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Budget – 2013 2014, upsc slide, edu zone

  1. 1. BUDGET – 2013-2014Key featuresMajor purposesSector wise discussionSpeech of P. ChidambaranMacro Economic frameworkAnalysisdiscussion
  2. 2. BUDGET – A FLASH BACKThe budget process of our country predates theindependenceBudget was first introduced on 7thApril 1860The first Finance Member, James Wilson presentedthe budgetLiaquat Ali Khan, member of the interim Govt.presented the budget of 1947-48After independence, India’s first Finance MinisterR.K. Shanmukhan Chetty, presented the 1stbudget on26thNovember, 1947
  3. 3. MEANING OF BUDGETThe word budget has been derived from the Frenchword “bougetts” which means a small bag. Itemphasizes a bag containing the financial proposalsThe use of the term budget for the annual financialplans of the govt. dates back to 1733In general, a budget shows financial accounts of theprevious year, the budget and revised estimates of thecurrent year and the budget estimates for theforthcoming yearArticle – 112 – annual financial statement
  4. 4. THE ECONOMY & THECHALLENGESGlobal economic growth slowed from3.9% in 2011 to 3.2% in 2012India is part of the global economy –exports and imports amount to 43% ofGDP- International Transmission – eg.Recent financial crisis
  5. 5. CURRENT GROWTH RATE OF THEINDIAN ECONOMYESTIMATINGAUTHORITYGROWTH RATE(%)CSO 5%RBI 5.5%POTENTIAL GR 8%GNP GAP 3% / 2.5%
  6. 6. CHALLENGEGetting back to that growth rate is the challenge thatfaces the countryThere is no reason for gloom or pessimismEven now, of the large countries of the world, onlyChina & Indonesia are growing faster than India in2012-13If we grow at the rate projected by many forecastersin 2013-14 – only China will grow faster than IndiaThe average for the 11thplan period, entirely under theUPA Govt., was 8%, the highest ever in any planperiod
  7. 7. STRATEGY / MANTRA OF THE BUDGETOur goal is “higher growth leading to inclusive andsustainable development”Growth is a necessary condition for economic dvptIt is growth that will lead to inclusive dvptWithout growth there will be neither dvpt norinclusiveness – consider SC, ST, Minorities, WomenAs Joseph Stiglitz, Nobel Prize winning economist, said,“There is a compelling moral case for equity; but it is alsonecessary if there is to be sustained growth. A country’smost important resource is its people”.The UPA Govt believes in inclusive dvpt, with emphasison improving human dvpt indicators
  8. 8. FISCAL DEFICIT, CURRENT ACCOUNTDEFICIT & INFLATIONThe purpose of a budget – to create the economicspace and find the resources to achieve the socio-economic objectivesAt present, the economic space is constrained due to:1) High fiscal deficit2) Reliance on foreign inflows to finance CAD3) Lower savings4) Lower investment5) Tight monetary policy to contain inflation6) Strong external headwinds
  9. 9. FORMS OF DEFICITS IN PFRD = total revenue expenditure – TR receiptsBD = total expenditure – total revenueFD = TE – (revenue receipts + non-debt creatingcapital receipts)FD = Budget deficit + borrowings (that part of the govt.expenditure which is financed out of borrowing)Primary Deficit = FD – interest paymentsMonetized Deficit means the extent to which the govt.borrows from the RBI and not from the market. RBI printsfresh currency which monetize the economy by bringingmore money into circulation – called deficit financing
  10. 10. CURRENT ACCOUNT DEFICIT (CAD)It is defined as deficit b/w receipts on account oftrade & invisibles and payments on account of trade &invisibles in the BoPs account of the countryTWIN DEFICITAn economy is deemed to have a Twin Deficit if it hasCAD and Fiscal Deficit
  11. 11. FISCAL DEFICIT, CURRENT ACCOUNTDEFICIT & INFLATIONIn September, 2012 – Govt. accepted themain recommendations of the Dr. VijayKelkarA new fiscal consolidation path wasannouncedRed lines were drawn for the FD at 5.3% ofGDP in 2012-13 and 4.8% in 2013-14
  12. 12. CAD; IS ANY AMICABLE SOLUTIONThe greater worry of the budget – CADThe CAD continues to be high mainly because of:1) Our excessive dependence on oil imports2) High volume of coal imports3) Our passion for gold4) Slow down in exportsThis year, and perhaps next year too, we have to findover USD 75 billion to finance the CAD
  13. 13. HOW CAN WE FINANCE CADThere are only 3 ways before usForeign Direct Investment (FDI)Foreign Institutional Investment (FII), andExternal Commercial Borrowing (ECB)Hence, we have no choice between welcoming andspurning foreign investmentForeign investment is an imperativeWhat we can do – to encourage foreign investment that isconsistent with our economic objectives
  14. 14. INFLATION: FOOD & NON-FOODEconomic evils; namely: inflation and deflationLooming large over our efforts to stimulate growth is inflation.Major factors responsible for inflation: Imported inflation Supply demand mismatch, eg. Oilseeds & pulses Excessive aggregate demandOur efforts in the past few months have brought downheadline WPI inflation to about 7.0% and core inflation toabout 4.2%It is food inflation that is worrying, and we shall take allpossible steps to augment the supply side to meet thegrowing demand for food items
  15. 15. INFLATIONCORE INFLATION: Take onlymanufacturing items only – practiced indeveloped countries – not food & fuelHEADLINE INFLATION: Take all sectorslike manufacturing, food and fuel items –practiced in India
  16. 16. WHOLE PRICE INDEX (WPI)SL.NO.COMPONENTS WEIGHTAGE(%)1 MANUFATURE ITEMS 64.972 PRIMARY ARTICLES 20.123 FUEL & POWER 14.91NO. OF COMMODITIES 676BASE YEAR 2004-05
  17. 17. 8 CORE INDUSTRIES1) COAL2) FERTILIZERS3) CEMENT4) ELECTRICITY5) CRUDE OIL6) NATURAL GAS7) REFINARY PRODUCTS8) STEEL
  18. 18. GOVERNMENT EXPENDITUREGovt. expenditure boosts AD and it has both goodand bad consequencesWisdom lies in finding the correct level of govt.expenditure; some propsals:Rationalization of PEDisciplined budget (tax & expenditure)Market mechanism (forces of DD & SS)Review of certain tax policiesThe dvpt must be sustainale – economically,ecologically, democratic legitimacy & approval
  19. 19. THE PLAN AND BUDGETARY ALLOCATIONS• Budget estimate of 2012-13 – BE Rs. 14,90,925 crore• Due to the slowdown & the austerity measures, therevised estimate is Rs. 14,30,825 crore – 96% of the BE• BE of 2013-14 – Rs. 16,65,297 crore & plan expenditureat Rs. 5,55,322 crore• Plan expenditure in 2013-14 will be 29.4% more thanthe revised estimate of the current year• All flagship programs have been fully & adequatelyfunded
  20. 20. MAIN GOAL OF THE BUDGETOne side ‘Economic policy’ and other side is‘Economic welfare’The link b/w policy and welfare can be expressed in afew words: opportunities, education, skills, jobs &incomesOne overarching goal: to create opportunities for ouryouth to acquire education & skills that will get themdecent jobs or self employment that will bring themadequate incomes that will enable them to live withtheir families in a safe and secure environment
  21. 21. SC, ST, WOMEN & CHILDRENThe total (SC & ST sub plans) represents an increaseof 12.5% over the BE and 31% of the revised budget(RB) of the current yearFund AllocationCATEGORY FUND (in crore)SC sub plan 41,561 - IIIST sub plan 24,598 - IVGender budget 97,134 _ IChild budget 77,236 - IIMinistry of MinorityAffairs3,511 - V
  22. 22. WOMENMinistry of Women & Child Dvpt hasbeen asked to design schemes that willaddress gender discrimination everywhere, especially at the work place –additional sum of Rs. 200 crore
  23. 23. MAULANA AZAD EDUCATION FOUNDATIONMain vehicle to implement educational schemes andchannelize funds to non-govt. organizations for theminoritiesIts corpus stands at Rs. 750 croreBudget allocated Rs. 160 crore to the corpus fund ofthe institution to increase corpus fund to RS. 1,500crore during the 12 FYPRs. 100 crore to this foundation to launch medical aidto its objectives
  24. 24. DISABLED PERSONSAllocate a sum of Rs. 110 crore to theDepartment of Disability Affairs forthe ADIP Scheme in 2013-14, as againstthe RE of Rs. 75 crore in 2012-13
  25. 25. HEALTH AND EDUCATIONHealth for all and education for all remain ourprioritiesAllocate 37,330 crore to the Ministry of Health &Family Welfare. Of this, the new National HealthMission (combines NRHM & proposed NUHM) willget 21,239 crore, an increase of 24.3% over the RERs. 4,727 crore for medical education, training &researchRs. 1,069 crore to the Department of AYUSHThe National Program for the Health Care of Elderlyis being implemented in 100 selected districts of 21states
  26. 26. EDUCATIONAllocate Rs. 65,867 crore to the Ministry of HumanResource DevelopmentSarva Shiksha Abhiyan (SSA) – Rs. 27,258 croreRight to Eductaion Act (1stApril, 2010, Article 21A)Rashtriya Madhyamik Shiksha Abhiyan (March 2009)alloted – Rs. 3,983 croreScholarships – 5,284 croreMid-Day Meal Scheme (15thAugust,1995) – Rs. 13,215 croreThe Govt. is committed to the creation of NalandaUniversity as a centre of educational excellence
  27. 27. ICDSAllocate Rs. 17,700 crore in 2013-14(15,850- 2012-13) – representing anincrease of 11.7%The focus will continue to be on earlychildhood care & education
  28. 28. DRINKING WATERAllocate Rs. 15,260 crore to the Ministry ofDrinking Water and SanitationProvide rs. 1,400 crore towards setting upwater purification plants
  29. 29. RURAL DEVELOPMENTAllocated – Rs. 80,194 croreMGNREGS (Feb,2006) - Rs. 33,000 crorePMGSY (25 Dec, 2000) - Rs. 21,700IAY (1985-86) - Rs. 15,184The budget proposed to carve out PMGSY-II andallocate a portion of the funds to the new programsthat will benefit states such as AP, Haryana,Karnataka, Maharashtra, Punjab & Rajasthan
  30. 30. JNNURMJawaharlal Nehru National Urban Renewal Mission isbeing continued in the 12thplan (2005-2012) -Allote Rs. 14,873 crore
  31. 31. AGRICULTUREThe average annual growth rate of agriculture9thFYP - 2.5%10thFYP - 2.4%11thFYP - 3.6%Total food grain production – 2012-13- over 250 MTsAgricultural exports from April to December, 2012have crossed Rs. 138,403 croreAllocate Rs. 27,049 crore to the Ministry ofAgricultureOf this, agricultural research will be provided Rs.3,415 crore
  32. 32. AGRICULTUREAgricultural credit is the driver of agriculturalproductionIt is a state subjectAgricultural credit target for 2013-14 – Rs. 700,000croreInterest subvention scheme for short-term crops loancontinued – 4% per annumThe budget proposed to extend the scheme to croploans borrowed from private sector scheduledCommercial Banks
  33. 33. GREEN REVOLUTIONContinue to support the eastern Indian states with anallocation of Rs. 1000 crore in 2013-14Crop diversification – Punjab & HaryanaRashtriya Krishi Vikas Yojana (RKVY-Aug 16, 2007) –9,954 crore – to mobilize higher investment inagriculture – 11thplan allocation was – 25,000 croreNational Food Security Mission (NFSM-Rabi, 2007-08) – 2,250 crore – intended to bridge yield gapsIntegrated Watershed Program – Rs. 5,387 crore
  34. 34. PROPOSED INSTITUTIONSNational Institute of Biotic Stress Management – foraddressing plan protection issues will be establishedat Raipur, ChhattisgarhIndian Institute of Agricultural bio-technology will beestablished at Ranchi, Jharkhand
  35. 35. NATIONAL LIVESTOCK MISSIONNLM will be launched in 2013-14 to attractinvestment and to enhance productivity taking intoaccount local agro-climatic conditionsThe budget proposed to provide Rs. 307 crore for themissionThere will be a submission for increasing theavailability of feed and fodder
  36. 36. FOOD SECURITYNational Food Security Bill is a promise of the UPAGovernmentThe budget set apart Rs. 10,000 crore, over and abovethe normal provision for food subsidy, towards theincremental cost that is likely under the Act
  37. 37. INVESTMENT, INFRASTRUCTURE & INDUSTRYThe growth rate of an economy is correlated with theinvestment rateInvestment is an act of faith. ‘Doing business in India’must be seen as easy, friendly and mutually beneficial.It is the infrastructure that needs large volumes ofinvestmentThe 12thplan projects an investment of USD 1 trillionor Rs. 55, 00,000 crore in infrastructureThe plan envisages that – private sector will share47% of the investment
  38. 38. INVESTMENT IN INFRASTRUCTUREGovt. has taken or will take the following measures toincrease investment in infrastructure:1) Infrastructure Dept Funds (IDF) will be encouraged2) India Infrastructure Finance Corporation Ltd (IIFCL), inpartnership with the ADB3) In the last two years, a number of institutions were allowedto issue tax free bonds4) Multilateral Development Banks – ADB, World Bank5) NABARD operates the Rural Infrastructure DevelopmentFund (RIDF). RIDF has successfully utilized 18 tranches sofar. The budget proposed to raise the corpus of RIDF-XIXin 2013-14 to Rs. 20,000 crore
  39. 39. ROAD CONSTRUCTIONGovt. has decided to constitute a regulatory authorityfor the road sector
  40. 40. CABINET COMMITTEE ON INVESTMENT (CCI)Revival of investment in the industrial sector,especially manufacturing, is a key challengeCCI has been set up to monitor investment proposalsas well as projects under implementation, includingstalled projects, and guide decision-making in orderto remove bottlenecks and quicken the pace ofimplementation
  41. 41. NEW INVESTMENTA company investing Rs. 100 crore or more in plantand machinery during the period 1/4/2013 to 31/3/2015will be entitled to deduct an investment allowance of15% of the investment – aim – to attract newinvestment and to quicken the implementation ofprojectsThe National Electronics Policy, 2012 is intended topromote manufacture of electronic goods in India
  42. 42. SAVINGSIncreasing savings and their optimal allocation forproductive uses lead for higher economic growthHigh saving rate – 36.8% - 2007-08Gross domestic saving fell by 6% points in 2011-12The private, comprising households and corporate,remains the main contributor to savingThe household sector must be incentivized to save infinancial instruments rather than buy gold
  43. 43. MEASURES TO INCREASE THE AMOUNT OFSAVINGRajiv Gandhi Equity Savings Scheme (proposed in thebudget, 2012-13 – income tax deduction of 50% onretail investments of up to Rs. 50,000 made directly inequities by those earning an annual income of lessthan Rs. 10 lakh) will be liberalized to enable the firsttime investor to invest in mutual funds as well aslisted sharesHome loan interest deductionInflation Indexed Bonds or Inflation Indexed NationalSecurity Certificates
  44. 44. INDUSTRIAL CORRIDORSDelhi Mumbai Industrial Corridor (DMIC) project hasmade rapid progressWork on two new smart industrial cities at Dholera,Gujarat and Shendra Bidkin, Maharashtra will startduring 2013-14 – support of JapanThe department of Industrial Policy and Promotion(DIPP) & the Japan International Cooperation Agency(JICA) are currently preparing a comprehensive planfor the Chennai Bengaluru Industrial CorridorThe next corridor will be the Bengaluru MumbaiIndustrial Corridor
  45. 45. LEH-KARGIL TRANSMISSION LINETo improve power supply in the Leh-Kargil regionand connect the Ladakh region to the northern grid,the govt. will construct a transmission system fromSrinagar to Leh at a cost of Rs. 1,840 crore. The budgetproposed to provide Rs. 226 crore in 2013-14 for theproject
  46. 46. CURRENT AFFAIRS – HEAD IIBrazilian Roberto Azevedo – new head ofWTOReplaced – Frenchman – Pascal LamyAzevedo – Brazilian career diplomat159 member WTO’s – Geneva basedHe has been Brazil’s WTO Ambassadorsince 2008
  47. 47. CURRENT AFFAIRS - SPORTSSir Alex Ferguson – ManchesterUnited Manager – retirementTook over from Ron Atkinson in 1986and has won 13 league titles - 5 FAcups – 2 Champions League
  48. 48. PORTSTwo major ports will be established inSagar, WB and in APA new outer harbour will bedeveloped in the VOC port atThoothukodi, TN
  49. 49. NATIONAL WATERWAYSFive inland waterways have been declared as nationalwaterwaysMove a Bill – Lakhipur – Bhanga stretch of river Barakin Assam as the 6thnational waterwayThe first transport contract has been awarded in WBfrom Haldia to Farakka
  50. 50. COALWe must reduce our dependence onimported coalCoal imports during the period April-December, 2012 have crossed 100 MTsIt is estimated that imports will rise to 185MTs in 2016-17
  51. 51. MICRO, SMALL & MEDIUM ENTERPRISESEnhance the refinancing capability ofSIDBI(April,2,1990) from the current levelof Rs. 5,000 crore to Rs. 10,000 crore peryearSIDBI set up the India Microfinance EquityFund in 2011-12 – Rs. 100 crore
  52. 52. TEXTILESContinue the Technology Upgradation FundScheme (TUFS) for the textile sector in the 12thplan with an investment target of Rs. 151,000 croreThe major focus would be on modernization ofthe powerloom sector. The budget provide Rs.2,400 crore in 2013-14 for the purposeTextile parks have been set up under Scheme forIntegrated Textile Parks (SITP)
  53. 53. TEXTILESA new scheme with an outlay of Rs. 500crore called the Integrated ProcessingDevelopment Scheme will be implementedin the 12thplan to address the environmentalconcerns of the textile industry, includingimproving the effluent treatmentinfrastructure. The budget provide Rs. 50crore in 2013-14 for the scheme
  54. 54. FINANCIAL SECTORFinancial sector is at the heart of the economyGovt. constituted the Financial Sector LegislativeReforms Commission (FSLRC) in 2011
  55. 55. BANKINGRs. 12,517 crore to infuse additional capital into 13public sector banksIn 2013-14 – budget allocated further amount of Rs.14,000 crore for capital infusionEnsure that public sector banks always meet the BaselIII regulationsBring all banks under core banking solutions (CBS)CBS and e-payment systems by 31/12/2013Rs. 1000 crore – to set up India’s 1stWomen’s Bank as aPS bank
  56. 56. HOUSING SECTOR BANKINGThe Rural Housing Fund set upthrough the NHB is used to refinancelending institutions, including RRBs,that extend loans for rural housingBudget proposed to start a fund forurban housing to mitigate the hugeshortage of houses in urban areas
  57. 57. INSURANCEIRDARashtriya Swasthiya Bima YojanaULIPs (Unit Linked Insurance Plans), a highlypopular hybrid financial product marketed by theinsurance companiesThe SEBI’s case that ULIPs with a large investmentcomponent were oriented more towards the capitalmarket than to life insurance and, therefore, shouldbe regulated by SEBI and not IRDAOrdinance – ULIPs will be regulated by IRDA
  58. 58. CAPITAL MARKETBest regulated marketSEBI’s (1988 – as per the recommendations of the G.S. PatelCommittee – in 1992- statutory body through an Act) silverjubilee year – 2013 - SEBI set up a new Committee headed byformer Chief Justice of Karnataka HC, Justice N.K. Sodhi toreview insider trading norms (6/3/13)Some proposals – simplify the proceduresIn order to remove the ambiguity that prevails on FDI & FII –adopt international practice and lay down a broad principle –where an investor has a stake of 10% or less in company treatedas FIIMore than 10% - treated as FDIA committee will be constituted to examine the application ofthe principle and to work out the details expeditiously
  59. 59. ENVIRONMENTWaste to energy project – promotionClean & Green energy is a priority of the Govt.The budget proposed to reintroduce ‘generation-based incentive’ for wind energy projects and provideRs. 800 crore to the Ministry of Non RenewableEnergy for the purpose.
  60. 60. OTHER PROPOSALSBackward Regions Grant Fund (BRGF) is a vitalsource of gab funding – Rs. 11,500 crore in 2013-14BRGF will include a state component for Bihar, theBundelkand region, WB, the KBK districts of Odishaand 82 districts under the Integrated Action PlanSkill Development – NSDCWe have set an ambitious target of skilling 50 millionpeople in the 12thplan period, including 9 million in2013-14NRLM & NULM – releasing funds
  61. 61. DEFENCEAllocation for defence to Rs. 203,672 crore
  62. 62. SCIENCE & TECHNOLOGYRs. 6,275 crore to the Ministry of S&TRs. 5,615 crore to the Department of SpaceRs. 5,880 crore to the Department of Atomic EnergyProblem – we do not pay enough attention to S & Tfor the common manInstitutions of Excellence
  63. 63. SPORTSThe budget proposed to set up theNational Institute of Sports Coachingat Patiala
  64. 64. PANCHAYATI RAJThe Rajiv Gandhi Panchayat Sashaktikaran(RGPSA) was started in 2013 with a modestallocation of Rs. 50 croreAllocated Rs. 455 crore to the Ministry ofPanchayati Raj in 2013-14
  65. 65. GHADAR MEMORIALTo mark the centenary of the Ghadarmovement, the Govt. will fund theconversion of the Ghadar memorial in SanFrancisco into a museum and library
  66. 66. CENTRAL SCHEMESReduced from 173 in number (11thplan)to 70 schemesAs a part of fiscal consolidation
  67. 67. MAKE THREE PROMISES1st– is the face of the woman – Nirbhaya Fund2nd– is the face of the Youth - NSDC3rd– face of the poor – Direct Benefit Transfer scheme
  68. 68. BUDGET ESTIMATESPlan Expenditure – Rs. 5,55,322 crore – 33.3% oftotal expenditureNon plan Expenditure – Rs.11,09,975 croreFD – 5.2% (2012-13) - 4.8% (2013-14)RD – 3.9 ,, - 3.3% ,,By 2016-17 bring down the FD – 3% - RD – 1.5% andthe Effective RD to zeroFRBM Act
  69. 69. PART- B : TAX PROPOSALSAn emerging economy must have a tax system thatreflects best global practicesThe budget propose to set up a Tax AdministrationReform Commission to review the application of taxpolicies and tax laws and submit periodic reports thatcan be implemented to strengthen the capacity of ourtax system
  70. 70. TAX GDP RATIOIn 2011-12, the ratio was 5.5% for DirectTaxes and 4.4% fro Indirect Taxes –Aggregate – 9.9% (lowest ratio – we mustreclaim that peak)In 2007-08 – the ratio – touched a peak of11.9%Laffer Curve
  71. 71. DIRECT TAXESCurrent slabs of personal income tax were introducedonly last year – no change in the budgetThe budget give some relief to the tax payers in thefirst bracket of 2 lakh to 5 lakh – tax credit of Rs. 2,0001.8 crore tax payers are expected to benefit to thevalue of Rs. 3,600 croreFiscal consolidation – both PE cut & augment PR
  72. 72. SUPER – RICH TAXThe budget proposed to impose a surcharge of 10% onpersons whose taxable income exceeds Rs. 1 crore –42,800 personsIncreased the surcharge from 5% to 10% on domesticcompanies whose taxable income exceeds Rs. 10 croreIn the case of foreign companies, who pay the higherrate of corporate tax, the surcharge will increase from2% to 5%Dividend distribution tax or tax on distributedincome – increase the current surcharge of 5% to 10%Educational cess for all tax payers shall continue at3%
  73. 73. INCOME TAX SLABBASE OF THE TAX RATE OF THE TAXUp to 2 lakh Nil2.1 lah t0 5 lakh 10%5.1 lakh to 10 lakh 20%Above 10 lakh 30%60-79 age group 2.5 lakhs – nil80 & above age 5 lakh - nil
  74. 74. SOME FACTSVenture Capital Funds – the relevant regulations of SEBIhave been replaced by Alternative Fund Regulations –registered with SEBIIntroduced Commodities Transaction Tax (CTT) on non-agricultural commodities futures contractsThe Finance Act, 2012 introduced the General AntiAvoidance Rules (GAAR)An expert committee was constituted to consultstakeholders and finalize the GAAR guidelinesImpermissible tax avoidance arrangements will besubjected to taxThe budget proposed to bring the modified provisionsinto effect from 1/4/2016
  75. 75. SOME FACTSThe Rangachary Committee was appointed to lookinto tax maters relating Development Centers & ITsector and Safe Harbor Rules for a number of sectorsThe 5thLarge Tax payer Unit will be opened at KolkatashortlyIncome – tax department is rapidly moving towardstechnology based processing (e-filing) – CentralProcessing Cell set up at Bengaluru & CentralProcessing Cell-TDS inaugurated a few days ago atVaishali, Ghazibad
  76. 76. DIRECT TAX CODE (DTC)Income Tax Act – 1961 – 2011 marked the 50thyearProposed to a new code based on the bestinternational practices that will be compatible withthe needs of a fast developing economy
  77. 77. INDIRECT TAXESCustoms duty – peak rate – 10% - no changeExcise duty - 12% ,,Service tax - 12% ,,As a measure of relief to the ship building industry –exempt ships and vessels from excise dutyIncreased the specific excise duty on cigarettes byabout 18%Items under service tax enlarged – levy service tax allair conditioned restaurants
  78. 78. ESTIMATEST he budget proposals on the Direct Taxes side areestimated to yield Rs. 13,300 croreIndirect Taxes side – Rs. 4,700 crore
  79. 79. GOODS AND SERVICES TAX (GST)GST first mentioned in the budget of 2007-08 andplanned to implement on 1/4/2010Need constitutional amendmentGST councilCompensation
  80. 80. CONCLUSIONIndia – 10thlargest economy in the worldWe can become 8th,or perhaps 7thlargest by 2017By 2025, we could become a USD 5 trillion economyand among the top five in the worldSwami Vivekananda (Jan 12th1863), whose 150thbirthanniversary we celebrate in 2013, told the people: “Allthe strength and succour you want is withinyourself. Therefore, make your own future”.
  81. 81. RUPEES COMES FROM1. Borrowing & other liabilities- 272. Corporate Tax - 213. Income Tax - 124. Union Excise Duties - 105. Customs Duties - 96. Service Tax & other Taxes - 97. Non-Tax Revenue - 98. Non-Debt Capital Receipts - 3
  82. 82. RUPEES GOES TO1. Central Plan - 212. Interest Payments - 183. States’ share of taxes & duties - 174. Subsidies - 125. Other non-plan expenditure - 116. Defence - 107. Plan assistance to states & UTs - 78. Non-plan assistance to states & UTs - 4

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