Presented by-Group 4

ShruthiVishal JCSourav

 What is a Budget ? 

Budget is Estimate of inflows and outflows of the Government during a year. Budget is presented for the ensuing Financial year.

Every budget consists of actual figures for preceding year ,budget and revised figures for current year, budget estimates for following year.

Main aspects of budget:

Government Spending

Tax revenue or receipts

Budget deficit

Government spending:

• Government purchases : government expenditures on currently produced goods and services, Including capital goods.

•Transfer payments: are payments made to individual for which the government does not receive current goods or services in exchange.

•Net interest payments: are interested paid to the holders of government bonds less the interest received by government.

Tax revenue or receipts:

•Personal tax : collected from personal income tax and property tax .

•Contribution for social insurance: it is deducted in employee personal income.

•Taxes on production and imports : this are mainly sales tax

•Cooperate taxes: cooperate profit taxes.

Budget deficit :

Deficit =outlays – tax revenues =(govt.purchases +transfer net interest) – tax revenue .

Primary deficit = Out lays – net interest- tax revenue

Current deficit: primary deficit + interest payments.

BUDGET AND IT’S IMPACT ON VARIOUS SECTORS

Automobile Sector

Measures

1. Rs 14883 crores allocated to JNNURM

2. Excise duty on SUV’s hiked from 27% to 30%

3. Tax concession on spare parts of environmental friendly vehicles extended till March, 2015.

Impact1. A big positive for the heavy commercial vehicle industry

2. Excise duty on SUV, a jolt to the industry as it is the only segment showing encouraging sales

3. Extension of Tax concession marginally positive for M&M

Media & Entertainment

Measures

1. Last year the Budget had accepted full exemption of service tax on copyright on cinematography. This year, Budget has accepted the industry's request to exempt service tax on films exhibited in cinema halls

2. Increase in custom duty of imported Set top boxes to 10% from 5%

Impact

1. Long term benefit for production houses

2. Marginal impact on DTH and cable companies that import set-top boxes

Banks & Financial Institutions  Measures

1. Rs 14000 crores for capital infusion in Public sector banks to meet Basel III requirements

2. Proposed to provide an additional deduction of interest of up to Rs 1 lakh on housing loans of up to Rs 25 lakh for the first time buyers in addition to the current exemption of Rs 1.5 lakh

3. Rs 6000 crore and Rs 2000 crore to rural and urban housing fund4. Increase corpus to SIDBI’s India Microfinance Equity by 100 crore

Impact

1. A big positive to Public sector banks as Basel III norms are to be implemented

2. Increase in demand for house loans3. Additional corpus will help small and mid-sized Micro lenders,

who find it hard getting loans from banks

FMCG Sector

MeasureRate of tax on payments by way of royalty and fees for technical services to non-residents or foreign company has been increased from 10% to 25%

ImpactWill raise tax outgo and consequently impact the bottom-line of listed MNC FMCG companies

MeasureExcise duty on cigarettes has been increased by 18%

ImpactLimited implications on cigarette companies

Cement Industry

Measures1. Awarding of 3000 km of road projects in first half of FY 20142. Boost to housing segment by giving tax deductions and allocating funds

Impact

1. Will help assured off-take of cement by giving importance to infrastructure and housing

2. Boost to construction activity3. The much anticipated hike in excise duty of cement was not

announced

Negative side- The railway budget hiked freight-rates by 5.8% Overall, positive for the cement sector

Real EstateMeasure1. Interest deduction raised to 2.5 lakh for loan up to 25 lakhs2. Again, increase in rural housing fund to Rs 6000 crore and the

setting up of an urban fund of Rs 2000 crore

Impact1. Boost demand for houses in Tier II and tier III cities2. Increases home ownership3. Projects in Tier II and Tier III cities

Chemical and Agrochemicals Measure1. Extension and expansion of a number of agriculture focused schemes2. Schemes include extension of agricultural credit, interest subvention etc

ImpactA positive for companies such as Rallis India, United Phosphorus

HospitalityMeasureLevy service tax on all air-conditioned restaurants

ImpactNet profit margins have risen to 11.4%(listed restaurants) The total income of such restaurants have risen by 16.4% Service tax levied will affect the revenue in the coming quarters

Textile

MeasureExcise duty on cotton and manmade sector to be done away with

ImpactEarlier , there was an excise duty of 3.6%. With excise duty gone, it is estimated that these companies could save 2% on salesGarments may cost cheaperThe demand in the value chain may go up by 3-4%

Highlights FISCAL DEFICIT1. Fiscal deficit seen at 5.2 % of GDP in 2012/132. Fiscal deficit seen at 4.8 % of GDP in 2013/14 CURRENT ACCOUNT DEFICIT1. India's greater worry is current account deficit2. Will need more than $75 billion this year and next year

to fund current account deficit INFLATION1. Food inflation worrying, will take all steps to augment

supply side

Highlights BORROWING1. Gross market borrowing seen at 6.29 trillion rupees in 13/142. Net market borrowing seen at 4.84 trillion rupees in 13/143. Net short-term borrowing seen at 198.44 billion rupees in13/144. To buy back 500 billion rupees worth of bonds in13/14

Spending1. Total budget expenditure seen at 16.65 trillion rupees in13/142. Non-plan expenditure estimated at about 11.1 trillion rupees in

13/143. India's 13/14 plan expenditure seen at 5.55 trillion rupees4. Revised estimate for total expenditure is 14.3 trillion rupees in

12/13, which is 96 % of budget estimate

Highlights

SUBSIDIES1. 2013/14 major subsidies bill estimated at 2.48 trillion

rupees from 1.82 trillion rupees2. Petroleum subsidy seen at 650 billion rupees in 2013/143. Petroleum subsidy assumes crude oil price at $110/barrel4. Revised petroleum subsidy for 2012/13 at 968.8 billion

rupees5. Estimated 900 billion rupees spending on food subsidies

in 2013/146. Revised food subsidies at 850 billion rupees in 2012/137. Revised 2012/13 fertilizer subsidy at 659.7 billion rupees

Highlights TAX1. Propose surcharge of 10 % on rich taxpayers with annual

income of more than 10 million rupees a year2. To increase surcharge to 10 % on domestic companies with

annual income of more than 100 million rupees3. For foreign companies, who pay the higher rate of corporate

tax, the surcharge will increase from 2 % to 5 %4. To continue 15 % tax concession on dividend received by

India companies from foreign units for one more year5. To impose withholding tax of 20 % on profit distribution to

shareholders6. 10 billion rupees for first installment of balance of GST

(Goods and Services Tax) payment7. To introduce commodities transaction tax (CTT)8. CTT on non-agriculture futures contracts at 0.01 %

What's getting costlier & what's cheaper for consumer

Source - economictimes.indiatimes.comConsumer Items Impact (Positive or Negative)

Television set-top boxes Negative

Mobile Phones worth more Rs 2000 Negative

Cigarettes and tobacco products Negative

Branded Non-Allopathic medicines Positive

Imported Jewellery Positive

Ready-made Garments Positive

Eating Out Negative

Sports Utility Vehicles (except taxis) Negative

Environment-friendly vehicles Positive

Imported Luxury Vehicles Negative

Silk and Silk products Negative

Home Furnishing and Decor Positive

Housing Construction Negative