Tax proposals:
Income-tax
Constraints in economy leave little room to raise tax rates. Chidambaram proposes to maintain status quo on personal income-tax rates introduced last year.
Relief to tax payers of Rs 2 lakh-5 lakh: Offers tax credit of Rs 2,000
Good News for NRIs - Duty free limit on gold increased to Rs 50,000 for male passengers and Rs 1 lakh to female passengers
Super rich tax: Surcharge of 10% on people with taxable income of Rs 1 crore or more. Only 42,800 persons with taxable income of over Rs 1 crore. Higher surcharge for only FY 2013.
Education cess for all tax payers to continue at 3 per cent.
Targets tax-GDP ratio of 11.9 per cent.
Tax free bonds in 2013-14 up to Rs 50,000 crore.
He said the Rajiv Gandhi Equity Savings Schemewill be liberalised and proposed to introduce inflation-indexed bonds. Income limit for tax-savings under Rajiv Gandhi Equity Savings Scheme has been raised to Rs 12 lakh from Rs 10 lakh. Inflation-indexed bonds will be announced on June 1.
First time home buyers, taking loan of up to Rs 25 lakh in FY 13-14, will get additional interest benefit of Rs 1 lakh.
Power sector tax holiday extended
TDS of one per cent on transaction of property over Rs 50 lakh. Not to be applicable to agriculture.
Securities transaction tax on equity futures cut from 0.17 to 0.1 per cent
Commodities transaction tax on non-agriculture future contracts at 0.01 per cent.
E-filing of tax returns to be made mandatory for more sectors
No change in basic customs duty for non-agri products
Duty on specified machinery for leather cut from 7.5 to 5 per cent
Export duty on deoiled rice bran cake withdrawn
Royalty tax hiked from 10% to 25%.
Import duty on set-top boxes increased to 10% from 5%
Import duty on raw silk increased to 15% from 5%
Taxing the rich further: Duty on imported goods like motor vehicles, yatchs and motor cycles increased
Equalise duty on grades of coal. 2% Customs and CVD duty on coal
Cigarattes hit with an 18% rise in excise duty. So also cigars and cheerots.
Excise duties on personal SUVs increased, Excise duty on SUVs hiked to 30 per cent from 27 per cent. No duty on those used as taxi.
No CVD on imported parts -- for ship buiding
All silver to attract excise of 4 per cent.
Mobile phones priced over Rs 2,000 to attract 6 per cent duty
Service tax on all A/C restaurants with over 2,000 sq ft proposed
Voluntary Compliance Encouragement Scheme for Service Tax payers
Chidambaram says Direct Taxes after changes will yield Rs 13,300 crore and indirect taxes. Rs 4,700 crore. Rs 9,000 crore for balance CST compensation to the States proposed.
Allocation
"I aim to create opportunity for the youth to acquire education and skills, provide adequate funds for women and children. I propose to increase the allocation for SC/ST and tribals."
Stating that women face gender discrimination everywhere, Chidambaram has proposed an additional sum of Rs 200 crore for women and childwelfare schemes to end discrimination.
Nirbhaya Fund of Rs 1,000 crore -- women and girl child related schemes
Health for all, education for all will remain a priority, he said. Rs 150 crore proposed for health scheme for old. Ayurveda, Unani, Homeopathy to be mainstreamed; stresses on care for elderly (geriatric care).
Education to get Rs 65,867 crore, 17 per cent more than last year's RE. Aligarh, Varanasi universities get Rs 100 crore.
Mid-day meal scheme will get Rs 13,215 crore; Child development scheme to get Rs 17,700 crore which is 11.2 per cent higher than last year's.
Proposes 1000s of scholarships for students of SC, ST, OBC and women: To provide over Rs 5,200 crore, up Rs 700 crore over RE.
Clean drinking water and sanitation -- to get over Rs 15,000 crore
Rs 1,500 crore towards setting up water purification plants
MNREGS to get about Rs 33,000 crore
Pradhan Mantri Gramin Sadak Yojana II announced for Andhra Pradesh, Haryana, Maharashtra, Punjab and Rajasthan. States that have completed PMGSY will be eligible for PMGSY 2. The Prime Minister will announce the details later.
Rural Development Schemes to get Rs 80,194 crore
Agriculture sector to get Rs 24,049 crore
Interest subvention scheme -- Rs 1,000 crore for Eastern States growing rice
Water shed management: For crops rich with micronutrients.. research programe of up to Rs 200 crore. Pilots rejuvinating cococunt gardens to be extended all over Kerala. The pilot scheme will get an additional Rs 75 crore.
Allocation to Agricultural Ministry increased 22 per cent to Rs 27,049 crore for 2013-14.
Agricultural Research to get Rs 3,415 crore in 2013-14.
Farmers Producers Organisations--to get matching grant, and credit enhancement scheme
He said the National Food Security Bill is a promise of the UPA Government.
Over and above food subsidy, Rs 10,000 crore set apart for food security Bill.
Credit disbursement to farmers targeted at Rs 7 lakh crore in 2013-14. Target of Rs 5,75,000 crore exceeded in 2012-13.
Budget 2013-14 proposes Rs 5,000 crore for Nabard to finance construction of warehousses, cold storage silos, godowns to storage agriculture produce. Nabard's RIDF corpus to be increased to Rs 20,000 crore from Rs 19,000 crore.
Infrastructure sector: Infra Debt Fund to be encouraged to provide long term, low cost funds. Of the four IDFs registered, two have been launched.
Energy sector
Waste to energy projects. Scheme to allow cities and municipalities to take up waste to energy projects on PPP mode. Waste to energy projects undertaken by municipalities to get viability gap funding
Low cost finance for renewable energy projects. Life span for five years. Rs 800 crore for generation-based incentives for wind energy.
Low interest bearing funds from National Clean Energy Fund to IREDA to lend for clean energy projects
New criteria to define backward regions: per capita, literacy and other human development indicators.
Defence sector
Defence allocation increased to Rs 2,03,672 crore. Department of Space to get Rs 5,615 crore; Rs 6,275 crore allocated to the Ministry of Science and Technology; Atomic Energy to get Rs 5,880 crore; Rs 200 crore fund to scale up S&T innovations to reach common man.
Road construction sector faces challenges. An independent authority for the road transport sector has been proposed. About 3,000 km of roads to be awarded in the first six months of 2013-14.
Chennai-Bengaluru Industrial Corridor has been proposed with Japanese funding support.
Stating that five inland waterways have been declared as national, the river in Assam will be the sixth. He said barge operators will be selected through PPP to move bulk cargo through waterways. He said two new ports will be set up in Sagar in West Bengal and in Andhra Pradesh.
Households must be incentivised to invest in mutual funds and listed shares rather than gold, said Chidambaram.
Oil exploration: NELP will be reviewed to move from profit sharing to revenue sharing and gas pricing policy will be reviewed. He said dependence on imported coal must be reduced and plans to formulate a PPP policy for coal. "No alternative to coal imports...India to adopt blending (pool-pricing)".
Industry proposals: MSMEs will continue to get tax benefits for three years after they graduate out of the category.
SIDBI will get more funds to provide finance to MSMEs; corpus of Rs 500 crore proposed for SIDBI set up credit guuarantee fund.
Modernization of powerloom sector; Rs 50 crore for apparel parks proposed.
Funds provided to technology incubators located in educational institutes approved by DST, MSME to be counted as Corporate Social Responsibility. The New Companies Bill, when enacted into a law, mandates corporates to spend 2 per cent of their net profits for CSR activities.
Women in handloom sector to get working capital and term loans at concessional interest of 6 per cent.
Support measures to boost exports in goods and services in FTP to be announced next month.
Rs 50 crore for environment schemes for textile units; Rs 96 crore for Textile Ministry interest subvention.
Financial sector
Standing Council of experts within the Finance Ministry-- examining transaction cost and will analyse international financial sector.
PSU banks will have ATMs in all their branches by 2014. India's first public sector bank for women proposed with Rs 1,000 crore as initial capital.
Rs 2,000 crore for urban housing fund to be set up by NHB.
Radio/TV sector
Private FM channels to reach 294 new cities, 839 new channels to be auctioned in 2013-14. All cities with over one lakh population will be covered by private channels.
Central Sponsored Scheme to be restructured. Numbers to be brought down to 70 from 173.
Technology: Over Rs 400 crore to make to make Post Offices IT-linked and provide real-time based banking services.
Sports: Rs 250 crore to set up National Institute of Sports Coaching at Patiala over 3 years
Insurance companies will be allowed to open branches in Tier two citites without IRDA's approval. LIC will be allowed to open branches in all towns with over population of 10,000.
RSBY will cover autorickshaw pullers, taxi drivers, sanitation workers, rag pickers
Third quarter GDP: This is Chidambaram's first Budget for UPA-II and the last full fledged one before general elections next year.
The third quarter GDP growth that is expected later this evening is expected to show a weak print, signaling no evidence of growth bottoming out.
The recommendations of the Kelkar Committee was accepted in 2012, he said. "We have to find over $75 billlion this year and perhaps next year to fund Current Account Deficit." He said foreign investments are imperative to fund CAD.
"We have brought down headline WPI inflation to 7 per cent and core inflation to 4.2 per cent but food inflation is worrying," he said.
Faced with huge fiscal deficit there is no choice but to rationalise expenditure, said Chidambaram.
"We took a doze of bitter medicine (policy decisions) that seems to be working. The economic space which we have gained has made me more ambitious in 2013-14."
The total expenditure is estimated at Rs 15,65,297 crore for 2013-14 and Plan expenditure for BE (budget estimate) 29.4 per cent higher than the RE (revised estimate).
11 lakh beneficiaries have received direct cash under the direct cash transfer scheme so far. Planned expenditure: Rs 55,223 crore.
The fiscal deficit for the current fiscal is estimated at 5.2 per cent and for 2013-14, 4.8 per cent.
Chidambaram ended his speech saying: "We are the 10th largest economy in the world. By 2016-17 we could become the seventh. By 2021, we could become a $5 trillion economy and in the top five. We could become anything."
I will try to provide more analysis related to the Union Budget 2013-14 in the coming days
Best Regards
Prakash Nair
