HIGHLIGHTS OF THE BUDGET 2013
The long-awaited Budget for the new financial year 2013-14 was announced by the Finance Minister P. Chidambaram. The budget comes up with some major and minor amendments in the financial plan, the common man needs to find out what’s in for him, the plus and the minus. Here are the highlights of the Budget 2013:
- Budget expenditure for 2013-14- Plan expenditure fixed at Rs 555,322 crore; Non plan expenditure at Rs 11,09,975 crore.
- Law has been modified to prevent tax avoidance that shall come into effect from the 1st of April,2016.For contributions to national children’s fund , 100% tax deduction is allowed
- Mutual fund tax redemptions reduced to .001 percent
- With a 5% increase in the total figure dedicated to defence has risen to Rs.203,672 crore.
- Maintenance repair overhaul sector (MRO) shall be encouraged by granting concessions to smoothen the business in the aviation segment
- 18% excise duty increased on cigarettes
- Customs duty on non agricultural products remain same
- A considerable increase in import duty from 75% to 100% is noted on heavy vehicles.
- 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- Import duty on rice bran oilcake withdrawn
- Tax Administrative Reforms Commission to be set up to regularly review tax law applications.
- Rajiv Gandhi Equity Scheme to be liberalised.
- Need to encourage FDI in consonance with economic priorities
- Tds is proposed on the sale of immovable properties. In spite of no capital gain on sale, 1% consideration to be deducted by government.
- From the 1st June,2013 Wealth Tax Returns will be electronically filed.
- Defective Return: To save the return from being counted in the defective or invalid return, the tax should be paid before filing the return.
- Investment allowance deduction to be treated as income under profits and gains of business or profession. This condition arises when the asset on which deduction is allowed is transferred within 5yrs.
- Taking a loan in order to acquire a residential property from the bank, allows the loan seeker a deduction over and above 1.50.000 adding up the total benefit to Rs.2,50,000.
- Commodities Transaction Tax (CTT) this tax is to be levied on sale of commodity derivatives and transactions traded in recognized associations at the rate of 0.01
- Agricultural land’s meaning has been modified from its earlier definition. If the situation of the land is 2 kms/6kms/8kms from the local municipality and the population lies between 10,000-1,00,000, 1,00,000-10,00,000 and above 10,00,000 respectively, then the area shall be called urban area.
- Security Transaction Tax Reduced from 10% to 25 %
- Royalty/Fees for Technical Services Paid to Non-Residents increased from 10% to 25%
- Immovable property when received for a consideration less than stamp duty value, the difference between stamp value and sale price ,in the hands of purchaser and buyer are taxable under the heads income from other sources and capital gains/business/ profession respectively.
- Keyman insurance policy assigned to any person, no exemption is granted on maturity if transferred from the company to keyman.
- For land/building held as stock in trade, the stamp duty value to be taken as consideration under the head profits and gains from business/profession.
Fiscal deficit shall be seen at 4.8 point of GDP in 2013-14 as compared to 5.2 point of GDP in 2012-13.rationalizing expenditure seems to be the option to face the huge deficit. The financial plan aims at reducing the fiscal deficit to 3% and revenue deficit to 1.5% of GDP by 2016-17
Relief in Tax credit of Rs.2000 to be provided to every person with an annual income upto Rs.5 lakh, around 1.8 crore people will benefit from this .Personal income tax slabs have not been increased or decreased.. Those with an income of Rs.1 crore and above, 10% surcharge applicable.
For Domestic Companies Surcharge at the rate 5% to be continued if Taxable Income exceeds Rs. 1 crore but upto Rs. 10 crore.10% if Taxable Income exceeds Rs. 10 crore. Education Cess and Marginal Relief to be continued as before
For foreign companies , 2% surcharge in case of income ranging in between 1crore-10 crore, whereas ,for income above 10 crore 5% surcharge applicable.
- Service tax remains untouched at the 12 % rate
- Service tax on all air conditioned restaurants (those serving alcohol and those not serving, both)
- No service tax to be charged on vocational courses offered by the government institutions
- No service tax on agricultural testing procedures.
- Vehicle parking to general public will be covered under the service tax
- For service tax defaulters, One time voluntary compliance scheme is introduced. The Direct tax proposals are expected to yield Rs 13,300 crore while indirect tax proposal to give Rs 4,700 crore. Under the Voluntary Compliance Encouragement Scheme 2013, service providers can register themselves and declare the last 5yrs’ accountability and refrain from any sort of penalty if tax is paid on time.
- Courses approved by State Council of Vocational Training to be included in the Approved Vocational Educational Course .
- Charitable organizations’ services to be exempted from tax .(The limit of value of progression reduced from Rs.25 lacs to Rs.10 lacs)
- The abatement for construction to be reduced from 75% to 70% provided carpet area of residential unit is greater than 2000 sq.ft.
- Rs. 1000 crore to be used for establishing Nirbhaya funds
- In order to ensure dignity, safety and security of women various measures of safety shall be introduced and investments on plans and programmes seeking the above for the female population and promoting the progress of the girl child.Rs.97000 to be put towards women’s development.
POWER AND ENERGY SECTOR
- Promotion and encouragement of waste to energy project in the cities.
- Low interest rate funds will be made available in order to promote clean energy and make it easier for the people.
- A shift from profit sharing to revenue sharing will be seen in oil and gas sector
The funds allocated for/under various schemes / sectors are stated as follows:
Allocated funds Plan/ scheme/sector
- Rs.500 crore Promoting crop diversification
- Rs.200 crore Promoting nutrient-rich crops
- Rs.50 crore Farmer-producer organisations
- Rs.50 crore Textile ministry establishing apparel parks
- Rs.96 crore Handloom sector to benefit 150,000 weavers by
Concessional six per cent interest on loans
- Rs.41,000 crore Scheduled Caste plan
- Rs.110 crore for Department of disabilities
- Rs.37,330 crore Health ministry
- Rs.65,867 crore Human resource development ministry
- Rs.13,250 crore midday meals scheme
- Rs.17,700 crore Integrated Child Development Scheme
- Rs.15,260 crore Drinking water and sanitation ministry
- Rs.307 crore National livestock mission to be launched
- Rs.10,000 crore Initial expenditure on implementation
- Rs.80,294 crore Rural development ministry allocation raised by 46 per cent
- Rs.33,000 crore Rural jobs scheme
- Rs.140 billion capital infusion in state-run banks
- Rs.800 crore New and Renewable energy
- Tax free infrastructure bonds to be issued worth rs.50000 crore.
- Infrastructure debt funds will be proposed to be promoted
- In the first six months of 2013, 3000 km of road projects to be granted. A regulator needs to be appointed for the same.
- For investors (investing over Rs.100 crore) in infrastructure projects, over 15 percent and more of incentive allowance permitted depreciation
- Two major ports coming up between west Bengal and Andhra Pradesh which will augment the 100 million tonnes handling capacity
- To ensure the operations are being carried out at Dabhol gas handling terminal in Maharashtra.
- New cities to emerge along Delhi – Mumbai corridor
- Elementary work to start up on Bangalore Mumbai industrial corridor
FOREIGN TRADE: Duty on exports of precious and semi precious stones to be cut to 2 point .No duty to be imposed on import of ships, vessels.
With the rising cost of living, the new budget will facilitate bond to protect our investments against inflation.
Health and Education shall be seen as the priorities along with welfare of women and children. Healthcare/medical institutions/affiliated schools will see some government spending. 3 billion to be allocated for programs aimed at solving the health issues like malnutrition. Alongside, safe drinking water to be made available by setting up more and more purification plants in order to combat food inflation, the food supply will be augmented. Foodgrain production for 2013 has been estimated to reach 250 million tonnes. Rs.10,000 crore allocated for initial expenditure on implementation. Creating abundant opportunities and scope for the youth in terms of job prospects/self employment will be laid emphasis upon thus increasing employment and ensuring security to many.