WHAT IS BUDGET An Estimates Of Income And Expenditure For A Set PeriodOf TimeTHE PROCESS FOR PREPARING A MONTHLY BUDGETINCLUDES: Listing of all sources of monthly income Listing of all required, fixed expenses, likerent/mortgage, utilities, phone Listing of other possible and variable expense
INFLATIONThis years budget will have a "softening impact" on price growth. Inflation-indexed bondsAlso, to wean away investments in securities like gold, theFinance Minister proposed financial instruments such asinflation-indexed bonds so as to protect personal savings frominflation.
How do you raise taxes while keepingvoters happy? explain how thegovernment will be able to increase itsrevenues, while also encouraging thebusiness investment and boostingconsumer spending.
TAX FOR THE RICHIndia recently joined the ranks of many Westerncountries with talk of raising taxes for wealthyindividuals.SANJAY SANGHVI, partner at law firm Khaitan &Co., expects “some kind of additional surcharge on anincome beyond a certain threshold.”
A surcharge is a tax on tax. For instance, if your taxliability for a year is 10,000 rupees ($185), the surchargewould be a tax on 10,000 rupees. Tax consultants expect asurcharge of around 10%, which in this case wouldtranslate to 1,000 rupees. Thus, the individual’s total taxliability would be 11,000 rupees ($203).CONTINUE
A standard practice of Indian finance ministers is togive some minor tax breaks to all individuals, and Mr.Chidambaram could keep this tradition alive. Last year, then Finance Minister PranabMukherjee raised the threshold below which individualsdidn’t have to pay tax. Following that, an annual incomeof less than 200,000 rupees was exempt from tax, up from180,000 rupees previously. This year there is a “further increase in the minimumexemption limit,”TAX BREAKS
INCENTIVES FOR EQUITYINVESTMENTS Mr. Chidambaram said last month that he would make the RajivGandhi Equity Savings Scheme, a program that gives tax breaks tofirst-time stock investors, more attractive. He could do so by raising the tax break for making stock and stockmutual fund investments. Currently, for an equity investment of up to 50,000 rupees in ayear, individuals can save a maximum of 5,000 rupees – a paltrysum for many.
DIESEL CAR TAX There may be bad news for owners of diesel cars. Some typesof diesel cars have historically attracted a lower duty comparedto similar petrol cars, but this may change. A diesel car with an engine capacity of between 1300 cc and1500 cc currently incurs a duty of 12%, whereas a petrolversion with the same engine capacity draws duty at 24%. “There has been talk that [duty on] diesel cars might also beraised,” Car companies will likely pass on that additional cost toconsumers.
EXCISE DUTYThe government increased the overall excise tax by 2percentage points to 12%.This tax is applicable to goods produced in thecountry, such as consumer durables like washingmachines and refrigerators.Manufacturers of these goods typically add this cost tothe sale price of their goods.
Duty-free limits raised to Rs 50,000 for men and Rs 1 lakh forwomen on gold. 18% rise in excise duty on Cigarettes, cigars and cheerots Service tax on all A/C restaurants Royalty tax hiked from 10% to 25% Tax Deducted at Source to be fixed at 1% on land deals over Rs50 lakh.CONTINUES
DRINKING WATER 15,260 crore allocated to Ministry of Drinking Water andSanitation. 1,400 crore provided for setting-up of water purificationplants in 2000 arsenic 12000 fluoride-affected rural habitations.
HIGHLIGHTS AND IMPACT OF THE UNIONBUDGET 2013-14 ON THE EDUCATION SECTOR Rs 1 lakh crore allotted for enhancing skills of youth India to get its first all-women’s bank: FM Allocation of Rs 65,867 crore to education ministry, up 17% Tax Free Bonds – Will allow some organisations to raise fundsstrictly based on need
RAILWAY Railway Minister Pawan Kumar Bansal announcedintroduction of 19 new train services. Bansal had already announced introduction of 106 newtrains including mail/express passenger and local trains onJanuary 26 in his maiden Rail Budget 2013-14.