Budget analysis of FY13-14 (draft)
As the Policy, Every year last working day of February the budget will be announced for succeeding year by FM(finance minister)
Every Budget has some thing to do and will effect every one Including children,Women,Old people,Rikshavalas,Billionares bla bla.. so we have to understand and interpret what ‘ll be the effect on us..As a MBA student it is mandatory to Analyse the BudgetHighlights: and Interpretation
As an Employed Individual of India.
As a Tax Paying Individual,There are no changes in Slab rates
.But FM has given 2,000 Rs Credit whose Income will dosen’t increase 5,00,000 i.e Suppose your final taxable Income is 3,80,000 as a rule 2 lakh is exempted and the you are liable to 10 % on 1,80,000 only(3,80,000-2,00,000) i.e you need not to pay 18,000.your total tax is 18,000-2,000=16,000.
If your Anuual Taxable Income is above 1 crore then you have to pay 10% Surcharge.as of now it was 5% only.There are only 42,800 people who will be affected with this
Education Cess remains same at 3%
A person taking a loan for his first home below `25,00,000 during the period 1.4.2013 to 31.3.2014 will be entitled to an additional deduction of interest of upto `100,000.as of now the deduction was 1,50,000 so totally we will get 2,50,000 tax deduction fot intrest paid This will promote home ownership real estate and to a number of industries like steel, cement, brick, wood, glass etc. besides jobs to thousands of construction workers.
Rajiv Gandhi Equity Savings Scheme will be liberalised to enable the first time investor to invest in mutual funds as well as listed shares The incom limit will be raised from 10,00,000 to 12,00,000
There will be Women bank for Women,By women it’s PSU Bank
Macro Economics:
At present the revised fiscal budget target was set to 5.2%.anf for the Next year the target was set to 4.8%
By 2025 India will become 5Trilion dollor econmy.at present we are 2 trillion dollor(100 lakh crore Rs) economy.
In 2011-12, the tax GDP ratio was 5.5 percent for direct taxes and 4.4 percent for indirect taxes. These ratios are one of the lowest for any large developing country but in 2007-08, the tax GDP ratio was 11.9 percent.
Diff between FDI and FII where an investor has a stake of 10 percent or less in a company, it will be treated as FII and, where an investor has a stake of more than 10 percent, it will be treated as FDI
FIIs will be allowed to participate in the exchange traded currency derivative segment to the extent of their Indian rupee exposure in India. FIIs will also be permitted to use their investment in corporate bonds and Government securities as collateral to meet their margin
requirements
About Budget:- Total Budget’s Expenditure is 16,65,966 in which 33.33% is Planned Expenditure(Allocations to every ministry).and remaining Non planned Expenditure(Subsidies to food grains,fertilizers,salaries to govt employees,interest on loans taken).
FM said that,We were Imported a 100 million tonnes of coal during April to dec,2012.though India is having a huge capacity to produce coal.This is also dragging the Fiscal deficit...to fulfil the needs of power generating companies, india needs huge coal so In 2015 India ‘ll go for PPP with CIL for the coal production in large amount.
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Banks and Capital Markets: As an Investor
STT has decreased to 0.001 % for equity cash segement from 0.1%(only when we sell).and for Equity futures 0.01% from 0.017%.but where as Newly Commodity Transaction Tax too has imposed and the rate will be same as equity futeres i.e 0.01%.
GAAR will come effect from April 1st,2016.
Agricultural Credit has been increased by 1.25 trillion rupees to 7 trillion.(1 lak crore=1 trillion)
The interest subvention scheme for short-term crop loans which is @4% will be continuec and extends to private banks too.... very negative news due to these two points bankex has fell 2.5% all mjor banks were down by average 7%
Banks will be permitted to act as insurance brokers so that the entire network of bank branches will be utilised to increase penetration
atleast one ATM is mandatory for every branch.
To provide greater support to MSMEs, FM has enhanced the refinancing capability of SIDBI from the current level of 5,000 crore to 10,000 crore per year
Fm made a proposal to amend the SEBI Act to strengten the regulator is under Consideration
About Corporate Companies: As a Industrialist and Analyst.
Increase in the surcharge from 5 percent to 10 percent on domestic companies whose taxable income exceeds 10 crore per year. In the case of foreign companies will be increased from 2 percent to 5 percent.(only for one year)
dividend distribution tax or tax on distributed income increases the current surcharge of 5 percent to 10 percent..(only for one year)
Educations cess same with 3%
Excise duty on cigarettes has increased 18 percent so it will become costly and effect ITC profits.
SUV service tax increased by 3% from 27% to 30%.
FM said,one half of property transactions are not having PAN number.so to control this Every Immovable property of above 50 lakhs ‘ll claim 1% TDS.... i.e 1% of your transaction will be given to income tax at the time of property transfer but we can claim that amount through TDS.if you want to file TDS we need PAN card.
Direct Tax Code(DTC) Which is going to replace Income Tax Act,1961 is work in Progress..
GST Which is going to reshape all indirect taxes like VAT,Service Tax,duty,customes etc... in single form of GST(Goods and service Tax).but state govt are showing less interest because they will lose revenues from VAT etc...but FM assures some compensation for this.if it happens then it will be very good for india.
There is no change in basic customs duty of 10 percent for non-agricultural products.
There is also no change in the normal rate of excise duty of 12 percent and the normal rate of service tax of 12 percent.
On motorcycles with engine capacity of 800cc or more duty from 60 percent to 75 percent; and on yachts(luxury private boats) and similar vessels from 10 percent to 25 percent
mobile phones priced at more than 2000, duty raised to the 6 percent.
To encourage domestic production of set top boxes as well as value addition, duty raised from 5 percent to 10 percent.
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Small and medium enterprises, including start-up companies, will be permitted to list on the SME exchange without being required to make an initial public offer (IPO), but the issue will be restricted to informed investors. This will be in addition to the existing SME
platform in which listing can be done through an IPO and with wider investor participation.
.
A company investing `100 crore or more in plant and machinery during the period 1.4.2013 to 31.3.2015 will be entitled to deduct an investment allowance of 15 percent of the investment.
At present, service tax does not apply to air conditioned restaurants that do not serve liquor. The distinction is artificial, and I propose to levy service tax on all air conditioned restaurants.
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Conclusion:
Over all the budget was good.As a Student,As a employee of 10 % bracket,and as a Investor.the Budget was satisfactory.But when we come to the Industry it was worrying.Due to the heavy Corporate surcharge(10%),DDT,Mandatory spending of 2% income in CSR etc....these will definetly effect the Net profit of companies. Atleat all corporate net income will be decreased by 10%(approximately) and even companies will don’t distribute dividend for next year because FM said for next only there will be DDT,so every company will skip this year dividends and pay next year.
Direct Tax Code and Goods and Service Tax was not yet declared.. if this Implemented it will be Global structure of taxation and tax evasion will be decreased.
DTH settop box,AC restrents,Cigarates,Silk clothes,SUV,Private ships(yothe) price will be increased
Vocational cources,Education material,Venture Capitalist loans these are some positives of Budget.
“Robin Hood budget by targeting Premium Class and Luxury goods and life style was targeted”
Thank you,
Abdul Zelani,
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