Genesis BM
February 28, 2013
 

Union Budget 2013-14

Finance Minister P. Chidambaram has presented a conventional Budget. He has not touched the income tax slabs, and has abstained from major tax concessions. Given below are the key highlights of the Union Budget 2013-14:

Highlights of the Budget 2013

Macro Statements

  • India faces challenge of getting back to its potential growth rate of 8 per cent
  • Only China and Indonesia growing faster than India
  • Plan expenditure pegged at Rs. 555,322 crore
  • Non-plan expenditure pegged at Rs. 11,09,975 crore for 2013-14
  • Revised estimate for total expenditure is Rs. 14.3 trillion in 2012/13, which is 96 percent of budget estimate
  • India's greater worry is the current account deficit - will need more than $75 billion this year and next year to fund deficit
  • Food inflation is worrying, will take all steps to augment supply side
  • 3000 km of road projects to be awarded in the first six months
  • Refinancing capacity of SIDBI increased to Rs. 10,000 crore from Rs. 5,000 crore for MSMEs
  • Household sector must be incentivised to save in financial instruments rather than gold
  • Allocation to defence spending up 4.5 per cent at Rs. 2.03 trillion
  • National Institute for Sports to train coaches to be set up at Patiala at a cost of Rs. 250 crore
  • Clean drinking water and sanitation to get Rs. 15,260 crore
  • Rs. 1,400 crore to set up water purification plants to fight fluoride affected areas
  • Proposal to set up India's first women's bank as a PSU bank; initial capital to be Rs. 1,000 crore
  • SIDBI's refinancing capacity increased to Rs. 10,000 crore
  • PSU banks to get Rs. 14,000 capital infusion in FY14
  • 2 new ports to be set up in West Bengal and Andhra Pradesh
  • KYC of banks will be sufficient to acquire insurance policies, banks to act as brokers
  • FY13 fiscal deficit estimated at 5.2 per cent; FY14 fiscal deficit estimated at 4.8 per cent
  • Rs. 6,275 crore allocated to Ministry of Science and Technology; Rs. 5,880 crore to Department of Atomic Energy
  • All cities with population of more than 1 lakh to be covered with FM radio services
  • 11 lakh beneficiaries have received benefit under Direct Benefit Transfer scheme
  • Rs. 532 crore to make post offices part of core banking
  • Grant of Rs. 100 crore each to AMU (Aligarh), BHU (Varanasi) and TISS (Guwahati) and INTACH.
  • By 2025 India can be a $5 trillion economy.

Policy Proposals

  • Tax Administration Reforms Commission to be set up to review tax laws
  • Oil and gas policy will be reviewed and changed from a profit-sharing structure to a revenue sharing structure
  • Natural gas pricing policy will be reviewed
  • NELP projects that were stalled will be cleared
  • A PPP policy framework is being devised with Coal India as a partner to provide coal to power producers. The Coal Ministry is working on it.
  • A proposal to amend the SEBI Act to strengthen the regulator is under consideration
  • Cabinet committee on investment set up to monitor stalled projects and guide decision making
  • The Insurance Law Amendment Bill and the PFRDA Bill are before the House, hope it gets passed in this session
  • FIIs can participate in Exchange Traded Currency Derivatives
  • Nirbhaya fund set up with an allocation of Rs. 1,000 crore set up to ensure safety and security of women
  • 10 per cent stake or less will be treated as FII, and stake of more than 10 to be treated as FDI
  • Insurance companies can open branches in Tier II cities without prior approval of IRDA
  • Company investing Rs. 100 crore or more between now and 2015 will be entitled to deduct an investment allowance of 15 per cent in addition to depreciation
  • Government has decided to constitute a regulator for the road sector
  • Government committed to food security bill. Rs. 10,000 crore set apart for expenditure likely under the Act

Tax Proposals

  • Surcharge of 10% on persons whose taxable income exceeds Rs. 1 crore
  • The current slabs were introduced last year. Hence, there is no case of revision, says Chidambaram
  • Rs. 5,87,082 crore to be transferred to states under share of taxes and non-plan grants in 2013-14
  • Person taking a loan for his first home during the period 2013-14 will be entitled to an additional deduction of Rs. 1 lakh
  • Surcharge of 10% on persons whose taxable income exceeds Rs. 1 crore
  • TDS of 1 per cent on land deals over Rs. 50 lakh
  • Excise duty on certain SUVs hiked to 30 per cent
  • Specific excise duty on cigarettes increased by 18 per cent
  • On mobile phones priced at more than Rs. 2000, excise duty hiked to 6 per cent
  • Excise rate, service tax rate unchanged
  • Non tax benefits to SME units to remain for 3 years after they outgrow from the category
  • Import duty on rice bran oilcake withdrawn
  • No change in basic customs duty rate of ten per cent and service tax rate of 12 per cent
  • Direct Taxes Code (DTC) bill to be introduced in current Parliament session: FM
  • No change in peak rate of customs duty for non-agriculture products
  • Modified GAAR norms to be introduced from April 1, 2016
  • Commodities transaction tax levied on non-agriculture
  • Commodities futures contracts at 0.01 per cent

For details on the Union Budget 2013-14 proposals, as shared by the Government of India, click here.

 

 

Genesis Burson-Marsteller, South Asia
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