Attached is a presentation on the Budget and the Budget speech. Attached is a presentation on the Budget and the Budget speech. Attached is a presentation on the Budget and the Budget speech.

1. UNION BUDGET
Date: July 2014

2. Know your FM…
 61 Years old
 Been Minister for Commerce and
Law and Justice in earlier NDA
 Graduate from Shri Ram College of
Commerce New Delhi and Law
from Delhi University
 Practices law in Supreme Court
 Lost this Lok Sabha Election from
Amritsar

3. Issues facing FM
 Inherited Poor Economy
 “Acche Din” promises
 Fiscal Deficit*
 Growth – how to crank
 Inflation** – Supply side or monetary policy
 FDI*** and Global Image
 Too few days in office

4. Explanation
 * Fiscal Deficit: Difference between
Government Income and Expense
 **Inflation: Calculated either by WPI [Whole
sale Price Index] or CPI [Consumer Price
Index]
 Mo ne tary Po licy: Co ntro lling Price s thro ug h incre asing Inte re sts –
re sults in lo we r Mo ne y supply
 Supply side : Incre asing Supply and the re by re ducing price s
 ***FDI: Foreign Direct Investments. Recent
examples are
 Etihad buying 24% in Je t Airways
 Diag e o buying stake in Unite d Spirits

5. What was good ….
 Personal Taxation
 FDI/FPI
 Infrastructure Sector Boost
 Fiscal Deficit Target @ 4.1%
 Boost to entrepreneurship – 10,000 Cr
super fund
 E Tailing Boost
 Clarity on GST
 28 – 100 Crore schemes

6. References
 Budget Speech: http://www.google.co.in/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=3&ve
d=0CCcQFjAC&url=http%3A%2F
%2Findiabudget.nic.in%2Fub2014-15%2Fbs
%2Fbs.pdf&ei=a-bRU-
f8LYWgugTv2IHQAQ&usg=AFQjCNEkzzpg01
-
_KG6gOVQqI_nFFMMkwA&bvm=bv.7177875
8,d.c2E

7. What was Bad…
Very similar to last budget by PC
Fails to give clear cancellation of
Retrospective Tax – Vodafone etc.
have been victims
No hard measures that will bring
economy back
Fiscal data - ?
Tax savings may get neutralized
by Rail Hike and Inflation

8. Union Budget – Growth
 3 year Projections of above
7-8 %
 Focus on Manufacturing and
Infrastructure
 FDI in Insurance and
Defence hiked up from 26%
to 49%.
• Sam e co ntro l
• Insurance is no t auto cle arance
and willne e d FIPBappro val

9. Fiscal Deficit
Year Fiscal Deficit % GDP
2014-15 4.1%
2015-16 3.6%
2016 - 2017 3%
 Iraq and Monsoon need to be factored
 High Revenue Growth Targets >> GDP Growth
 58,000 Crores on PSU disinvestments
 Expenditure cuts by Government may affect growth

10. Personal Taxation
 Exemption limits raised from 2 L to 2.5 L and 3
L for Senior Citizens
 Tax Deduction on Home Loan increased from
1.5 L to 2 L
 80 C increased from 1 to 1.5 L
 PPF limit increased to 1.5 L from 1 L
 Lower income brackets affected more
Example: Sanjay earns 4.5 L – with 1 L
investment – currently pays 14 K Tax. Will now
pay 5 K Tax

11. How will you be impacted?
 Foreign Branded Clothes available
online if they are made in India
 Smaller [< 19”] LED and LCD to
cost less
 Import duty on fatty acids and
palm oil reduced. Soaps will cost
less
 Lower cost footwear – 500 – 1000
INR will cost less
 Baggage allowance increased for
foreign shopping to Rs.45,000/-

12. How will you be impacted?
 Cigarettes – even loose to cost
more
 Colas or drinks with added sugar
 Radio Taxi is now under service
tax net
 Smart TVs that are 55” or higher

13. FPI Tax
 Foreign Portfolio Investors
 Gains will be treated as Capital Gains and not
regular income
 So 15% Tax on short term capital gains
 No Tax on gains after 1 year
 No Tax on short term gains on investments
routed through Mauritius or Singapore
 Business Income would have been 30% Tax

14. Impact on Investor
 Debt Mutual Fund – Long term capital gains
increased to 20% from 10%
 Long Term is 3 years – not 1
 Negative change is Dividend Tax calculation
 Positive Tax reforms for Infrastructure sector -
REIT
Previously if an investor invested 10 L in a Debt fund for over a year, he paid
only 10% tax on the capital appreciated – about 10,000 assuming 10% interest.
Now he has to pay 20% or 20,000 on the same capital gain

15. Realty Sector
 Indian has a shortage of 1.9 Cr homes
 Homes in larger cities are remaining
unsold
 Tax exemption on interest on Home Loans
– 2 L
 7,000 Crores for development of 1 smart
cities
 Smaller Real Estate Projects can get FDI
 Real Estate Investment Trusts to avoid
Double Taxation
 Focus will be on low and mid income

16. Banking Sector
 One KYC – Know Your Customer.
Currently done each time you open a new
account.
 Single Demat account
 India’s savings rates have dropped in the
last 5-7 years
 Move towards regulating chit funds
 Differentiated Banks – Local area or
specific products
 Setting up of 6 debt recovery tribunals
 Boost to rural funding

17. Manufacturing
 Aim – promoting local manufacturing.
 Previously:
 We have a free trade pact with Japan, Korea etc.
 Inverted Duty Structure – sometimes cheaper to import
whole rather than in parts
 Single window portal for all business and
investment activities
 Setting up National Industrial Corridor
 7.5% duty drop in palm oil.

18. Union Budget – India Inc. says
 “Budget 2014 appears to be in the right direction. It
attempts to balance the need of the economy for structural
reforms as well as fiscal consolidation. It has something in
it for everyone” – Anil Agarwal – Executive Chairman
Vedanta Resources
 “Given the severe constraints the finance minister had to
perform a tightrope work and he has done a commendable
job. The middle class clearly has something to cheer
about” – Sunil Mittal, Chairman Bharti Enterprises
 “On an even keel but Jaitley has set the stage for bold
reforms. However the disappointment is on FDI
proposals.” – Deepak Parekh Chairman HDFC

19. UNION BUDGET
Source: Economic Times
Thank You