G. Direct Tax:

a. Direct Tax Code remains work in progress

b. No changes in Income Tax rates or slabs, Rs 2000 credit for those earning up to Rs 5 lakh per annum.

c.  To increase surcharge to 10 % on domestic companies with annual income of more than 100 million rupees.

d. To continue 15 % tax concession on dividend received by India companies from foreign units for one more year.

e.  Propose to impose withholding tax of 20 % on profit distribution to shareholders

f.  Surcharge of 10% on Rs 1 crore plus income earners

g.  Education cess to continue

h. 1 per cent TDS on sale of immovable property above Rs 50 lakh. not applicable to agricultural land.

i. STT rates cut on equity futures to 0.01% from 0.017%

j.  To levy CTT on non agri futures at 0.01%

k.  Agri commodity futures exempt from CTT

l. First home loan up to Rs 25 lakh will get an additional Rs 1 lakh interest deduction

m. Tax Free Bonds - Will allow some organisations to raise funds strictly based on need

n.  Income level for Rajiv Gandhi Equity Scheme raised by Rs 2 lakh

o.  Inflation indexed bonds and NSCs to be introduced

p.  Amnesty on service tax non-compliance from 2007 * 10 bln rupees for first installment of balance of GST (Goods and Services Tax) payment.

q.  Propose to reduce securities transaction tax on equity futures to 0.01 % from 0.017 %.

H. Indirect Tax:

a.  No change in peak basic customs duty

b.  Extend tax benefit to electrical vehicles

c.  To levy 2% customs CVD on coal imports

d.  Higher customs duty on set top boxes

e.  Duty cut on leather, leather good machines

f. Exempts imported ships and vessels from duty

g.  Excise duty on SUVs raised from 27% to 30%. Will not apply to SUVs registered as taxis

h.  Excise duty raised by18% for cigarettes

i.  All AC restaurants will have to pay service tax whether or not they serve alcohol.

j.  Increase in import duty on high end motor vehicles from 75% to 100%; and on motor cycles from 60% to 75%

k.  Luxury imported items to be cost more

l.  Mobile phones, priced above Rs 2000, get more expensive

m.  100 per cent Customs Duty on luxury cars

n. Gold duty free limit raised to Rs 50,000 for men and to Rs 1 lakh for women travellers

o.  Tax surcharge to add Rs 13000 crore to govt revenue

p.  DT proposals to raise Rs 13,300 crore, indirect tax to fetch Rs 4700 crore

I. Corporate Sector and Markets:

a.  Plans to issue inflation-indexed bonds.

b. Proposes capital allowance of 15 % to companies on investments of more than 1 billion rupees.

c.  Foreign institutional investors (FIIs) can use investments in corporate, government bonds as collateral to meet margin requirements.

d.  Insurance, provident funds can trade directly in debt segments of stock exchanges.

e.  FIIs can hedge forex exposure through exchange-traded derivatives

J. Other Proposals:

a. Modified GAAR to come into effect from Apr, 1 2016

b. Tax Administration Reform Commission to be set up to regularly review tax law applications

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

d. Need for state and central govt to pass a GST law

PREPARED BY – CA NITESH MORE




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