Key Features of Budget 2013-2014

HIGHLIGHTS OF UNION BUDGET 2013-14

The Union finance minister on 28th February 2013 presented the Budget for the year 2013-14. Some of the key points that were highlighted by Chidambaram in the Budget are:

No change in slabs and rate for personal income tax.
Tax credit of Rs 2000 to be provided to every person to having income of up to Rs 5 lakh, this will benefit 1.8 crore people.
5 to 10 per cent surcharge on domestic companies whose taxable income exceeds Rs 10 crore.
Commodities transaction tax levied on non-agriculture commodities futures contracts at 0.01 per cent.
Modified GAAR norms to be introduced from April 1, 2016.
No change in peak rate of customs duty for non-agriculture products.
Direct Taxes Code (DTC) bill to be introduced in current Parliament session.
No change in basic customs duty rate of ten per cent and service tax rate of 12 per cent.
Import duty on rice bran oilcake withdrawn.
Series of concessions granted to Maintenance, Repair and Overhaul (MRO) business in the aviation sector.
Import duty raised on set-top boxes from 5 to 10 per cent to safeguard interest of domestic producers.
10 per cent customs duty to be levied on unprocessed illuminate.
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.
No countervailing duty on ships and vessels.
Specific excise duty on cigarettes and cigars raised by 18 per cent.
Excise duty on SUVs to be increased to 30 per cent from 27 per cent, SUVs registered as taxis exempted.
Vocational courses offered by state-affiliated institutes to be exempted from services tax.
Duty on mobiles above Rs 2,000 raised from one to six percent, based on their maximum retail prices.
Service tax to be levied on all a/c restaurants.
One time voluntary compliance scheme for service tax defaulters to be introduced. Interest and penalties to be waived.
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.
Contributions made to central and state government health scheme eligible to tax benefit.
Eligibility conditions for life insurance policies of persons suffering disabilities to be liberalised.
Investor Protection Fund set up by depositories will be exempt from tax.
TDS of one per cent on value of properties above Rs 50 lakh. Agriculture land exempted.
Securities Transaction Tax (STT) reduced on equity future, mutual fund.
Fiscal deficit will be 5.2 per cent in current year and 4.8 per cent in the next fiscal.
Will redeem pledge to reduce fiscal deficit to 3 per cent by 2016-17 and revenue deficit to 1.5 per cent of GDP.
Tax Administration Reform Commission to be set up to regularly review tax law applications.
In 2011-12, tax-GDP ratio was 5.5 per cent for direct taxes and 4.6 per cent for indirect taxes.
Surcharge of 10 per cent for individuals whose taxable income is over Rs 1 crore.
Plan expenditure pegged at Rs 5,55,322 crore.
Non plan expenditure pegged at Rs 11,09,975 crore for 2013-14.
Low interest rate funds to be provided from Clean Energy Fund for green projects for a period of five years.
Generation-based incentives to wind energy projects reintroduced, Rs 800 crore provided for the purpose to Ministry of New & Renewable Energy.
Constraints will not come in the way for providing additional funds for security of the nation.
Rs 2,03,672 crore, including Rs 86,741 crore capital expenditure to Defence in 2013-14.
Grant of Rs 100 crore each to AMU (Aligarh), BHU (Varanasi) and TISS (Guwahati) and INTACH.
National Institute for Sports to train coaches to be set up at Patiala at a cost of Rs 250 crore.
Rs 532 crore to make post offices part of core banking.
Rs 5,87,082 crore to be transferred to states under share of taxes and non-plan grants in 2013-14.
Comprehensive social security package being evolved by convergence of several schemes run by various ministries.
Investor with stake of 10 per cent or less will be treated as FII; any stake more than 10 per cent will be treated as FDI.
FIIs will be allowed to participate in exchange-traded currency derivatives.
Schemes to be evolved for cities to take up waste to energy projects.
Small and medium companies to be allowed to listed on MSME exchange without making a public offer.
Financial Sector Legislative Reforms Commission (FSLRC) to submit its report in March 2013.
Govt. to construct power transmission system from Srinagar to Leh at the cost of Rs 1,840 crore, Rs 226 crore provided in current Budget.
Headline WPI inflation brought down to 7 per cent and core inflation to 4.2 per cent.
Budget expenditure is Rs 16,65,297 crore and Plan expenditure Rs 5,55, 322 crore
The revised expenditure target is Rs 14,30,825 crore or 96 per cent of Budget estimate for this fiscal. In 2013-14, the budget estimate is Rs 16,65,297 crore.
One overarching goal to provide education and skills to youth for securing jobs in the 2013-14.
FM allocates Rs 41,561 crore for SC sub-plan; Rs 24,598 crore for tribal sub plan.
Additional sum of Rs 200 crore to Women and Child Welfare Ministry to address issues of vulnerable women.
Rs 3511 crore allocated to Minority Affairs Ministry which is 60 per cent of the revised estimates.
CFM allocates Rs 41,561 crore for SC sub-plan; Rs 24,598 crore for tribal sub plan.
Rs 3511 crore allocated to Minority Affairs Ministry which is 60 per cent of the revised estimates.
Rs 110 crore to be allocated to the department of disability affairs.
Rs 37,330 crore allocated for Ministry of Health & Family Welfare.
Rs 1069 crore allocated to Department of Ayush.
Rs 4,727 crore to be allocated for medical education and research.
In the Budget Rs 65,867 crore allocated to Ministry of HRD in 2013-14.
Medical colleges in six more AIIMS-like institutions to start functioning this year; Rs 1650 crore allocated for the purpose.
Rs 5,284 crore to various Ministries for scholarships for SC/ST, OBC and minority students.
Rs 13,215 crore to be provided for mid-day meal scheme.
Rs 17,700 crore provided for Integrated Child Development Scheme.
Rs 15,260 crore to be allocated to Ministry of Drinking Water and Sanitation.
Rs 80,194 crore allocation for Ministry of Rural Development in 2013-14. About Rs 33,000 crore for MGNREGA.
Rs 80,194 crore allocated for rural development schemes.
States which have completed Pradhan Mantri Gramin Sadak Yojana will be eligible for PMGSY-II, others will continue with PMGSY-I.
Rs 14,873 crore for JNNURM for urban transportation in 2013-14 against Rs 7,880 crore in the current fiscal.
Foodgrain production in 2012-13 will be over 250 million Tons.
Average annual growth rate of agriculture and allied services estimated at 3.6 per cent in 2012-13 when 250 MT foodgrains was produced
Rs 27,049 crore allocation to the Agriculture Ministry in 2013-14
Rs 7 lakh crore target fixed for agriculture credit for 2013-14 compared to Rs 5.75 lakh crore in the current year.
Eastern Indian states to get Rs 1,000 crore allocation for improving agricultural production.
Additional sum of Rs 200 crore to Women and Child Welfare Ministry to address issues of vulnerable women.
Green revolution in east India significant. Rice output increased in Assam, Odisha, Jharkhand and West Bengal; Rs 1,000 crore allocated for eastern states.
Rs 5,387 crore to be allocated for integrated watershed programme for farmers in 2013-14, an increase from Rs 3,050 crore in the current fiscal.
Indian Institute of Biotechnology will be set up at Ranchi.
Rs 10,000 crore set aside for incremental cost for National Food Security Bill over and above food subsidy.
Four Infrastructure debt funds have been registered.
Tax free bonds issue to be allowed up to Rs 50,000 crore in 2013-14 strictly on capacity to raise funds from the market.
Rs 5,000 crore will be made available to NABARD to finance construction of godowns and warehouses.
Government has decided to constitute a regulatory authority for the road sector.
A company investing Rs 100 crore or more in plant and machinery in April 1, 2025 to March 31, 2025 will be allowed 15 per cent investment deduction allowance, apart from depreciation.
Rajiv Gandhi Equity Scheme will be liberalised to allow first time investor to invest in Mutal Fund and equity.
First housing loan up to Rs 25 lakh would get additional deduction of interest of up to Rs 1 lakh in 2013-14.
Current account deficit continues to be high due to excessive dependence on oil, coal and gold imports and slowdown in exports.
India does not have choice between welcoming and spurning foreign investment; it is an imperative.
Battle against inflation must be fought at all fronts.
DIPP and Japan's JICA preparing plan for Chennai-Bengaluru Industrial corridor.
Two new major ports to be set up in West Bengal and Andhra Pradesh
Oil and gas exploration policy will be reviewed and moved from profit-sharing to revenue-sharing.
Policy on exploration of shale gas on the anvil; natural gas pricing policy will be reviewed and uncertainty removed.
Govt to set up India's first women's bank as a public sector bank by October 2013.
Coal imports during Apr-Dec 2012 crossed 100 million tonnes and expected to go up to 185 million tonnes in 2016-17.
5 million tons Dabhol LNG import terminal to be operate at full capacity in 2013-14.
FM asks state governments to prepare financial restructuring plan for power distribution companies at the earliest.
SIDBI's re-financing facility to MSMEs to be doubled to Rs 10,000 crore.
Incubators set up by companies in academic institutions will qualify for Corporate Social Responsibility (CSR) activities.
Rs 500 crore would be allocated for addressing environmental issues faced by textile industry.
Concessional six per cent interest on loans to weavers.
Financial Sector Legislative Reforms Commission (FSLRC) to submit its report next month.
Standing Council of Experts in Ministry of Finance to examine transaction cost of doing business in India.
Rs 14,000 crore capital infusion into public sector banks in 2013-14.
PSU banks to have ATMs at all their branches by March 31, 2014.
Rs 6,000 crore to be allocated for rural housing fund in 2013-14.
All Regional Rural Banks and cooperative banks to be e-linked by this year-end.
Insurance companies will be empowered to open branches in Tier-II cities with approval of IRDA.
National Housing Bank (NHB) to set up urban housing bank fund and Rs 2,000 crore will be allocated in this regard.
Public sector general insurance companies to set up adalats to clear disputes related to claims.
Rashtriya Swasthya Bima Yojana benefit will be extended to rickshaw pullers, auto and taxi drivers and sanitation workers.
Comprehensive social security package being evolved by convergence of several schemes run by various ministries.
Schemes to be evolved for cities to take up waste to energy projects.
Small and medium companies to be allowed to listed on MSME exchange without making a public offer.

IMPLICATIONS OF UNION BUDGET 2013-2014.

India unveiled a bigger-than-expected outlay for the coming fiscal year, to be funded by higher revenue including new taxes on the rich and large companies, in one of the most highly anticipated budgets of recent years.

Sports utility vehicles, imported cars and motorcycles, high-end mobile phones, eating out at air-conditioned restaurants and cigarettes will become costlier with finance minister P Chidambaram deciding to impose higher taxes on these items.

On the other hand, there is good news for ladies as far as jewellery is concerned as they will be allowed to bring more duty free gold items provided they have stayed out of India for more than year.

Moreover, branded apparels will become cheaper as there will be zero excise duty on the item. Carpets and other textile floor coverings of coir or jute will also become less expensive as they have been fully exempted from excise duty.

In his Budget proposals for 2013-14, finance minister P Chidambaram said excise duty on Sports Utility Vehicles (SUV) will be raised to 30 per cent from 27 per cent. Subsequently, basic customs duty on new passenger cars and other motor vehicles (high-end cars) costing more than $40,000 and/or engine capacity exceeding 3,000cc for petrol run vehicles and exceeding 2500 cc for diesel run vehicles has been hiked 100 per cent from 75 per cent earlier. Likewise, duty on yachts and similar vessels has also been raised to 25 per cent from 10 per cent.

In a blow to mobile handset makers, excise duty on instruments priced above Rs 2,000 has been raised to six per cent but the concessional excise duty of one per cent and has been kept unchanged in the case of low priced phones.

Smokers will also have to shell out more for their puffs with Chidambaram training his eyes on them for more tax revenues.

Eating out at air conditioned restaurants will also become more expensive with the finance minister bringing it under the purview of service tax. At present, service tax of 12 per cent does not apply to A/C restaurants that do not serve liquor.

Homes and flats with a carpet area of 2,000 sq ft or more or of a value of Rs 1 crore will also become more expensive as the rate of abatement for this class of buildings has been reduced from 75 per cent to 70 per cent.

Silk clothes made using imported raw materials will become expensive as customs duty on raw silk of all grades has been increased to 15 per cent from 5 per cent.

Set top boxes will also become costlier with basic customs duty on the item has been increased 10 per cent from from 5 per cent.

However, it is not gloomy all the way with Chidambaram leaving room for some cheer as well. The duty-free allowance on jewellery for an Indian passenger, who has been residing abroad for over one year or a person who is transferring residence to India, has been raised to Rs 1 lakh in case of a lady passenger from Rs 50,000 earlier.
For a male passenger, this has been raised to Rs 50,000 from Rs 10,000. Moreover, precious stones will become cheaper as the basic customs duty has been cut to 2 per cent from 10 per cent on pre-forms of precious and semi-precious stones.

Branded apparels will also become cheaper as there will be no excise duty on the item. Last year, 10 per cent excise duty was levied on 30 per cent of the maximum retail price (MRP).

Imported hazel nuts will also become cheaper as the customs duty has been reduced to 10 per cent from 30 per cent.

Similarly, dehulled oat grain will also be less expensive as customs duty has been cut to 15 per cent from 30 per cent earlier.

The following sectors/companies will benefit or be impacted by the budget proposals:

WINNERS

* Explorers such as ONGC, Oil India, Reliance Industries and Cairn India will benefit as the budget proposed to move to revenue-sharing from profit-sharing policy in the oil and gas sector.

* Higher allocation for building roads should help highway developers, including IRB Infrastructure and Jaiprakash Associates.

LOSERS

* Increase in excise duty on sport utility vehicles (SUVs) to 30 percent from 27 percent is seen hitting demand for such vehicles made by companies that include Mahindra & Mahindra and Tata Motors.

* A proposal to raise the excise duty by about 18 percent on cigarettes is negative for India's biggest tobacco company, ITC Ltd.

* Gross market borrowing is seen at 6.29 trillion rupees in 2013/14, higher than market estimated, which is negative for banks including State Bank of India and Punjab National Bank as it is likely to trigger worries over liquidity in the system.