UNION BUDGET 2013-14

NITESH GOYAL

BUDGET

• A budget (from old French bougette, purse) is a quantified financial plan for a forth coming accounting period.

• A budget is an organizational plan stated in monetary terms.

The purpose of budgeting is to: • Provide a forecast of revenues and expenditures, that

is, construct a model of how a business might perform financially if certain strategies, events and plans are carried out.

• Enable the actual financial operation to be measured against the forecast.

BUDGET

• The budget of a government is a summary or plan of the intended revenues and expenditures of that government. There are three types of government budget : the operating or current budget, the capital or investment budget, and the cash or cash flow budget.

• The budget is prepared by the Budget Division of Department of Economic Affairs of the Ministry of Finance annually. This includes supplementary excess grants and when a proclamation by the President as to failure of Constitutional machinery is in operation in relation to a State or a Union Territory, preparation of the Budget of such State.

BORROWING

Gross market borrowing seen at 6.29 trillion rupees in 2013/14

Net market borrowing seen at 4.84 trillion rupees in 2013/14

Short-term borrowing seen at 198.44 billion rupees in 2013/14

To buy back 500 billion rupees worth of bonds in 2013/14

SUBSIDIES

• 2013/14 major subsidies bill estimated at 2.48 trillion rupees from 1.82 trillion rupees

• Petroleum subsidy seen at 650 billion rupees in 2013/14

• Revised petroleum subsidy for 2012/13 at 968.8 billion rupees

• Estimated 900 billion rupees spending on food subsidies in 2013/14

• Revised food subsidies at 850 billion rupees in 2012/13 • Revised 2012/13 fertiliser subsidy at 659.7 billion

rupees

GROWTH

• India faces challenge of getting back to its potential growth rate of 8 point

• India must unhesitatingly embrace growth as highest goal

SPENDING

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

• Non-plan expenditure estimated at about 11.1 trillion rupees in 2013/14

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

• Revised estimate for total expenditure is 14.3 trillion rupees in 2012/13, which is 96 point of budget estimate

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

REVENUE

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

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

• Target 558.14 billion rupees from stake sales in state-run firms in 2013/14

• Expect revenue of 408.5 bln rupees from airwave surcharges, auction of telecom spectrum, licence fees in 2013/14

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

TAX

• Proposes surcharge of 10 point on rich taxpayers with annual income of more than 10 million rupees a year

• To increase surcharge to 10 point on domestic companies with annual income of more than 100 million rupees

• For foreign companies, who pay the higher rate of corporate tax, the surcharge will increase from 2 pct to 5 per cent.

• To continue 15 point tax concession on dividend received by India companies from foreign units for one more year

• Propose to impose withholding tax of 20 point on profit distribution to shareholders

TAX

• * Amnesty on service tax non-compliance from 2007 * 10 billion rupees for first installment of balance of GST (Goods and Services Tax) payment * Propose to reduce securities transaction tax on equity futures to 0.01 point from 0.017 point * Time to introduce commodities transaction tax (CTT) * CTT on non-agriculture futures contracts at 0.01 point

DEFENCE

• To allocate 2.03 trillion rupees to defence in 2013/14

AGRICULTURE

• To allocate 801.94 billion rupees to rural development in 2013/14

• Plan to allocate 270.49 billion rupees for agriculture in 2013/14

• About Rs 33,000 crore for MGNREGA.

• Rs 7 lakh crore target fixed for agriculture credit for 2013-14

Highlights

• Leather products get cheaper

• Mobile phones, dinning out, cigarettes, SUVs, motorbikes, set-up boxes get expensive

• Excise duty on cigarettes raised by 18 per cent

• Mobile Phones, SUVs to get more expensive: On mobile phones priced at more than Rs.2000, excise duty hiked to 6%. Excise duty on SUVs raised from 27% to 30%

Highlights

• No change in slabs and rate for personal income tax.

• A tax credit of Rs. 2000 for every person who has an annual income of upto Rs. 5 lakh

• Rs. 6,275 crore to ministry of science and technology, Rs. 5,880 crore to Department of Atomic Energy

• Tax-free infrastructure bonds of Rs.50,000 crore to be issued

Highlights

• Re-financing capacity of SIDBI increased to Rs. 10,000 crore from Rs. 5,000 crore for Ministry of Small and Medium Enterprises

• 5 to 10 per cent surcharge on domestic companies whose taxable income exceeds Rs 10 crore.

• Import duty raised on set-top boxes from 5 to 10 per cent to safeguard interest of domestic producers.

Highlights

• Import duty raised from 75 to 100 per cent on luxury vehicles.

• Duty free limit on gold raised to Rs 50,000 in case of male and Rs 100,000 in case of female.

• Duty on mobiles above Rs 2,000 raised from one to six per cent, based on their maximum retail prices

• Service tax to be levied on all a/c restaurants

Highlights

• Direct tax proposals to yield Rs 13,300 crore, indirect tax proposal to give Rs 4,700 crore

• Education cess to continue at 3 per cent

• TDS of one per cent on value of properties above Rs 50 lakh. Agriculture land exempted

• Surcharge of 10 per cent for individuals whose taxable income is over Rs 1 crore

Highlights

• Rs 14,873 crore for JNNURM for urban transportation in 2013-14 against Rs 7,880 crore in the current fiscal.

Hospitality & Tourism

• The allocation for the Ministry this year is Rs 1,297.66 crore while it was Rs 1210 crore in the Union Budget 2012-13 and Rs 1110.96 crore in 2011-12.

• The budget allocation for plan projects/ schemes for the benefit of North East region and Sikkim has been hiked from Rs 121 crore to Rs 129 crore.

Hospitality & Tourism

• The allocation under tourist infrastructure is for construction of budget hotels, wayside amenities, tourist reception centers, refurbishment of monuments, special tourism projects, adventure and sports facilities, sound and light shows, illuminations of monuments, providing for improvement in solid waste management and sewerage management, procurement of equipments directly related to tourism and rural tourism projects etc.

Hospitality & Tourism

• This provision also relates to large revenue generating projects, generating revenue through levy of fees or user charges like tourist trains, cruise vessels, cruise terminals, convention centre, golf courses etc. and creation of land bank for hotels to provide hotel accommodation by purchasing land and build hotels through public private partnerships.

• The provision also includes Externally Aided Projects including UNDP Endogenous Tourist Projects and assistance to central agencies for tourism infrastructural development.

Eating out to become more expensive

• Your happy meal and chicken zinger burger is set to turn costlier by about 10-12%, with the Finance Minister levying a service tax of 12.36% on all air-conditioned restaurants in the country.

• The eating out industry is estimated at Rs 60,000 crore, with the organised food retail segment valued at over Rs 8,000 crore. The industry has been clocking growth of 20-25% a year, but the last two quarters have seen growth slowing down on account of cautious consumer sentiment. Till now, a service tax of 4.9% was levied