NEW DELHI, Feb 28: Resisting the temptation of election-year populism, the general Budget today offered no major tax sops but slapped a surchage on ‘super-rich’, raised duties on mobile phones, cigarettes and imported luxury vehicles and imposed a levy on property sale above Rs 50 lakh.
Presenting UPA-II’s last full-fledged Budget ahead of net year’s general Elections to net in an additional Rs 18,000 crore, Finance Minister P Chidambaram did a tight rope walk balancing growth needs with fiscal prudence by stepping up expenditure in social sectors and cutting subsidies.
In a Budget that pegs fiscal deficit at 4.8 per cent of GDP, Defence allocation has been stepped up by 14 per cent over the revised expenditure in the current year to Rs 2,03,672 crore in the next.
Without changing the basic slabs and rates in income tax rates, Chidambaram gave a benefit of Rs 2,000 to individual tax payers with taxable income of up to Rs 5 lakh, that will benefit 1.8 crore tax payers entailing a revenue sacrifice of Rs 3,600 crore.
First-time home buyers will get an additional deduction of interest of Rs 1 lakh for home loans above Rs 25 lakh and Rs 1.50 lakh for home loans up to Rs 25 lakh. This will be over and above the current Rs 1 lakh deduction allowed for self-occupation.
The much-talked about ‘super-rich’ tax was levied as a 10 per cent surcharge on “relatively prosperous” persons with an income over Rs 1 crore.
Similarly, on domestic corporates with taxable income of Rs 10 crore, the surcharge has been raised from 5 to 10 per cent. Foreign companies will pay an increased surcharge of 5 per cent, up from 2.
The Finance Minister proposed that the surcharges will be in existence for just a year, while continuing the 3 per cent education cess on all tax payers.
In a bid to eliminate tax evasion through under-valuation and under-reporting in property sale, the Budget proposes a TDS of one per cent on all transfers of immovable properties for a consideration above Rs 50 lakh. Agriculture land will however be exempted from this.
While Securities Transaction Tax (STT) has been marginally reduced, the Minister introduced a new Commodities Transaction Tax (CTT) on non-agricultural commodities futures.
In indirect taxes, the Budget does not make any change in the peak Customs and Excise Duties or Service Tax, but it sharply raised import duty on high-end luxury cars, motorcycles and yachts from 75 per cent to 100 per cent and excise duty on SUVs from 27 to 30 per cent.
The Finance Minister, like most of his predecessors, did not fail to touch smokers in raising resources. Cigarettes, cigars, cigarillos and cheroots will attract an additional 18 per cent excise duty.
Dining at air-conditioned restaurants will cost more as service tax has been extended such establishments which were earlier exempted if they did not serve liquor.
Mobile costing above Rs 2,000 will attract a 6 per cent excise duty instead of 1 per cent currently.
Under the fresh excise duty proposals, marbles and silver manufactured from smelting zinc or lead while readymade garments, carpets and floor covering of coir and jute will become cheaper.
Vocational courses in state-aided institutions and agriculture testing facilities have been exempted from service tax.
In a one-time amnesty scheme, 10 lakh service tax defaulters have been offered a voluntary compliance encouragement scheme under which penalty and interest will be waived for returning to the tax fold.
Aiming at higher growth rate for inclusive and sustainable development and revive manufacturing, Chidambaram hiked outlays for health, water and sanitation, SCs/STs and tribals and rural development.
While the direct tax proposals will bring in Rs 13,300 crore, those on indirect tax side will rake in Rs 4,700 crore.
Hoping to put behind a bad year on account of economic slowdown, Chidambaram said he has a confidence to be more ambitious in the coming year in pegging the total expenditure at Rs 16,65,297 crore and Plan expenditure of Rs 5,55,322 crore. Non-Plan expenditure is estimated at Rs 11,09,975 crore.
This is more than 29.4 per cent of the revised estimate in the current year.
“All flagship programmes have been fully and adequately funded. I dare say I have provided sufficient funds to each ministries or departments consistent with the capacity to spend the funds,” he said in his Budget speech that lasted over 100 minutes.
However, during the current year the revised estimate for total expenditure was reduced to Rs 14,30,825 crore, down from Rs 14,90,925 crore.,
The fiscal deficit for the current year has been contained at 5.2 per cent and for the coming year it is estimated at 4.8 per cent. The current year estimate is less than previously predicted 5.3 per cent.
Chidambaram expressed optimism that 2016-17 the Government would bring down the fiscal deficit to 3 per cent, the revenue deficit to 1.5 per cent of GDP and effective revenue deficit to zero.
Unusually, the Budget does not make any economic growth rate prediction for the current as well as next fiscal.
Presenting his eighth budget, the first after coming back to Finance Ministry last year, Chidambaram brought down the subsidy for 2013-14 to Rs 2,31,084 crore from Rs 2,57,654 crore.
He raised the target from disinvestment proceeds to over Rs 55,000 crore from current year’s revised estimate of about Rs 24,000 crore.
In a bid to revive manufacturing, the Finance Minister announced the grant of investment allowance at the rate of 15 per cent to manufacturing companies that invest more than Rs 100 crore in plant and machinery between April 2013 and March 2015. This will be over and above currently allowable depreciation.
The Budget proposes three measures to promote household savings. The income limit for Rajiv Gandhi Equity Saving Scheme for first time investors is being raised from Rs 10 lakh to Rs 12 lakh.
To wean away investments in securities like gold, instruments such as inflation indexed bonds will be introduced to protect savings from inflation.
In order to encourage infrastructure sector, Chidambaram said the Government will allow certain companies to raise tax free bonds up to Rs 50,000 crore and encourage infrastructure debt fund.
The Budget has increase allocation for education to Rs 65,867 crore, on health and family welfare scheme to Rs 37,330 crore, backward region grant fund to Rs 11,500 crore, drinking water and sanitation Rs 15,260 crore and on Jawarhar Lal Nehru Urban Renewal Mission to Rs 14,873 crore.
In the midst of a major modernisation drive, Defence Ministry today got a 14 per cent hike in its budget as Finance Minister P Chidambaram gave it Rs 2,03,672 crore for 2013-14 with a promise to provide any additional fund required for national security.
Today’s allocation is up by Rs 25,169 crore from last year’s revisited estimate of Rs 1,78,503 crore. The budget estimate was Rs 1,93,407 crore but Rs 14,904 crore was slashed by the Finance Ministry owing to the strain on the economy.
“I propose to increase the allocation for defence to Rs 2,03,672 crore. This will include Rs 86,741 crore for capital expenditure,” Chidambaram said.
“The Defence Minister has been most understanding and I assure him and the House that constraints will not come in way of providing any additional requirement for the security of the nation,” he said.
The Defence Ministry is in a major modernisation process with several acquisitions in the pipeline besides upgradation of infrastructure in the northeast along with China border.
Among the major acquisitions in the offing are the 126 multirole combat aircraft, 22 Apache attack choppers and 15 heavy-lift choppers.
The capital expenditure was hiked from Rs 69,579 crore last year to Rs 86,741 crore.
Defence Minister A K Antony was satisfied with the allocation.
“Factoring the current economic scenario, he (Chidambaram) has been fair to the Defence sector also by increasing the budget and giving an assurance that should there be any urgent need in future the same would be provided,” Antony told reporters.
“Taking into account the difficult economic situation both at home and abroad, the Finance Minister has done a good job. The measures that he has outlined for the rejuvenation of the economy while ensuring inclusive growth are indeed commendable,” Antony said.
The Defence Ministry had last year demanded for Rs 40,000 crore more for meeting its modernisation requirements in addition to the Rs 1,93,407 crore but that could not be provided.
Rs 14,904 crore were cut from its budget allocation. Of this cut, Rs 10,000 crore were from the capital expenditure and the remaining was from revenue expenditure.
Of the total expenditure of the Government of India, defence expenditure would account for ten per cent which is one per cent less than 2012-13.
In 2011-12, the Government had allocated Rs 1,64,415 crore for the Defence Ministry and later, it was revised to Rs 1,70,937 crore. Increasing the allocation by 13 per cent, the Government gave Rs 1,93,407 crore to the ministry for 2012-13. (PTI)
Budget Highlights
- Finance Minister makes three promises: to women, youth and the poor .
- Nirbhaya Fund to empower women and to keep them safe and secure.
- Proposal to set up India’s first Women’s Bank as a Public sector bank.
Rs 1,000 crore for skill development of 10 lakh youth to enhance their employability and productivity
Direct Benefit Transfer (DBT) Scheme to be rolled out throughout the country during the term of UPA Government
Fiscal Deficit for 2013-14 is pegged at 4.8 per cent of GDP. The Revenue Deficit will be 3.3 per cent for the same period
Plan Expenditure placed at Rs 5,55,322 crore. It is 33.3 per cent of the total expenditure while Non Plan Expenditure is estimated at Rs 11,09,975 crore. The plan expenditure in 2013-14 will be 29.4 per cent more than the RE of the current year i.e. 2012-13
Substantial rise in allocation to the social sector. Allocation for Rural Development Ministry raised by 46 percent to Rs 80,194 crore.
The target for farm credit for 2013-14 has been set at Rs 7,00,000 crore against Rs 5,75,000 crore during the current year.
Rs 10,000 crore earmarked for National Food Security towards the incremental cost.
Education gets Rs 65,867 crore, an increase of 17 per cent over RE for 2012-13.
ICDS gets Rs 17,700 crore. This is 11.7 per cent more than the current year.
Drinking water and sanitation will receive Rs 15,260 crore. Rs 1,400 crore is being provided for setting up water purification plants to cover arsenic and fluoride affected rural areas.
Health and Family Welfare Ministry has been allotted Rs 37,330 crore. National Health Mission will get Rs 21,239 crore which represents 24.3 per cent over the RE.
The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) will receive Rs 14,873 crore as against RE of Rs 7,383 crore in the current year.
Defence has been allocated Rs 2,03,672 crore. Rs 3,511 crore have been earmarked to Minority Affairs Ministry, 60 per cent higher than RE for 2012-13
The Government will encourage Infrastructure Debt Fund (IDF) and allow some institutions to raise tax free bonds upto Rs 50,000 crore which is 100 per cent more than the current year
India Infrastructure Finance Corporation (IIFC), in partnership with ADB will help infrastructure companies to access bond market to tap long term funds.
Income limit under Rajiv Gandhi Equity Savings Scheme (RGESS) will be raised from Rs 10 lakh to Rs 12 lakh
First home loan from a bank or housing finance corporation upto Rs 25 lakh entitled to additional deduction of interest upto Rs 1 lakh.
Proposal to launch Inflation Indexed Bonds or Inflation Indexed National Security Certificates to protect savings from inflation.
On oil and gas exploration policy, the Budget proposes to Move from the present profit sharing mechanism to revenue Sharing. Natural gas pricing policy will be reviewed.
On coal, the Budget proposes adoption of a policy of Pooled pricing.
Benefits or preferences enjoyed by MSME to continue upto three years after they grow out of this category
Refinancing capacity of SIDBI raised to Rs 10,000 crore
Technology Upgradation Fund Scheme (TUFS) for textile to continue in 12th Plan with an investment target of Rs 1,51,000 crore.
Rs 14,000 crore will be provided to public sector banks for capital infusion in 2013-14.
A grant of Rs 100 crore each has been made to 4 institutions of excellence including Aligarh Muslim University, Banaras Hindu University, Tata Institute of Social Sciences, Guwahati and Indian National Trust for Art And Cultural Heritage (INTACH).
New taxes to yield Rs 18,000 crore.
SSA surcharge of 10 per cent on persons (other than companies) whose taxable income exceeds Rs1 crore have been levied.
Tobacco products, SUVs and Mobile Phones to cost more.
Relief of Rs 2,000 for the tax payers in the first bracket of 2 to 5 lakhs.
‘Voluntary Compliance Encouragement Scheme’ launched for recovering service tax dues.
Rs 9,000 crore earmarked as the first installment of balance of CST compensations to different States/UTs. (UNI)
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