Budget is a complex subject. We have tried to make it simple to understand.

1. Union Budget Simplified
Conceived–Developed by:
PKS Management Consultants
Bangalore
Service Tax Regd. No. AYMPS8310HSD001

2. Index
1. What is a Union Budget
2. What are the important parameters of Budget
3. Various stakeholders of the Budget
4. Philosophy of Budget
5. Preparing the Budget
6. Reading the Budget
7. Salient features
8. Going ahead
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3. 1. Union Budget
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4. Union Budget
• Annual financial statement of Govt. of India
• Presented on the last day of February every
year
• Has to be passed by the house
• It can come into effect from April 1
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5. Budget Season
• Railway Budget
• Economic Survey
• Union Budget
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6. Railway Budget
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7. Economic Survey 2013-2014
• GDP growth seen at 5.4-5.9 pc in 2014/15
• Growth rate of 7-8 pc can occur after 2015/16
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8. Interim Budget
• Budget of the government which is passing
through transition
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9. 2. Important
parameters of
Budget
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10. GDP
• Gross domestic product (GDP) is
– Market Value
– Of all officially recognized final goods and services
– Produced within a country
– In a year
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11. Inflation
• A general increase in prices
– and
– fall in the purchasing value of money
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12. Fiscal Deficit
• Fiscal deficit is the difference
– between the government's expenditures
– and its revenues (excluding the money it's
borrowed).
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13. Current Account Deficit
• A measurement of a country's trade in which
– the value of goods and services it imports
– exceeds
– the value of goods and services it exports.
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14. FDI (Foreign Direct Investment)
• Is a direct investment into production or
business
– In a country
– By an individual or company of another country,
– Either by buying a company in the target country
or
– By expanding operations of an
existing business in that country.
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15. FII (Foreign Institutional Investor)
• An investor or investment fund
– That is from or registered in a country
– Outside of the one in which it is currently
investing.
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16. Disinvestment
• The action of an organization or government
selling or liquidating an asset or subsidiary
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17. Subsidy
• A form of financial or in kind support
extended to an economic sector
• Example 3F : Fuel, Fertilizer and Food
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18. Infrastructure
– The basic physical and organizational structures
and facilities (e.g. buildings, roads, power
supplies)
– Needed for the operation of a society or
enterprise.
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19. Direct Tax
• A tax, such as income tax
– Which is levied on the income or profits of the
person who pays it,
– Rather than on goods or services.
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20. In-direct Tax
• An indirect tax (such as sales tax, service tax )
– Is a tax collected by an intermediary
– From the consumer.
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21. Jargons
in
Budget
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22. Reforms
• Refers to policies directed to achieve
improvements in economic efficiency
• Economic reforms were started in 1991 in
India.
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23. GST
• Goods and Service Tax - step towards a
comprehensive indirect tax reform
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24. Retrospective Tax
• Old proceedings are being taxed as per the
new rules
• Example : Vodafone case
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25. GAAR
• GAAR is an acronym for General Anti-
Avoidance Rules
– which are framed to minimize tax avoidance
• Example: siphoning off profits to tax havens.
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26. Core Sector
• Eight Core Industries
– Coal
– Crude oil
– Natural Gas
– Petroleum Refinery Products
– Steel
– Cement
– Fertilizer
– Electricity
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27. Infrastructure Sector
• Roads
• Railways
• Ports
• Airports
• Buildings
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28. PPP
• A public–private partnership (PPP) is a
- government service or private business
venture
- which is funded and operated through a
- partnership of government and
- one or more private sector companies.
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29. 3. Stakeholders
of
Budget
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30. Consumer
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31. Business
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32. Taxpayer
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33. Social
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34. Political
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35. Economy
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36. Market
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37. 4. Philosophy
of
Budget
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38. Low Inflation
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39. Low Fiscal Deficit
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40. Higher FDI / FII
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41. Industrial Growth
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42. Agricultural Growth
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43. Service Industry Growth
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44. Higher Employment Generation
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45. Ultimately
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46. 5. Preparation
of
Budget
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47. Ministry of Finance
• Finance Ministry has overall responsibility of
framing the budget
• With inputs from…
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48. Planning Commission
• Sets overall targets for ministries
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49. Comptroller and Auditor General
(CAG)
• Keeps a tab on accounts
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50. Administrative Ministries
• State their requirements and plan priorities
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51. Other stakeholders
• Various representation from
– Industry
– Political parties
– Economist &
– Civil society groups
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52. 6. Reading
of
Budget
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53. Part A
• Broad outlays of money for different Sectors
• Introduction of new Schemes
• Priorities of the Government and focus areas
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54. Part B
• Taxation proposals
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55. Speech of FM
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56. Part A
I. STATE OF THE ECONOMY
II. PLAN & BUDEGTARY ALLOCATIONS
III. AGRICULTURE
IV. INDUSTRY
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57. Part A continued..
V. INFRASTRUCTURE
VI. FINANCIAL SECTOR
VII. DEFENCE & INTERNAL SECURITY
VIII. CULTURE & TOURISM
IX. OTHER PROPOSALS
X. BUDGET ESTIMATES
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58. Part B :
XI. TAX PROPOSALS
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59. 7. Salient Features
of
Budget 2014-15
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60. Comes from – Goes to
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61. Impact on Investors
• Life made easy for Foreign Portfolio
Investors(FPI)
• Cobwebs on various tax issues cleared
• Money FPI make, will be deemed as capital
gain not as business income. - Less tax
• One KYC One Demat
• KYC norms eased – one
verification is enough
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62. Impact on Infrastructure
• 8,500 Kms of Highways in fiscal
• 100 smart cities – 7,060 Cr. allocated
• Tax holiday for power projects
• 500 Cr. On solar power
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63. Impact on Defence
• FDI upto 49 % allowed
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64. Impact on Finance & Banking
• 49 % FDI in Insurance sector
• Public may buy shares of PSU banks
• Promoting consolidation of subsidiary banks
• 6 new Debt Recovery
Tribunals
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65. Impact on Emerging Business
• 10KCr+ for startups
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66. Impact on Taxpayer
• Basic Tax exemption raised from 2 to 2.5 Lakhs
• For senior citizens limit raised from 2.5 to 3
Lakhs
• Home loan interest deduction enhanced from
1.5 lakhs to 2 Lakhs.
• Section 80c deductions
enhanced from 1 to 1.5 Lakhs
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67. Impact on
Consumer
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68. Cheaper
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69. Cheaper
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70. Cheaper
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71. Cheaper
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72. Cheaper
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73. Cheaper
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74. Cheaper
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75. Cheaper
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76. Cheaper
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77. Cheaper
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78. Cheaper
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79. Cheaper
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80. Costly
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81. Costly
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82. Costly
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83. Costly
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84. Costly
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85. Costly
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86. Costly
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87. Impact on Direct Tax
• Status quo on retrospective taxation
• Lowering tax disputes
• Investment allowance limit lowered
• Transfer pricing rules eased (arms-length
principle for cross border transaction with
related entities)
• Dividend Distribution tax raised from 14 to
17%
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88. Impact on Indirect Tax
• Signal about rollout of GST soon
• Private companies can ascertain their tax liability
before hand. – Predictability
• Service tax on online / Mobile ads / marketing of
products for foreign companies
• No excise duty on the discounts offered to customers
• Custom duty on Computer and TV components
lowered
• Education cess on imported electronic products
• Excise duty on branded petrol reduced.
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89. Impact on Economy
• Forming of Expenditure Management
Commission
• Revamp FCI, make PDS more efficient
• New Indian Accounting standard
• E-Biz portal
• Setting up of National Corridor Authority
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90. Fiscal Prudence
• Fiscal deficit target of 4.1 %
• To reduce to 3.6% and then to 3.0% by 2016-
17
• 58,425 crore disinvestment target
• 10% in CIL and NHPC, 5 % in SAIL,ONGC,PFC
and REC
• IPO of HAL is on cards
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91. Impact on Social Sector
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92. Skill India
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93. A house for everyone by 2022
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94. Mission Ganga
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95. Free Drugs, Free Diagnosis for All
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96. 5 New IIT / IIM, 4 New AIIMS
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97. Social sector … continued
• Minimum pension of Rs. 1000 – 20 Lakhs to
benefit
• Mandatory wage ceiling for EPF raised to
15,000 - 50 Lakhs to benefit
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98. 100 crore club
• 28 different schemes
- Digital India
- Virtual class room
- Beti Bachao, Beti Padaho
- Madarasa modernization
- Van Bandhu …
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99. 8. Going forward
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100. Keeping tab on
• Newspapers
• Magazines
• TV Discussions
• Internal discussions
• Google about various topics
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101. An artefact of
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102. Thanks!!