budget highlights 2013-14_d n sharma & associates

8/12/2019 Budget Highlights 2013-14_D N Sharma & Associates

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g g s o u ge-

Chartered Accountants


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Generalbudget


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Stateof

econom

Slowing from 3.9 per cent in 2011 to 3.2 per cent in2012

o aeconomy

Growth rate of 8 percentIndian

challenge Only China and Indonesia growing faster than India

in 2012-13 In 2013-14, only China projected to grow faster

Competition

an n an

Higher growth leading to inclusive and sustainableMool Mantradevelopment


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The

tri le

fi ht

Fiscal Deficit Current AccountDeficit Inflation

New fiscalconsolidation path

5.3 per cent ofGDP this year

Foreign investmentin an imperative in

view of the highcurrent account

Battle againstinflation must be

fought on all fronts Efforts in the past 4.8 per cent of

GDP in 2013-14announced

deficit (CAD) Encourage three

main source ofCAD Financing:

few months havebrought downheadline WPIinflation to about

FII, FDI ECB

per cen ancore inflation toabout 4.2 percent


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The

money

game

RevisedEstimates (RE)of theexpenditure in

Austerity

measures

Flagshipprogrammes

safeGoal

- atper cent of theBudget

Estimates (BE)

programmesfully andadequatelyfunded and

Createopportunities

for our youth toacquire

During 2013-14, BE of totalexpenditure of16,65,297

provided toeach Ministry orDepartmentconsistent with

education andskills that willget them decentjobs or selfemployment

crore an oPlanExpenditure at5,55,322 crore

e r capac yto spend funds


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Health

all

the

way,

but

Lets

get

educated

,inistry o ea t ami y e are

21,239 croreNew National Health Mission

4,727 croreMedical education trainin and research

150 croreNational Programme for the Health Care of Elderly

1,069 croreAyurveda, Unani, Siddha and Homoeopathy

1,650 croreSix AIIMS-like institutions

65,867 croreMinistry of Human Resource Development (an increase of17 percent over the RE of the current year)

, croreSarva Shiksha Abhiyaan (SSA)

5,284 croreMinistries/Departments scholarships to students belongingto SC, ST, OBC, Minorities and girl children

13 215 crore

Government commitmentCreation of Nalanda University as a centre of educational

excellence


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Water

to

villages,

Buses

to

cities

15,260 croreallocated to

Drinking

WaterAllocation of80,194 crore in2013-14 forMinistry of RuralDevelopment

Rural

Development JNNURM

Drinking Waterand Sanitation

marking anincrease of 46%over RE 2012-13

14,873 crorefor JNNURM inBE 13-14 asagainst RE of

1,400 croreprovided forsetting-up of

carve outPMGSY-II andallocate aportion of thefunds to the new

, .Out of this, asignificantportion will beused to supportthe purchase of

purificationplants in 2000arsenic and12000 fluoride-affected rural

programme awill benefitStates such asAndhra Pradesh,Haryana,Karnataka,

upto 10,000buses, especiallyby the hill States

a tat ons Maharashtra,Punjab and

Rajasthan


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Thedifferentlyprivileged:Women,

SC ST Women and Children Minorities Disabled Persons

Allocations for ScheduledCaste Sub Plan and TribalSub Plan increasedsubstantially over the

An increase of 12 per centover the BE and 60 per centover the RE of 2012-13 toMinistry of Minority Affairs

A sum of 110 crore to theDepartment of DisablityAffairs for ADIP scheme in2013-14 against RE 2012-

allocations of the currentyear

97,134 crore allocated forprogrammes relating towomen and 77,236 croreallocated for ro rammes

Allocation of 160 crore tothe corpus of Maulana AzadEducation Foundation toraise its corpus to 1,500crore during 12th Planeriod

13 of 75 crore

relating to children Ministry of Women and

Child Development to designschemes that will address theconcerns of womenbelon in to the most

vulnerable groups, includingsingle women and widows

An additional sum of 200crore proposed to beprovided to the Ministry to


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Kisaan

un ammed Average annual growth rate of agriculture and allied sector was 3.6% during XI Plan against 2.5% and 2.4%

In 201213, total food

grain production will be over 250 million tonnes. Minimum support price for every

agricultural produce has increased significantly under the Government

27,049 crore allocated to Ministry of Agriculture, an increase of 22 per cent over the RE of current year

Agricultural research provided 3,415 crore

Agricultural Credit

Green Revolution

Farm research

or - , arge oagricultural credit kept at 7lakh crore

Interest subvention scheme forshort-term crop loans to becontinued scheme extendedfor cro loans borrowed from

reen revo u on o eas ernIndia a remarkable success.1,000 crore allocated in2013-14

500 crore allocated to start aprogramme of cropdiversification

a ona ns u e o o cStress Management foraddressing plant protection

issues will be established atRaipur, Chhattisgarh

The Indian Institute of-

private sector scheduledcommercial banks Rashtriya Krishi Vikas Yojanaand National Food SecurityMission provided 9,954 croreand 2,250 crore respectively

Allocation made for pilotsprogramme on Nutri-Farms for

will be established at Ranchi,Jharkhand

Pilot scheme to replant andrejuvenate coconut gardensimplemented in some districtsof Kerala and the Andaman &

introducing new crop varietiesthat are rich in micro-nutrients

Nicobar extended to entireState of Kerala


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The3I:Investment,Infrastructureand

Ri ht S eak:

Communication with investors to be improved to remove any apprehension ordistrust, including fears about undue regulatory burden

Need of new and innovative instruments to mobilise funds for investment in

infrastructure sector. Measures such as:

Infrastructure Debt Funds (IDF) to be encouraged

IIFCL to offer credit enhancement

Infrastructure tax-free bond of 50,000 crore in 2013-14

Build roads in North eastern states and connect them to Myanmar with assistancefrom WB & ADB

Raising corpus of Rural Infrastructure Development Fund (RIDF) to 20,000 crore

5,000 crore to NABARD to finance construction for warehousing. Window toPanchayats to finance construction of godowns.


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Letsthereberoad,investmentand

A regulatory

Road

Construction Companiesinvesting 100crore or more inplant and

CabinetCommittee

onInvestment Rajiv Gandhi

Equity SavingsScheme to be

Savings

au or y or roasector

the period1.4.2013 to31.3.2015 will be

entitled to deductan investment

liberalised.

Additionaldeduction of

3000 kms of roadprojects inGujarat, MadhyaPradesh,

allowance of 15per cent of theinvestment

Incentives to

ulakh for a persontaking first homeloan upto 25 lakhduring period1.4.2013 to

a aras ra,Rajasthan

and Uttar Pradeshwill be awardedin the first six

semiconductorwafer fabmanufacturingfacilities, includingzero customs duty

31.3.2014

In consultation withRBI, instruments

rotectin savin s-14

or p an anmachinery

from inflation tobe introduced


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Lets

Industrif

and

use

waterwa s

ans or seven new c es ave een na se an wor on wo new smarindustrial cities at Dholera, Gujarat and Shendra Bidkin, Maharashtra will start

during 2013-14 Delhi Mumbai Industrial Corridor (DMIC) to be provided additional funds during

2013-14

IndustrialCorridors

Preparatory work has started for Bengaluru Mumbai Industrial Corridor

Government to construct a transmission system from Srinagar to Leh at a cost of 1,840Leh-Kargilcrore

Line

Two new major ports will be established in Sagar, West Bengal and in AndhraPradesh to add 100 million tonnes of capacity

A new outer harbour to be developed in the VOC port at Thoothukkudi, Tamil Naduthrough PPP at an estimated cost of 7,500 crore

A bill to declare the Lakhipur-Bhanga stretch of river Barak in Assam as the sixthnational waterwa to be moved in ParliamentNational

Preparatory work underway to build a grid connecting waterways, roads and portsWaterways


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In

search

of

Power

an as

A policy toencourage

oa

In the medium tolong term need to

ower

Guidelinesregarding financial

exp ora on anproduction of shalegas will be

announced The 5 MMTPA LNG

re uce ourdependence onimported coal

One way forward isto devise a PPP

res ruc ur ng oDISCOMS havebeen announced

State Governmentur ed to re areterminal in Dabhol,Maharashtra willbe fully operationalin 2013-14.

policy frameworkwith Coal IndiaLimited as one ofthe partners

the financialrestructuring plan,quickly sign MoUand take

inistry o oa toannounceGovernmentspolicies in duecourse

scheme


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MSME

and

textiles

still

need

nurturingMicro, Small and Medium Enterprises (MSME ) Textiles

Benefits or preferences enjoyed by MSME to

continue upto three years after they growout of this category

Refinancing capacity of SIDBI raised to

Technology Upgradation Fund Scheme

(TUFS) to continue in 12th Plan with aninvestment target of 1,51,000 crore

Allocation of 50 crore to Ministry of Textile

10,000 crore

Another sum of 100 crore provided to India

Microfinance Equity Fund

A corpus of 500 crore to SIDBI to set up a

to incentivise setting up Apparel

Parks within the SITPs to house apparel

manufacturing units

A new scheme called the Integrated

Credit Guarantee Fund for factoring

A sum of 2,200 crore during the 12th Plan

period to set up 15 additional Tool

Rooms and Technology Development Centres

Processing Development Scheme will be

implemented in the 12th Plan to address the

environmental concerns of the textile

industry

with World Bank assistance

Funds provided to technology incubators

located within academic Institutions

approved by the Ministry of Science and

or ng cap ta an term oans at a

concessional interest of 6 per cent to

handloom sector

Scheme of Fund for Regeneration of

Technology or Ministry of MSME to qualify

as CSR expenditure

800 clusters during the 12th Plan


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BankforwomenandInsurancefortaxi

Banking

Com liance of ublic sector banks with

Insurance

A multi- ron ed a roach to increaseBasel III regulations to be ensured

14,000 crore provided in BE 2013-14for infusing capital

All branches of public sector banks tohave ATM b 31.3.2014

the penetration of insurance, both lifeand general, in the country

Insurance companies to open branches

in Tier-II cities and below without priorapproval of IRDA

Proposal to set up Indias first WomensBank as a public sector bank. Provisionof 1,000 crore as initial capital

6,000 crore to Rural Housing Fund in2013-14

Rashtriya Swasthya Bima Yojana to beextended to other categories such asrickshaw, auto-rickshaw and taxidrivers, sanitation workers, rag pickersand mine workers

National Housing Bank to set up UrbanHousing Fund. 2,000 crore to beprovided to the fund in 2013-14


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Capital

Market:

Strengthen

the

regulator

Proposal to amend the SEBI Act, to strengthen the regulator, under consideration

Designated depository participants, authorised by SEBI, may register different classes

of portfolio investors, subject to compliance with KYC Guidelines

w s mp y e proce ures an prescr e un orm reg s ra on an o er norms orentry for foreign portfolio investors

Rule that, where an investor has a stake of 10 per cent or less in a company, it will be

treated as FII and, where an investor has a stake of more than 10 per cent, it will betreated as FDI will be laid

FIIs will be permitted to participate in the exchange traded currency derivativesegment to the extent of their Indian rupee exposure in India

Government securities as collateral to meet their margin requirements

SEBI to prescribed requirement for angel investor pools by which they can be

reco nised as Cate or I AIF venture ca ital funds


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DirectTax


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Relief

to

common

man

but

rich

taxed

No Change in slab Up to 180000 - NIL 180001 to 500000 10%Slab

500001 to 800000 20% Above 800000 30 %

A tax credit of 2000 to every person with total income upto 5lakhs

Relief topoor

Surcharge of 10 percent on persons (other than companies) whosetaxable income exceed 1 crore

Rich taxed


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Personal

taxes

easier

Permissible premium rate increased from 10 percent to 15percent of the sum assured by relaxing eligibility conditions oflife insurance policies for persons suffering from disability and

Lifeinsuranceeasy for

challenged

Contributions made to schemes of Central and State Governmentssimilar to Central Government Health Scheme, eligible for section80D of the Income tax Act

Moredeductions

Donations made to National Children Fund eligible for 100percent deduction

Donations


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Companies

to

bear

somecharge

Increase surcharge from 5 to 10 percent on domestic companieswhose taxable income exceed 10 croreDomestic

n case o ore gn compan es w o pay a g er ra e o corpora etax, surcharge to increase from 2 to 5 percent, if the taxableincome exceeds 10 crore

Foreign

In all other cases such as dividend distribution tax (DDT) or tax ondistributed income, current surcharge increased from 5 to 10percent

DDTspray

Additional surcharges to be in force for only one yearYear tobear


22/33

Boost

the

investment

Investment allowance

At the rate of 15 percentto manufacturingcompanies that invest more

Powered sector

Eligible date for projectsin the power sector toavail benefit under Section

Low DDT

Concessional rate of taxof 15 percent on dividend(DDT) received by an

t an crore in p antand machinery during theperiod 1.4.2013 to31.3.2015

- exten e rom31.3.2013 to 31.3.2014

n ian company rom itsforeign subsidiaryproposed to continue forone more year

Venture fund boost

A Category I AlternativeInvestment Fund AIF set u as

Easy securitisation

Securitisation Trust to beexem ted from Income Tax.

Transaction made easy

Reductions made in rates ofSecurities Transaction Tax in

Venture capital fund allowedpass through status underIncome-tax Act

Tax to be levied at specifiedrates only at the time ofdistribution of income forcompanies, individual or HUFetc

No further tax on income

respect of certain transaction Proposal to introduceCommodity Transaction Tax(CTT) in a limited way.

Agricultural commodities willbe exempted.

received by investors from theTrust


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Land

and

buyback

in

spot

Land dealt

TDS at the rate of 1

percent on the value of

Buy backed

A final withholding tax at

the rate of 20 percent on

Royalty not cakewalk

Proposal to increase the

rate of tax on payments

properties whereconsideration exceeds 50lakhs. Agricultural land tobe exempted

unlisted companies toshareholders throughbuyback of shares

fees for technical servicesto non-residents from 10percent to 25 percent


24/33

GAARstillhaunts,Transferpricingprogresses

Modified provisions of GAAR will come into effect from1.4.2016GAAR

Rules on Safe Harbour will be issued after examining thereports of the Rangachary Committee

It was appointed to look into tax matters relating to

Transferpricing

Development Centres & IT Sector and Safe Harbour rules fora number of sectorsprogresses


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IndirectTax


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Statusquoforsomeandjumpforsome

xc se an serv ce axrelief

No change in thenormal rates of 12

Agri push

No change in theeak rate of basic

Electric jump

Customs: Period ofconcession available

percent for exciseduty and service tax

customs duty of 10percent for non-agricultural products

for specified part ofelectric and hybridvehicles extended

upto 31 March 2015

The gold rush

Duty free gold limitincreased to 50,000 incase of male passengerand 1,00,000 in case ofa ema e passengersubject to conditions


27/33

ImportedCarsexpensive,preciousstones

Raw silk from 5 to 15 percent

Steam Coal and Bituminous Coal equalised and 2 percent customduty and 2 percent CVD levied on both kinds coal

Imported luxury goods such as high end motor vehicles, motor

ustomsDuty UP

cycles, yachts and similar vessels increased

Specified machinery for manufacture of leather and leathergoods including footwear reduced from 7.5 to 5 percent

Pre-forms precious and semi-precious stones reduced from 10to 2 percent

CustomsDuty

-

Concessions to air craft maintenaince, repair and overhaul(MRO) industryDown

on


28/33

Excise:Wearmore,smokeless

Relief to read made Relief to shi buildingarment industry

In case of cotton,zero excise duty atfibre stage also. In

an cra pus

Handmade carpetsand textile floorcoverings of coir

industry

Ships and vesselsexempted fromexcise duty. No

very ax

Proposals to levy 4percent excise dutyon silver

case o spun yarnmade of man madefibre, duty of 12percent at the fibrestage

an u e o a yexempted fromexcise duty

on mpor eships and vessels

manu ac ure romsmelting zinc orlead

Lets not Smoke

Pay more for SUV The Taj Ingredient tax

Lets not talk

on cigarettesincreased by about18 percent

Similar increase oncigars, cheroots and

increased from 27to 30 percent. Notapplicable forSUVs registered astaxies

marble increasedfrom 30 per squaremeter to 60 persquare meter

phones priced atmore than 2000raised to 6 percent

c gar os


29/33

Servicetaxratesame,servicestaxedmore

Vocational courses offered by institutes affiliated to the State Council ofVocational Training and testing activities in relation to agriculturalproduce also included in the negative list for service tax

Agriculture to beresearched

Exemption of Service Tax on copyright on cinematography limited tofilms exhibited in cinema halls

Watching inmovie hall stilleasy, not on TV

Proposals to levy Service Tax on all air conditioned restaurantFine dining is finebut pay more

For homes and flats with a carpet area of 2,000 sq.ft. or more or of avalue of 1 crore or more, which are high-end constructions, where thecom onent of services is reater rate of abatement reduced from 75

High end homesex ensive

to 70 percent


30/33

ST:VoluntaryComplianceEncouragement

Out of nearly 17 lakh registered assesses under Service Tax only 7 lakhs file returnsregularly

A onetime scheme called Voluntary Compliance Encouragement Scheme proposed to beintroduced

Defaulter may avail of the scheme on condition that he files truthful declaration ofService Tax dues since 1st October 2007


31/33

GoodandServicesTax(GST):Adream

CST GST Draft

A sum of 9,000 crore towards the first

installment of the balance of CSTcom ensation rovided in the bud et

Work on draft GST Constitutional

amendment bill and GST lawex ected to be taken forward


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OverallBudget

P an expen iture is p ace at 5,55,322 crore

Non Plan Expenditure is estimated at 11,09,975 crore

Fiscal deficit for the current year contained at 5.2 per cent and for the year 2013- 14

.

Revenue deficit for the current year at 3.9 per cent and for the year 2013-14 at 3.3per cent

By 2016-17 fiscal deficit to be brought down to 3 per cent, revenue deficit to 1.5 percent and effective revenue deficit to zero per cent


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an ouDeepak Sharma

Chartered Accountants223, Goyal Trade Centre, Sona Theatre Bldg, Shantivan, Near National Park, Borivali E, Mumbai-66

Mobile: +91-9819025531 / 9699911890 Office: +91-22-28964504 Email: [email protected]

budget highlights 2013-14_d n sharma & associates

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