Union Budget 2013 -14 - Thursday Feb 28,2013

Finance Minister P Chidambaram presented his 8th Union Budget and India's 82nd on Thursday Feb 28,2013. This is the last Union Budget before the 2014 Lok Sabha elections.

Finance Minister P. Chidambaram’s wife Nalini (second from right), along with her daughter-in-law Srinidhi, son Karti, on their way to attend the presentation of the budget in Parliament House on Thursday

Budget 2013-14 Highlights

• Fiscal Deficit - 5.3 % of GDP for 2012-13 and 4.8 % of GDP for 2013-14(Estimate)

• The estimate of Plan Expenditure is placed at Rs 5,55,322 crore. As a proportion of total expenditure, it will be 33.3% and the Non Plan Expenditure is estimated at Rs 11,09,975 crore.

• The Current Account Deficit(CAD) continues to be high mainly because of our excessive dependence on oil imports, the high volume of coal imports, our passion for gold, and the slow down in exports.We have to find over USD 75 billion to finance the CAD. There are only3  ways - FDI, FII or External Commercial Borrowing (ECB)

• The 12th Five Year Plan began in 2012-13 and the total expenditure had been fixed at Rs 14,90,925 crore. Due to the slowdown and the austerity measures, the revised estimate is Rs 14,30,825 crore or 96 percent of the budget estimate.The 12th Plan projects an investment of USD 1 trillion or Rs 55,00,000 crore in infrastructure. The Plan envisages that the private sector will share 47 percent of the investment.

• In 2013-14,the Budget Estimate of total expenditure at Rs 16,65,297 crore and of plan expenditure at Rs 5,55,322 crore was fixed and the plan expenditure in 2013-14 will be 29.4 percent more than the revised estimate of the current year

• Budget Allocation of Rs 203,672 crore for Defence(1.93 lac in 2012-13)
• Budget Allocation of 37,330 crore to the Ministry of Health and Family Welfare
• Budget Allocation of Rs 4,727 crore for medical education, training and research.

• Budget Allocation of Rs 5,284 crore for thousands of scholarships given to students belonging to Scheduled Castes, Scheduled Tribes, Other Backward Classes and Minorities, and girl children

• The Mid-Day Meal Scheme (MDM) will be provided Rs 13,215 crore

 Agriculture
Budget Allocation of  Rs 27,049 crore to the Ministry of Agriculture, an increase of 22 percent over the RE of the current year
 Investment allowance
A company investing Rs 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 percent of the investment. This will be in addition to the current rates of depreciation.
 Coal
Coal imports during the period April-December, 2012 have crossed 100 million tonnes. It is estimated that imports will rise to 185 million tonnes in 2016-17. If the coal requirements of the existing power plants and the power plants that will come into operation by 31.3.2015 are taken into account, there is no alternative except to import coal and adopt a policy of blending and pooled pricing
 Banking
Before the end of March, 2013,  Rs 12,517 crore to  be infused as additional capital into 13 public sector banks.In 2013-14,  a further amount of Rs 14,000 crore for capital infusion
Propose to set up India's first Women's Bank as a Public Sector Bank with Rs 1,000 crore as initial capital.
Insurance
All towns of India with a population of 10,000 or more will have an office of LIC and an office of at least one public sector general insurance company
Capital Market
To remove the ambiguity that prevails on what is Foreign Direct Investment (FDI) and what is Foreign Institutional Investment (FII), it is proposed to follow the international practice and lay down a broad principle that, where an investor has a stake of 10 % or less in a company, it will be treated as FII and, where an investor has a stake of more than 10 %, it will be treated as FDI.
FIIs will be allowed 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
The list of eligible securities in which Pension Funds and Provident Funds may invest will be enlarged to include exchange traded funds, debt mutual funds and asset backed securities.
Broadcasting
Proposed to expand private FM radio services to 294 more cities. About 839 new FM radio channels will be auctioned in 2013-14 and, after the auction, all cities having a population of more than 100,000 will be covered by private FM radio services.
Postal Service
IT driven project to modernise the postal network at a cost of Rs 4,909 crore.
Central Sponsored Schemes
In 2013-14, to transfer resources to the tune of Rs 5,87,082 crore to the States and UTs under share of taxes, non-plan grants and loans, and central assistance
To the women of India
Proposed to contribute Rs 1,000 crore for security of women and set up 'Nirbhaya fund'. Ministry of Women and Child Development and other ministries concerned will be requested to work out the details of the structure, scope and application of the fund.
To the youth of India
A large number of youth must be motivated to voluntarily join skill development programmes and it is proposed to ask the National Skill Development Corporation to set the curriculum and standards for training in different skills and 1000 cr set apart for this scheme

Handloom Sector
Working Capital and Term Loans at a concessional interest of 6 %
Tax Proposals
In 2011-12, the tax GDP ratio was 5.5 percent for direct taxes and 4.4 percent for indirect taxes. These ratios are one of the lowest for any large developing country.In 2007-08, the tax GDP ratio touched a peak of 11.9 percent. In the short term, we must reclaim that peak.
Direct Taxes

• Tax Reforms Commission Proposed
  

• No Revision in the Tax Slabs and the Tax Rates as they were introduced only last year.However,a relief of Tax Credit of Rs 2000 to the tax payers in the first bracket of Rs 2 lakh to Rs 5 lakh is proposed that will benefit 1.8 crore tax payers(Estimate)

• Education Cess for all tax payers shall continue at 3 %

• 10% Surcharge to be levied on Income of 1 crore and above to Indl/HUF/PF
• 10% Surcharge on Domestic Cos. on Income exceeding Rs 10 crore per year.
• Tax benefit to the first-home buyer who takes a loan for an amount not exceeding Rs 25,00,000  get an additional deduction of interest of Rs 100,000 to be claimed in AY 2014-15. If the limit is not exhausted, the balance may be claimed in AY 2015-16. This deduction will be over and above the deduction of Rs 150,000 allowed for self-occupied properties under section 24 of the Income-tax Act

• Donations made to the National Children's Fund will now be eligible for 100 percent deduction

• Investment allowance at the rate of 15 percent to a manufacturing company that invests more than Rs 100 crore in plant and machinery during the period 1.4.2013 to 31.3.2015

• Securities Transaction Tax (STT) Reduced -

                               -Equity futures: from 0.017 to 0.01 percent
                               - MF/ETF redemptions at fund counters: from 0.25 to 0.001 percent
                               - MF/ETF purchase/sale on exchanges: from 0.1 to 0.001 percent, only on the seller

• Proposed to levy Commodity Transaction Tax (CTT) on non-agricultural commodities futures contracts at the same rate as on equity futures, that is at 0.01 percent of the price of the trade.

• Transactions in immovable properties are usually undervalued and underreported. One-half of the transactions do not carry the PAN of the parties concerned. With a view to improve the reporting of such transactions and the taxation of capital gains,  TDS at the rate of one percent on the value of the transfer of immovable property where the consideration exceeds Rs 50 lakhs.(agricultural land will be exempt)is levied

Indirect Taxes

• No change in the peak rate of basic customs duty of 10 percent for non-agricultural products
• No change in the normal rate of excise duty of 12 percent and the normal rate of service tax of 12 percent. 
• Import Duty on Cars/Motorcycles/Yachts increased

                       motor vehicles from 75 % to 100 %
                       on motorcycles with engine capacity of 800cc or more from 60 % to 75 % and
                       on yachts and similar vessels from 10 % to 25 %.  

• SUVs occupy greater road and parking space and ought to bear a higher tax and it is proposed to increase the excise duty on SUVs from 27 % to 30 %.(SUV Taxi's Exempted)

• mobile phones priced at more than Rs 2000, duty raised to 6%

• proposed to levy service tax on all air conditioned restaurants.