UNION BUDGET2013 - 14

TAX&

INVESTMENT VIEW POINT

Reduction in Tax Rates, Increase in rates of Depreciation, Amnesty Scheme to fund

infrastructure, Issue of Sovereign Bonds...

Stability & Growth gets prominence and not Election Politics.

The Gujarat effect ?

UNION BUDGET - 2013 - 14 - BACKDROP

Budget announcements before Presentation of the budget !

FDI in multibrand Retail.

Increase in price of petroleum products.

Increase in the Import Duty on Gold from 4% to 6%.

Ground work to pass the Insurance & Pension Bills.

Kick starting process for granting new banking licenses.

GDP Trend & Forecast

Sector 2009 - 10

2010 - 11

2011 - 12

2012 - 13

2013 - 14

Agriculture 0.8 % 7.9 % 3.6 % 1.8 % 2.8 %

Industry 9.2 % 9.2 % 3.5 % 3.0 % 5.1 %

Services 10.5 % 9.8 % 8.2 % 7.8 % 8.0 %

GDP 8.6 % 9.3 % 6.2 % 5.0 % 6.5 %

Source : Central Statistics Office, RBI

Shares of various sectors of the economy in the GDP

Sector 2009 - 10 2010 - 11 2011 - 12 2012 - 13

Agriculture 14.6 % 14.5 % 14.1 % 13.7 %

Industry 28.3 % 28.2 % 27.5 % 27.0 %

Services 57.1 % 57.3 % 58. 4% 59.3 %

Source : Central Statistics Office, RBI

Inflation Rate

Year 2010 - 11 2011 - 12 2012 - 13

Wholesale Price Index

(WPI)9.6 8.9 7.6

Consumer Price Index

(CPI)10.4 8.4 10.0

(Jan - '13)

(Jan - '13)

Savings Rate

Gross Domestic Savings as a % of GDP

2009 - 10 2010 - 11 2011 - 12

33.7 34 30.8

UNION BUDGET - 2013 - 14

Trends in global stock markets% change during the year

Country Index 2008 2009 2010 2011 2012 2013 *

India Nifty -51.8 71.5 17.3 -24.9 27.3 -1.7

USA Dow Jones -32.7 15.4 9.4 4.7 5.7 3.8

Japan Nikkei -39.7 16.6 -4.0 -18.7 21.4 5.8

UK FTSE -30.9 18.7 7.3 -7.3 3.5 6.1

China Shanghai -65.4 74.2 -13.4 -22.9 4.6 2.1

Brazil Bo -40.2 70.4 -1.1 -18.9 5.4 -10.2

* for the period from January 1 to February - 2013

Foreign Exchange Reserve, FDI & FII Flows

2009 - 10 2010 - 11 2011 - 12 2012 - 13Avg.

exchange rate (Rs.)

47.44 45.56 47.92 54.5

FDI$ Million

37,745 32,901 32,955 22,158

FII $ Million

32,376 31,471 17,171 15,629

Forex Reserves

$ Billion

279.1 304.8 294.4 295.5

Till Jan-'13

Till Dec'12

Till Dec'12

At Jan. end

Source : indiabudget.nic.in

Foreign Trade

Year 2011 - 12 2012 - 13 2013 - 14

In US $ Billion 78.2 75 75

As a % of GDP 4.2 % 4.0 % 4.0 %

Estimated

Current Account Deficit

Oil, Coal, Gold - Major drain on ForexSource : pmindia.gov.in & FM Speech

Estimated

Fiscal Deficit

2009 - 10 2010 - 11 2011 - 12 2012 - 13 2013 - 14

6.5% 4.8% 5.7% 5.2% 4.8%

Defence outlay

Defence budget total size : Rs. 2,03,000 crore.

Capital outlay for modernization of equipment : Rs. 86,740 crore.

Revenue outlay for pay and allowances and related expenses : Rs. 1,16,931 crore.

What the armed forces had to return : around Rs. 14,900 crore

Some Important Announcements

Provision for GST Rs. 9,000 Crores

Some Important Announcements

Investment Allowance

A tax break given to companies for investment of Rs. 100 Cr. and above in plant and machinery and is over and above depreciation benefits enjoyed by them.

Inflation - Indexed Bonds

These bonds are aimed at helping savers protect the principal and interest their investments. The principal rises with higher inflation.

Thrust on PPP in Coal Mining, Policy Soon

Public Private Partnership to help boost supply of coal to power producers and other consumers.

Big Push for Highway Sector

Government to award contracts for 3,000 km roads by September and set up a regulator for the sector.

Some Important Announcements

Dividend Distribution Tax on Mutual Fund

NameIndividual / HUF

Upto 31st May 2013 From 1st June 2013

Liquid 27.038 % 28.325 %Debt 13.519 % 28.325 %

Equity NIL NIL

Some Important Announcements

Securities Transaction Tax

Nature of Transaction Payable Upton 31st May 2013

From 1st June 2013

Sale of a unit of an equity oriented fund to the mutual fund On Redemption 0.25 % 0.001 %

Delivery based purchase of units of an equity oriented fund entered into in a recognized stock exchange

By Purchaser 0.10 % NIL

Delivery based sale of units of an equity oriented fund entered into in a recognized stock exchange

By Seller 0.10 % 0.001 %

Sale of futures in securities By Seller 0.017 % 0.01 %

Some Important Announcements

Condition for Rajiv Gandhi Equity Scheme relaxed, a bit.

Infrastructure Tax Free Bonds for Rs. 50,000 corers to be issued in 2013 - 14.

MSME's Non Tax Benefits to stay for 3 years.

Income Tax

Rebate of Rs. 2,000/= for individual having Total income upto Rs. 5 lakhs.

Additional deduction for interest on borrowing loan Sec 80 EE - Virtually no benefit.

Surcharge @ 10% on Individual / HUF's having admitted income above Rs. 1 crore.

1991 - 92

1993 - 94

1997 - 98

2005 - 06

2008 - 09

2010 - 11

2012 - 13

Personal Exemption Limit

Rs. 22,000

Rs. 30,000

Rs. 40,000

Rs. 1,00,000

Rs. 1,50,000

Rs. 1,60,000

Rs. 2,00,000

Maximum Tax Rate 50 % 40 % 30 % 30 % 30 % 30 % 30 %

Income limit for maximum tax 1 Lakh 1 Lakh 1.5 Lakh 2.5 Lakh 5 Lakh 8 Lakh 10 Lakh

Income Tax Collection

Rs. 6,731

Cr.

Rs. 9,123

Cr.

Rs. 20,235

Cr.

Rs. 57,308

Cr.

Rs. 1,06,046

Cr.

Rs. 1,39,069

Cr.

Rs. 1,89,866

Cr.

Income Tax

Historically, lower tax rates have yielded higher tax revenue !

Income Tax

We are fortunate...

Unfortunately, we do not get in return the worth of the taxes paid.

Income Tax

TDS on transfer of Immovable property Rs. 50 Lac and above. Does not apply to agricultural lands. Dropped last year again reintroduced.

Wealth Tax Returns also to be filed electronically.

Keyman Insurance Policy even after assignment shall continue to be Keyman Insurance only. Effective on policies after 1st April 2014.

Income Tax

Transfer of immovable property below stamp duty valuation. The principle of Sec 50C (Capital Gains) made applicable to Stock in trade also under new Sec 43CA.

Transfer of Immovable property below stamp duty value, difference above Rs. 50,000/= shall be deemed income of the buyer under Sec. 56.

Return filed without payment of taxes shall be considered as a defective return.

Income Tax

Definition of Capital Assets in regard to Agricultural Land changed.

Existing : Land situated beyond 8 kms from limits of town / city with a population of 10000 and above, not considered as capital asset.

Proposed : Population Range Distance

10000 to 1 lakh 2 kms1 lakh to 10 lakh 6 kms10 lakh and above 8 kms

Shortest distance - Aerial distance shall be considered.

Income Tax

Some Amusing Facts...

There are just 3.5 corers Income Tax Payers in the country, which is just 2.5% of the total population

44% of the Income Tax Payers pay Rs. 1,000/= or less Income Tax.

89% Income Tax Payers contribute just 11% of the total tax collected.

33% of total Income Tax is collected from Mumbai.

Indirect Taxes

Presently all the offenses under Customs Act / Central Excise Act & Service Tax Act are bailable. Draconian provision to make arrest unbailable if default exceeds a certain amount.

Amnesty Scheme for Service Tax assesses.

Expections

Honestly, I have never expected anything from any budget ! My perspective is simply that, as a manager it's not my prerogative to dwell ON the system. My responsibility is to deliver IN the system by ensuring that, for the same external conditions, Bajaj does better than its comptition.

Rajiv Bajaj - Managing Director Bajaj Auto Ltd.

We should all look at the budget this way...

Thank you...