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Finance Minister Pranab Mukherjee on Friday announced marginal tax reliefs 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%Income Tax proposals:
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%
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 abroadCorporate Tax
Corporate Tax structure left unchanged
Withholding tax on certain overseas borrowings reduced to 5% from 20%
Securities Transaction Tax cut by 20% for stock market ordersService Tax
Service Tax rate up from 10% to 12%
Higher Service Tax to add Rs 186.6 bn in revenue
Duty-free baggage allowance for Indians increased to Rs 35,000
Duty-free baggage allowance for children increased to Rs 15,000Proposal to tax all services except negative list
Exempted services include:
Government services
Pre-school, school education, recognised education at higher levels and approved vocational education
Renting of residential dwellings, entertainment and amusement services to be exempt
Public transportation to be exempt from service tax
Agricultural activities and animal husbandry to be exempt from service tax
Health care
Charities, religious persons
Sportspersons
Performing artists in folk and classical arts
Individual advocates providing services to non-business entities
Independent journalists
Services related with animal care and car parking
Services of business facilitators and correspondents to banks and insurance companies
Construction services relating to specified infrastructure, canals, irrigation works, post-harvest infrastructure, residential dwelling, and low-cost mass housing up to an area of 60 sq. mtr.
Exemption for the monthly charges payable by a member to a housing society up from Rs 3,000 to Rs 5,000
Industry related with cinematographic films
To set up a Study Team to examine the possibility of a common tax code for service tax and central excise
New scheme to simplify refundsIndirect Taxes
Other Indirect Taxes
Standard Excise duty raised from 10% to 12 %
Merit Excise duty raised from 5% to 6 %
Lower merit rate raised from 1% to 2 %
Lower merit rate for coal, fertilisers, mobile phones and precious metal jewellery retained at 1%
Excise duty on large cars up from 22% to 24%
Customs duty cut to 2.5% on sugarcane planter, root or tuber crop harvesting machine and rotary tiller and weeder
Customs duty cut to 5% on specified coffee plantation and processing machinery
To extend project import benefit to green house and protected cultivation for horticulture and floriculture
Customs duty cut to 5 % on some water soluble fertilisers and liquid fertilisers
Customs duty cut to 2.5 % on urea
To extend concessional import duty for Mechanised Handling Systems and Pallet Racking Systems in mandis or warehouses for horticultural produce
Imports of equipment for initial setting up or expansion of fertiliser projects fully exempt for three years
Steam coal fully exempt, concessional CVD of 1% for two years
Natural Gas and Liquified Natural Gas exempt
Uranium concentrate, Sintered Uranium Dioxide in natural and pellet form exempt
Customs Duty on Mining machinery cut to 2.5%
Customs Duty on Railways safety equipment cut to 7.5%
Import Duty on road, tunnel boring equipment fully exempt
Parts of aircraft, testing equipment and tyres exempt
Customs Duty on coating material for manufacture of electrical steel cut to 5 %
Nickel ore and concentrate and nickel oxide/ hydroxide fully exempt
Customs Duty on non-alloy, flat-rolled up at 7.5%
Automatic shuttle-less looms fully exempt
Automatic silk reeling and processing machinery fully exempt
Second-hand textile machinery to attract basic duty of 7.5 %
Duty on wool waste and wool tops cut to 5%
Duty on Titanium dioxide cut to 7.5%
Aramid yarn and fabric used for the manufacture of bullet proof helmets fully exempt
Duty on branded ready-made garments with up at 12 %
Waste Paper fully exempt
LCD and LED TV panels fully exempt
Memory card for mobile phones fully exempt
Duty on Adult diapers cut to 5%
Duty on bicycles increased to 30%
Duty on bicycle parts increased to 20%
Excise Duty on hand-made matches cut to 6%
Six specified life-saving drugs/ vaccines for HIV-AIDS, renal cancer etc fully exempt
Customs Duty on Soya protein concentrate and isolated soya protein cut to 15% and 10% respectively
Iodised salt to have concessional basic customs duty of 2.5%
Customs Duty on Probiotics cut to 5%
Solar energy equipment to be fully exempt
Excise duty on LED lamps cut to 6 %
Hybrid vehicle batteries to be fully exempt
Customs duty on gold bars, gold coins increased to 4%
Customs duty on non-standard gold increased to 10%
Customs duty on platinum increased to 4%
Basic duty on gold ore, concentrate and dore bars increased to 2%
Excise duty on refined gold increased to 3 %
Polished, coloured gem stones to attract 2% duty
Excise duty on cigarettes to attract ad valorem component of 10% on existing rates
Excise duty on hand-rolled bidis increased to 10 per thousand
Excise duty on machine-rolled bidis increased to `21 per thousand
Duty increased on pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco in pouches
Cess on Crude petroleum oil increased to `4,500 per metric tonne
Customs Duty on large cars/ MUVs/ SUVs with value exceeding USD 40,000 enhanced from 60 per cent to 75 per cent ad valorem
Packaged cement to have unified rate of 12 % + `120 PMT for non-mini cement plants and 6 % + `120 PMT for mini-cement plants
Non-branded jewellery to attract excise duty of 1%
Branded silver jewellery fully exempt
Building of commercial vehicle bodies to attract an ad valorem rate of 3%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 yearGrowth & 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
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 lifeFiscal 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 GDPFarm & 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 bnInflation
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 constraintsFinancial 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 formInfrastructure
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 13Subsidy
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 graduallyChildren and Education
Allocated Rs 255.55 bn under Right to Education
Integrated Child Development Services (ICDS) scheme to be re-structured
Allocated Rs 158.50 bn for child development in FY 13
Allocated Rs 119.37 bn for mid-day meal plan FY 13
Allocated Rs 7.5 bn for empowerment of adolescent girls
Credit guarantee fund proposed for poor students
Allocated Rs 31.24 bn for secondary education
Rs 250 mn for the Institute of Rural Management, Anand
Rs 500 mn to establish a world-class centre for water quality with focus on `arsenic contamination in Kolkata
Rs 1 bn for Kerala Agricultural University
Rs 500 mn for University of Agricultural Sciences Dharwad, Karnataka
