Finance Minister Pranab Mukherjee on Friday announced tax relief for individual tax payers. Presenting Union Budget 2012-13 in Lok Sabha, Mukherjee said income upto Rs 2 lakh would be tax free; income from Rs 2 to 5 lakh would be taxed at 10%; from Rs 5 to 10 lakh at 20%; and income above Rs 10 lakh would attract tax of 30%.In other tax measures, Mukherjee announced that interest from savings account up to Rs 10,000 would be tax free. Also, apart from medical insurance, an additional Rs 5,000 would be exempted for preventive health check-ups. Senior Citizens have been exempted from filing advance tax.
Meanwhile, Service Tax has been hiked from 10% to 12%. Also, its net has been widened and all services barring 17 would now be taxed. Corporate Tax structure has been left unchanged. Mukherjee earlier said India continues to remain among front-runners in economic growth. Mukherjee however said the economic growth is estimated at 6.9 percent during the current fiscal year which was "disappointing". The Finance Minister also exuded confidence that headline inflation would moderate in the next few months and remain stable.
Income Tax:
* Tax collection up 15%
* Personal Income Tax slabs for individuals relaxed
* Exemption limit enhanced from Rs 1.8 lakh to Rs 2 lakh
* Upper limit of 20% tax raised from Rs 8 lakh to Rs 10 lakh
New Slabs as follows:
* Upto Rs 2 lakh - Nil, Rs 2-5 lakh - 10%, Rs 5–10 lakh – 20%, and above Rs 10 lakh – 30%.
* Interest from savings account up to Rs 10,000 to be exempt from tax.
* In addition to medical insurance, an additional Rs 5000 to be exempted for
preventive health check-ups.
* Senior Citizens exempted from filing advance tax. Compulsory reporting of assets sold abroad.
Corporate Tax:
* Corporate Tax structure left unchanged. Withholding tax on certain overseas borrowings reduced to 5% from 20%. Securities transaction tax by 20% for stock market orders.
Service Tax:
* Service Tax rates raised from 10% to 12%. To bring more businesses under Service Tax net; only 17 services exempted now. Higher Service Tax to add Rs 186.6 bn in revenue. Changes in direct taxes to result in revenue loss of Rs 45 bn. Government services, public transport exempted from services tax. Standard excise rate hiked to 12% from 10%.
Tax Reforms:
* Advanced pricing agreement in DTC to be in Financial Bill. New tax exemption on individual share invest with lock-in. GST network to get operational from Aug. GST under progress, talks on with states for drafting law.
* To examine parliamentary panel report on Direct Tax Code.
* Rajiv Gandhi Equity Saving Scheme launched
* Rajiv plan equity invest lock-in period to be 3 years
* Rs 50000 tax exempt for share invest in new Rajiv plan
* Tax exemption on individual share invest below a million rupees
* Tax free infra bonds Rs 600 bn to be issues FY 13
* To allow Rs 100 bn NHAI tax free bonds FY 13
* To allow Rs 100 bn IRFC tax free bonds in FY 13
* To allow Rs 50 bn HUDCO tax free bonds FY 13
* To allow Rs 50 bn SIDBI tax free bonds FY 13
* To allow Rs 100 bn power sector tax free bonds FY 13
* To okay Rs 50 bn National Housing Bank tax free bonds
* 1% loan sop plan for home loans up to Rs 2.5 mn
* Interest subvention on low cost homes extended by a year
Growth & Divestment:
Past year was supposed to be year of recovery. This year’s performance turned out to be disappointing. We were facing several challenges; global situation a dampener.
* GDP estimated to grow 6.9% in 2011-12
* FY 13 GDP seen 7.6%, plus or minus 0.25%
Proposes Mid-term fiscal goals:
Aim to raise Rs 300 bn through sales of stakes in state run companies next fiscal. Aim to raise Rs 140 bn through sales of stakes in state companies this fiscal year. Agri, Services performing well. Industry pulled down growth in past two years. Industry now showing signs of recovery.
* FY 12 Services growth at 9.4
* FY 12 Industry growth at 3.9%
* FY 12 Agri growth at 2.5%
Need to improve supply side of economy. India still front runner in world; share of trade has increased. Crude oil prices to cross USD 115/barrel.
Five main objectives:
* Focus on domestic demand driven growth recovery
* Create conditions for rapid revival of high growth in private investment
* Address supply bottlenecks in agriculture, energy and transport sectors, particularly in coal, power, national highways, railways and civil aviation.
* Intervene decisively to address the problem of malnutrition especially in the 200 high-burden districts
* Expedite coordinated implementation of decisions being taken to improve delivery systems, governance, and transparency; and address the problem of black money and corruption in public life.
Fiscal Health & Estimates
* Aim to trim fiscal deficit
* To make amendments to Fiscal Responsibility and Budget Management Act (FRBM Act)
* Current account deficit 3.6%
* Fiscal deficit 5.9% of GDP this FY
* Expect fiscal deficit 5.1% of GDP next FY
* Concept of effective revenue deficit to be fiscal parameter
* Expect gross tax receipts at Rs 10.78 tn next FY, up 15.6%
* As a percentage of GDP, gross taxes to be 10.6 % in FY 13
* Total spending Rs 14.49 tn next FY
* Non-Plan spending Rs 9.69 tn next FY, 8.7% higher than revised estimates
* Net tax to Centre in FY 13 at Rs 7.71 tn
* Expect non-tax revenue at Rs 1.64 tn next FY
* Non-debt Capital Receipts at Rs 416.50 bn
* Plan expenditure at Rs 5.21 tn, 18% higher than estimates
* Direct tax collection fell short by Rs 320 bn
* Total Debt stock at 45.5 % of GDP
* Effective Revenue Deficit at Rs 1.85 tn or 1.8% of GDP
Farm & Food
* Agri to be on govt priority list
* To increases outlay for agriculture by 18% to RS 202.08 bn
* India to be self sufficient in urea manufacturing in 5 years
* Announces 2 new handloom mega clusters
* To set up 3 technical assistance centres for textiles
* Allot Rs 700 mn for Maharashtra power loom cluster
* East Indian states produced 7 mn tones more of paddy
* Rs 5 bn pilot plan in 12th plan for geo textiles in NE
* Allocated Rs 3 bn for FY 13 irrigation plans
* Allot Rs 10 bn to up kharif output in NE FY 13
* Allot Rs 4 bn to up kharif output in NE FY 12
* Allot 5 bn for aquaculture FY 13
* NABARD to give rural banks Rs 100 bn for short term loans
* To move bill for NABARD Act amendment
* 3% rate subvention for farmers repaying loans on time
* Rs 5.75 tn farm credit target in FY 13
* Rs 2 bn for R&D of seeds and farm research
* Allocation to farm development plan RKVY hiked to Rs 92.17 bn
* To set up govt owned irrigation promotion company
* To add 5 mn tones grain storage capacity in FY 13
* To start national food processing mission in FY 13
* Micro-irrigation allotment up 13% to Rs 142.42 bn
Inflation:
* Headline inflation was major cause of concern
* Inflation likely to moderate in FY 13
* Inflation largely structural in nature
* Headline inflation is beginning to stabalize
* Prolonged period of high inflation tends to get generalized
* Inflation driven by farm supply constraints
Financial Sector & Banks
* India Opportunity Venture Fund via SIDBI of Rs 50 bn
* To issue revised norms for banks priority sector lending
* To set up financial holding company for recapitalization of banks
* To move National Housing Bank Amendment Bill
* To move Regional Rural Bank Amendment Bill
* Rs 158.88 bn for capitalization of PSU banks in FY 13
* Propose electronic voting to up shareholder involvement
* IPOs of over Rs 100 mn to be in electronic form
Infrastructure:
* 12th plan invest for infra at Rs 50 tn
* ECBs allowed to part finance rupee debt of power projects
* Coal India told to to sign coal supply pacts with power companies
* Inter ministerial panel to monitor allocated coal mines
* Targetting 8800 km projects under NHDP FY 13
* Irrigation including damns under viability gap funding FY 13
* Irrigation, fertilizer, terminal market under viability gap funding
* Viability gap funding for oil, gas pipelines, storage
* Telecom towers to get viability gap funding in FY 13
* Inadequate infra strain on growth
* Extend plan to capitalize regional rural banks by 2 years
* To give Rs 40 bn FY 13 for rural housing V Rs 30 bn in FY 12
* Realtors can borrow overseas for low cost home projects
* To move bill for Public Debt Management
* To allow external commercial loans for affordable homes
* Foreign airline investment of 49% under consideration
* Budget approves overseas borrowing of upto USD 1 bln for airlines' working capital needs
* Budget OKs overseas borrowing for low-cost housing projects
* To allow 1 year ECBs of USD 1 bn for airline companies
* Allowed direct import of ATF by airlines
* Foreign borrow for capex maintain, operate toll roads
* Up NHDP allocation 14% to Rs 253.6 bn in FY 13
Subsidy:
* To keep Subsidies under 2% of GDP over next 3 Years
* Subsidy for food security to be fully provide for
* Some subsidies inevitable
* Fiscal policy had to absorb subsidy payments
* Aim to directly transfer kerosene subsidy to individuals
* Testing kerosene subsidy transfer in Rajasthan
* Direct transfer subsidy pilot for 50 districts
* Aim to directly transfer subsidy on LPG to consumers
* Direct transfer of fertilizer subsidy to retailer, farmers soon
* Direct transfer subsidy to be rolled out gradually
Other Highlights:
* GDP to grow by 6.9% in 2011-12
* This year’s performance disappointing
* India still among front runners in economic growth
* Monetary policy was geared towards containing inflation
* Need to improve supply side of economy
* Exports grew 23 %
* Imports grew 29%
* Past year was supposed to be year of recovery
* To keep subsidies under 2% of GDP over next 3 years
* We were facing several challenges; global situation a dampener
* Industry pulled down growth in past two years
* Industry now showing signs of recovery
* Need to improve supply side of economy
* Subsidy for food security law to be fully provided
* Some subsidies inevitable
* Agriculture to services performed well
* Economy now turning around
* Manufacturing on cusp of revival
* Need to improve micro-economic environment
* Expect headline inflation to moderate in the next few months and remain stable
* Agri growth at 2.5%
* External trade growth encouraging
* India has successfully achieved diversification of import and export market
* Diversification has helped overcome global slowdown
* Current account deficit at 3.6%
* Fiscal balance has deteriorated due to increase in direct tax seepages and increased subsidy
* Expect smaller fiscal deficit in the coming year
* Concept of effective revenue deficit is being brought in as a fiscal parameter
* Crude oil prices to cross USD 115/barrel
* Need to take a close look at revenue expenditure, particularly subsidies
* Endeavour to restrict subsidy to under 2% of GDP
* Recommendation of task force under Nandan Nilekani has been accepted
* Direct transfer of fertilizer subsidy to retailer and then on to farmer to be rolled out
* Direct transfer of kerosene subsidy pilot project in Alwar, Rajasthan
* Direct subsidy transfer to be implemented in at least 50 more districts soon
* DTC to be implemented at the earliest
* The structure of GST network has been approved by EGoM
* Treasury management for CPACs has been enhanced
* Rs 30000 cr to be raised via disinvestment
* At least 51% stake will remain with the govt
* FDI in multi-band retail held in abeyance
* GST to be operational by August 2012
* Provision for advance pricing agreement included in DTC bill
* Reform in financial sector has been pursued to ensure more market intervention
* New scheme - Rajiv Gandhi equity scheme - to be introduced
* Simplifying process of IPOs
* Mandatory for companies to issue stocks over Rs 10 cr through online system
* 8 financial amendments bills to be introduced this year
* Central Know Your Customer repository would be set up
* 70,000 habitations have been provided with banking services
* Ultra small branches would be set up
* Swabhiman campaign to be extended to habitations with population of 1000 people
* 81 Regional Rural Banks have migrated to core banking
* Weak RRBs to be recapitalized for another two years
* Viability gap funding under PPP is an important factor
* Oil and gas and LNG storage and oil gas pipeline, telecom towers will also be * made eligible under viability gap finding
* The first infra debt fund with a outlay of Rs 8,000 cr has been launched
* Tax free infra bonds to be raised to Rs 60,000 cr
* Coal India has been advised to sign power purchase agreements with power plants
* 8,800 km roads to be covered under NHDP
* ERCB for capex of toll system and maintenance
* ECB for working capital requirement of aviation industry for a period of 1 year with an upper cap of USD 1 bn
* Delhi-Mumbai industrial corridor has made progress
* USD 4.5 bn has come Japan for DMIC
* ECB for low cost housing
* New handloom cluster in Prakasam and Guntur districts of AP and leather cluster in Jharkhand
* Power loom mega cluster in Ichalkaranji in Maharashtra
* India opportunity venture fund to be launched
* 1% interest subvention for homes costing less than Rs 25 lakhs to continue
* RKBY under Rs 300 cr for irrigation program
* National food security mission, integrated development of pulses villages
* National mission of sustainable irrigation being taken up
* National mission on oil seed and oil palms
* Rs 500 cr for aquaculture
* Rs 10,000 cr to NABARD to refinance RRBS
* Kisan card can be operated from ATMs
* Allocation for SC/ST increased to Rs 37,113 crore
* Food security a legal entitlement
* PDS network being created using AADHAR platform
* Multispectral programs to address maternal nutrition to be rolled out in select district
* Budget OKs overseas borrowing to part-fund power projects' rupee debts
* Budget approves overseas borrowing of upto USD 1 bln for airlines' working capital needs
* Budget OKs overseas borrowing for low-cost housing projects
* To increases outlay for agriculture by 18% to Rs 202.08 bn
* India to be self sufficient in urea manufacturing in 5 years
* Foreign borrow for capex to maintain, operate toll roads
* Irrigation including damns under viability gap funding FY 13
* Irrigation, fertilizer, terminal market under viability gap funding
* To allow Rs 100 bn NHAI tax free bonds FY 13
* To allow Rs 100 bn IRFC tax free bonds in FY 13
* To allow Rs 50 bn HUDCO tax free bonds FY 13
* To allow Rs 50 bn SIDBI tax free bonds FY 13
* To allow Rs 100 bn power sector tax free bonds FY 13
* Inter ministerial panel to monitor allocated coal mines
* To OK Rs 50 bn National Housing Bank tax free bonds
* ECBs allowed to part finance rupee debt of power projects
* Hike in agri credit by Rs 1 tnh To Rs 5.75 tn next FY
* Outlay for agriculture up by 18% to Rs 202.08 bn
* Mid-Day meal scheme allocated Rs 11937 cr
* RG for empowerment of adolescent girls scheme gets 750 cr
* Rural drinking water and satiation allocated 14000 cr
* PMGSY get Rs 24000 cr
* Backward region development fund allocated Rs 12040 cr
* Development projects for drought mitigation in Bundelkhand and other select areas Rs 20000 cr
* Rs 5000 cr for developing warehousing facility
* 6000 schools to be set up at block levels and developed as model schools
* No new case of polio was reported in last one year
* New vaccine unit to be set up near Chennai
* NRHM enlarged to include iodine deficiency and vaccination
* NRHM allocated Rs 20822 cr
* National urban health mission launched
* Seven more govt medical colleges to be upgraded to AIIMS
* National Rural Livelihood Mission to provide self employment - allocation upped to Rs 3915 cr
* Interest subvention of additional 3% on loans upto Rs 3 lakhs to women self help groups - effective rate of 4%
* Credit guarantee fund for skill development
* In the eventuality of the death of the bread earner of a BPL family they will get Rs 10,000
* Rs 25 cr to Institute of Rural Management in Anand
* Rs 100 cr for Kerala agricultural University
* Rs 50 cr of Dharwad Agriculture University
* Rs 50 cr to Agri universities in Haryana, Odisha
* Indira Gandhi pension scheme beneficiaries to get Rs 300 pm as against current Rs 200
* National population registry project to be completed in the next two years
* 14 cr AADHAR number generated
* AADHAR is ready for payments under MGNERGA, pension scheme
* 82 double tax avoidance agreements have been finalized
* 17 tax info sharing agreements has been finalized
* Will table white paper on black money
* Dedicated information cells to track black money
* Allowed direct import of ATF by airlines
* Realtors can borrow from overseas for low cost home projects
* Gave Rs 40 bn in FY 13 for rural housing Vs Rs 30 bn in FY 12
* Announces 2 new handloom mega clusters
* To set up 3 technical assistance centres for textiles
* Allot Rs 700 mn for Maharashtra power loom cluster
* East Indian states produced 7 mn tones more of paddy
* Rs 5 bn pilot plan in 12 plan for geo textiles in NE
* Allot 10 bn to up kharif output in NE FY 13
* Allot 4 bn to up kharif output in NE FY 12
* Rs 5.75 tn farm credit in FY 13
* Rs 100 bn to NABRAD for refinancing RRBs
* NABARD to give rural banks Rs 100 bn for short term loans
* Allocated Rs 255.55 bn under Right to Education
* Allocated Rs 208.22 bn under rural health plan FY 13
* No new case of polio
* Credit guarantee fund proposed for poor students
* Allocated Rs 31.24 bn for secondary education
* Allocated Rs 200 bn for rural infra development in FY 13
* Allocated Rs 240 bn under rural road project
* Allocated Rs 158.50 bn for child development in FY 13
* Expect gross tax receipts at Rs 10.78 tn next FY
* Total spending Rs 14.49 tn next FY
* Expect non-tax revenue at Rs 1.64 tn next FY
* Non-Plan spending Rs 9.69 tn next FY
* Fiscal deficit 5.9% of GDP this FY
* Expect Fiscal deficit 5.1% of GDP next FY
Source:zeenews.
