Budget 2019 What matters most

Too many promises and lots of ideas but how and when will budget ideas be implemented and more importantly how will it be funded is a big ?? because funding is depending on private partnership. Secondly this budget is filled with contradictory goals

The govt wants 90000 crores from RBI , is going to borrow more and substantially enough that it wants to borrow sovereign debt in foreign funds .

Too much populism and mismanagement can make India another Pakistan and Argentina is a big big risk when governments depend on external debt to finance deficits in the distant future.

Budget is very Inflationary ! u will pay more excise and government earns more cess of at least 40000 crores vide oil tax on petrol and diesel. Expect everything to face inflation or mehengai tax even if there is no or little change in normal taxes.

Huge push on reviving a property market with more deduction of 150000 but middle class is over saturated with having empty second and third flats that they are unable to sell .  Model tenancy law will be revolutionary if it can meander through the complex and archaic legal system and free up locked empty houses for use thus increasing supply of rentable property, making postponing a property purchase more lucrative.

There is a big push for govt to recapitalize psu banks 70000 crores is huge but will the npa ko evergreen karo, ji mantri ji, chalta hai and corruption culture of babus in banks change ? will politicians meddling in banks and creating massive NPAs stop ? Essar RCom Kingfisher and Jet Air , N Modi are salient examples of crony capitalism.

INDIRA Gandhi had nationalized banks . The PSU banks have become bankrupt thrice received bailouts to keep them afloat  since then, showing the desperation of Rulers /mantris to control the strings of the economy.

Farmers and psu banks are good candidates for permanent bailouts. How do i become a farmer or a psu staffer ??

The markets are crashing as Modi govt policy reminds it of the Indira Era.

Govt has a disinvestment target of 105000 crores and wants to increase public shareholding to 35% but govt holdings will include PSU and LIC holdings (what hypocrisy).

The govt spells out vide policy to small investors – dont invest in PSU cos as it will keep dis-investing while keeping control .. an unmitigated disastrous way of destroying taxpayer and investor wealth. Wonder who will invest when even UPA era disinvestment is in losses . Atal era disinvestment candidates like  ONGC etc will be in losses very soon the way the govts want to milk them.

Govt wants to lay the red carpet for foreign funds but fails to understand that the local small investor is suffering and bleeding .

Govt it seems, want to incentivize the rich to QUIT India and follow Gandhi bapus advise , as it increases taxes on the rich with added cess .

Gold purchases will fall as u pay 2.5 % more,  Excise / Cess on oil will make more problems for Automakers which are already a all time lows .

Tax of 20% on buyback is ridiculous especially when govt reintroduced LTCG .

This will make a huge impact on investor psyche especially because the policy is shifting towards Indira era policy.

Excise / Cess on oil will make more problems for Automakers which are already a all time lows .

 

 

 

 

 

Budget 2019 Vote on account what matters most.

Budget math doesnt add up  .. it seldom does in India

The fisc deficit is more than 4.5 % of gdp say some pundits especially considering state govt loan mafis and schemes like raytu bandhu and nrega

When lawyers become FM fiscal math jugglery is a given.. like PC had used oil bonds and other tools to hide deficits ,, this govt has used small savings to lend to Air India , PSU ETF and LIC to fund IDBI and its disinvestment  etc which is putting small savers and lic policyholders and pension funds and eventually the taxpayer at a huge risk .

Inflationary.. please all budget .. RBI will have hands full dealing with inflationary impact

BUDGET 2019 Vote on account

1. Within 2 years, Tax assessment will be done electronically no manual intervention.
2. IT returns to be processing in just 24 hours and Refund given.
3. Minimum 14% revenue of GST to states by Central Govt.
4. Tax free Gratuity limit increase to 20 Lakhs from 10 Lakhs
5. No Taxes vide rebate us 87A upto 5 lakh annual income after all deductions.
6. INDL Income upto 6.5 lakhs  after deductions tax free
7. Standard deduction has increase from 40000 to 50000
8. Ceiling Limit of TDS u/s 194A has increased from 10000 to 40000

HAPPY BUILDER LOBBY and multiple home owners

8. No tax on second self-occupied house
9. Recommendations to GST council for reducing GST rates for home buyers
10. Ceiling Limit of TDS u/s 194I has increased from 180000 to 2400000. Ceiling Limit of TDS u/s 194I has increased from 180000 to 240000
11. Capital tax exemption u/s 54 has increased to reinvestment in two residential houses.
12. Benefit u/s 80IB has increased to one more year i.e. 2020
13. Benefit has given to unsold inventory has increased to one year to two years.

 

 

GENERAL Budget provisions

14. State share has increased to 42%
15. PCA restriction has abolished from 3 major banks
16. 2 lakhs seats will increase for the reservation of 10%
17. 60000 crores for manrega
18. 1.7 Lakh crore to ensure food for all
19. 22nd AIIMS has to be opened in Haryana
20. Approval has to be given to PM Kisan Yojana
21. Rs. 6000 per annum has to be given to every farmer having upto 2 hectare land. Applicable from Sept 2018. Amount will be transferred in 3 installments
22. National kamdhenu ayog for cows. Rs. 750 crores for National Gokul Mission
23. 2% interest subvention for farmers pursuing animal husbandry and also create separate department for fisheries.
24. 2% interest subvention for farmers affected by natural calamities and additional 3% interest subvention for timely payment.
25.Custom duty has abolished from 36 Capital Goods
26. Bonus will be applicable for workers earning 21000 monthly
27. The scheme, called Pradhan Mantri Shram Yogi Mandhan, will provide assured monthly pension of Rs. 3,000 with contribution of Rs. 100 per month for workers in unorganized sector after 60 years of age.
28. Our government delivered 6 crores free LPG connections under Ujjawala scheme
29. 2% interest relief for MSME GST registered person
30. 26 weeks of Maternity Leaves to empower the women
31. More than 3 Lakhs crores for defence
32. Custom duty has abolished from 36 Capital Goods
33. Single window for approval of India film makers

 

India Budget 2013 What matters most!

P Chidambaram budget speech is  known to induce dreams and elevate people to a euphoric state of mind but the fine print in the draft is known to always have a googly and take back more than what he has given…

This budget is insipid and worse it is subtly populist mainly to avoid a ratings downgrade and there is a big risk that the govt will bring in the populist measures like Food security act on the sly once it makes up its mind on going for elections. The budget does not seriously address concerns regarding pathetic growth and stagflation or the twin deficits that the Indian economy currently suffers from. The numbers are also suspect. Read MB , Read BD, Read LM

The govt has already taxed us with High INFLATION which is well above 10.0% and Huge increase in Money Supply, both of which have increased price of gold and housing by 4 to 5 times during the current MMS /Sonia Congress/ UPA 1 &2 govt tenure.

This Budget has given a raw deal to the local Investor class. Equity IPOs , Government IPOs FPOs etc have given a huge negative returns . Equity & Debt  Mutual funds and fixed deposits have given negative returns post inflation in 5 yr period.

TAX FREE INCOME : NO CHANGE ..  😦

INDIVIDUALS: Upto 2,00,000 – Nil

INDIVIDUAL RESIDENTS 60 TO 80 Yrs: Upto 2,50,000 – Nil

INDIVIDUAL RESIDENTS 80 Yrs +: Upto 500,000 – Nil

TAX SLABS

I. Upto 5,00,0000  {10% of the amount exceeding Tax free Income}

II. Upto 10,00,000 –  {I + 20% of the amount over 500000}

III. Above 10,00,000 –  {I + II + 30% of the amount over 1000000}

Tax Credit of Rs 2000 for income upto Rs 500000

Surcharge of 10% on persons with income of over Rs one crore

Dividend Distribution Tax: Surcharge on Dividend Distribution Tax has gone up from 5% to 10%. This has an implication on those is the dividend mode in Debt MF schemes. They will not pay 14.16%, instead of 13.52%. Not much of an implication, though the net dividend would now be lower now.

Securities Transaction Tax The STT on MF/ETF done with the fund houses has been reduced from 0.25% to 0.001%. Similarly the STT on MF/ETF transaction done on the exchange, only the seller will need to pay STT of 0.001%. Again, from an individual investor view point, this may not be very significant as the percentages before and after as both low.

Commodities transaction tax on non-agriculture commodities futures contracts at the same rate as equity futures that is 0.01 per cent of the price of the trade

Investment and Deductions

• First-time home loans up to Rs.25 lakhs  get extra Rs.1 lakh interest deduction (if not exhausted, the balance limit can be claimed next year)
• Inflation-indexed Bonds and National Security Certificate to be introduced
• Investment in RGESS need not be done in 1 year alone but can be done in 3 successive years. Income limit under RGESS raised from Rs.10 lakhs to Rs.12 lakhs
• Surcharge on Dividend Distribution Tax increased from 5% to 10%. So it may be prudent to consider taking the returns in the form of capital gains if it works out better depending on one’s tax bracket
• Reduction in STT on equity and MFs
• Passengers will be allowed to bring in duty free gold jewellery of up to Rs 50,000 in case of men and Rs 1,00,000 in case of women.

………………………………………………………………………………………………………………………………

What goes up
Cigarettes, Cigars, Cheroots, High-end mobile phones,Imported luxury cars, High-end motor vehicles, Sports Utility Vehicles,Imported yatch and motorboats, Marbles for flooring, Set-top boxes, Dining in air conditioned restaurants, Silk clothes, Homes and flats, Parking fees.

What goes Down
Jewellery, Precious stones, Cotton garments,Branded apparels, Carpets, Textile floor, Agricultural testing procedures, Imported hazel nuts, Dehulled oat grain, Truck chasis, Sabudana, Ships and vessels, Cinema and films, Machinery for manufacturing of leather goods

………………………………………………………………………………………………………………………………

• Investment Allowance of 15% for investment in plant & machinery exceeding Rs.100 crore will boost capital expenditure
• Surcharge increased from 5% to 10% for companies with Rs.10 crore or more taxable income
• Amnesty Scheme for Service Tax defaulters
• No change in the peak rate of basic customs duty on non-agriculture products and rates of excise duty and service tax of 12 per cent.

 Inputs from Moneycontrol and ET

Postal MIS Rules, Rates and Bonus History

As govt policy goes govts are fickle and keep changing rules

Postal MIS with its paltry return of 8% is a deadbeat investment in the Congress or Rahulfnflation era where inflation is above 10% officially and 15% in real terms.

But for those already invested here is a ready reckoner with full details. Please leave a comment if you find any errors…  E & OE.

Postal MIS Rules

Investment Limit : Maximum amount is Rs. 4.5 lacs in single account and Rs. 9 lacs in a joint account Wef 8.12.07 Onwards. It was Single 3 Lakhs and Joint 6 Lakhs before.

Premature Withdrawal : No penalty on death of Holder … Nomination available. In case of joint holdings 50% or share of deceased Holder can be withdrawn. You need not disclose death if you want to continue the investment to maturity

Premature withdrawal of the invested amount is allowed after 1 year of opening the account. If the account is closed between 1 and 3 years of opening, 2% of the deposited amount is deducted as penalty. If it is closed after 3 years of opening, 1% of the deposited amount is charged as penalty. The bonus amount is forfeited when you close the account early.

Table 

From	Rate Of Int	Maturity Bonus	Term	ITax Rebate
Before 1.1.99	13%	10%	6 yrs	80L
1.1.99 to 14.1.00	12%	10%	6 yrs	80L
15.1.00 to 28.2.01	11%	10%	6 yrs	80L
1.3.01 to 28.2.02	9.50%	10?	6 yrs	80L
1.3.02 to 28.2.03	9%	10?	6 yrs	80L
1.3.03 Onwards	8%	5%	6 yrs	80L
13.2.06 Onwards	8%	Nil	6 yrs	Nil
8.12.07 Onwards	8%	5%	6 yrs	Nil
1.12.2011 Onwards	8.20%	Nil	5 yrs	80C
1.4.2012 Onwards	8.50%	Nil	5 yrs	80C

RGESS : Rajiv Gandhi Equity Savings Scheme

As things stand , the RGESS or Rajiv Gandhi Equity Savings Scheme seems to be a dud. The full details of this scheme were supposed to come out in may … but with a paralized govt busy with President elections everything else including the economic perils plaguing the country, according to the Congress bosses can wait.

Rajiv Gandhi Equity Savings Scheme

• For New Equity investors earning less than Rs10 lakh annually.
• For investments in the top 100 stocks traded on BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).
• Churning of portfolio is not permitted during the first year.
• Maximum investment allowed Rs 50,000.
• Maximum Deduction U/s 80C Rs. 25,000 (50% of Rs. 50000)
• Lock in period – 3 years
• Possibility of announcement of a no frills demat account.

Problems faced by Small Investor

• Over regulation, one needs to sign upto 70 times to open a trading and demat account and submit 2/3 photos, and KYC is a big hassle that is not done once per individual but for every demat form.    
• Small investors cannot claim costs .. Travel costs , Demat Charges and Demat AMC etc which most often exceeds the dividend received on their shares. This is cheating.
• Overcharging by NSDL / DPS which charges both an AMC ranging from 300 to 500 taxes extra. and minimum transaction charges starting from Rs 15 to 25. 
• Cheating by some DPs who have hidden charges and make conditional promises like free demat accounts, no AMC until you make a transaction in that account etc and dont honor them. A company with a tiger logo is/used to be notorious at this.  
• Archaic laws that force people to open multiple demat accounts to demat their old shares held with multiple joint holders.
• Multiplicity of taxes and over taxation of delivery based trades and Double/High taxation of Share dividends(Corp tax + DDT). 
• A small investor pays the same dividend distribution tax of 15% as say Mukesh Ambani..who has promoter perks, FIIs (including benami industrialists and politicians) investing via PNs from Mauritius dont pay any tax on STCG is it fair ?
• Cumbersome legal procedure in case of loss of certificates or death of investors holding physical shares. Companies insist on expensive and cumbersome formalities like surety LOA etc for paltry amt of shares. Costs sometimes exceeds the mkt value of shares. 

Flaws in Congress UPA Government thinking.

• The scheme is poorly drafted. New Investor is undefined. There is no logic in dividing the small investor class into two parts new and old. 
• Long term capital gains are tax free. So why will one lock in for 3 years if they can exit tax free after one year ?
• It was people from this very govt that considered direct equity investing by Small investors risky and promoted Mutual Funds then why create this scheme ?  The top 100 stocks include likes of Unitech and DLF and RCom shares that have fallen more than 80% within a short span. Remember K10 stocks like HFCL?
• The main problem plaguing the markets is lack of returns and falling valuations. The govt has not shown long term vision or thinking or even made minor investor friendly reform for the last 8 odd years. It has poor corporate governance standards.
• Worse the govt populist policy means it cheats small PSU investors by unethically milking returns of PSUs like ONGC for supposed public good which is ruinous in the long term. It favors private Cos over PSUs .. eg NTPC vs Reliance Power ? saga, Coal India agreements saga and Coal-gate ?.
• PSU Company share prices have fallen by 25 to 65% during the Congress UPA regime … notably SCI. 
• Small investors directly or indirectly via funds invested with FIs like LIC have burnt their hands in Congress era Disinvestment.

India Union Budget 2012/13 What matters most!

Thanks to the total failure of the UPA 2 Govt to govern, the problems i had talked about  in India Budget 2011/12 What matters most! have only worsened.

Fiscal defect is 1.3% higher than estimate… Wow!!  something which will have to be funded by market borrowing. Reduction of Inflation due to base effect offers little relief to the aam admi who is finding the burden unbearable.

Indians are facing deeply entrenched inflation, tight liquidity, high interest rate, industrial slowdown, zero reforms and negative market sentiment that have lead to Stagflation for the last few months, something which will worsen in the coming months if govt doesn’t get its act together.

Pronob is known as the chief troubleshooter and problem fixer of the Congress upa govt …  and this seems to be  reflected in his budget.

TAX SLABS

Income upto 2 lakhs                          Tax payable   Nil
Income upto 2.5 lakhs                      Tax payable   Nil for Senior citizens 60 yrs and above
Income 2 lakhs to 5 lakhs                Tax payable  10%
Income 5 lakhs to 10 lakhs             Tax payable  20%
Income above 10 lakhs                    Tax payable  30%

Senior Citizens with no biz income freed from advance tax burden

10,000 bank interest tax-free. (Old Sec 80L revived)

Cost of preventive health checkup upto a limit of Rs 5000 permitted U/s 80D.

New Adult Duty free goods limit is Rs 35000/- , for Child upto 10yrs  Rs 15000/-

Sale of residential property exempted from capital gains if invested in equity or equipment of an SME.

Disappointment for lower and middle middle class with income upto 5/6 lakh who face a double whammy of the biggest tax i.e. high Inflation and overall higher prices due to increase in fuel prices, customs duties and service taxes . Increase in the tax free income far to low and should have been at-least Rs 2.5 Lakhs considering inflation. 

Financial Responsibility and Subsidy Reform Proposals

Fiscal deficit in 2011/12 revised to 5.9% of GDP from 4.6% of earlier target.

Fiscal defict 2012/13 to be at 5.1%

FY 13 net market borrowing at Rs 4.8 lakh crores

Gross tax at 10.6% of GDP

GDP expected to grow at 6.9%

Current account defict to be at 3.6%

Economy to grow at 7.6% in 2012/13

Central subsidies to be under 2% of GDP

To bring down subsidy to 1.7 % of GDP in the next 3 years

To roll out computerized scheme for fertilizer subsidy transfer

Direct transfer of subsidy for kerosene initiated

Pay market rate for LPG Cylinder, direct transfer of subsidy for  LPG

Remove bottlenecks in agriculture, energy, transport, coal, power and national highways

To become self sufficient in urea production in next 5 years

How credible are the numbers ? Taking into consideration the pathetic track record of the UPA  can one sincerely believe in the estimates especially on govt borrowings ?  Fuel subsidy allocation not realistic.

All talk and repetition of promises, but no real concrete action on fiscal consolidation or dealing with burgeoning subsidy. No action on dealing with supply side issues only repetition of promises. No vision to change the spending pattern from consumption to investment.

Reform Postponed

DTC implementation deferred for one more year

GST to be operational by August 2012

White paper on Black Money

Capital and Debt Markets Proposals

 STT on delivery cut to 0.1% from 0.25%. 

Rs 30,000 cr divestment target in FY 13

PAN for identification of Investors and tracking evasion.

Central KYC database.

Rajiv Gandhi Equity (Tax Exemption) Savings Scheme with a lock in of 3yrs for new investors investing Rs 50000 on income below 10 Lakhs.

Change in IPO guidelines to promote small town participation

Recapitalization of PSU banks

Rs 10000 crore of tax fee bonds for power sector

Will allow external commercial borrowing for power, housing road construction companies

Govt doubles allocation for tax-free bonds to Rs 60,000 crore for financing infrastructure projects in 2012/13

To allow qualified foreign investors in Indian corporate debt markets

Dull/drab and a major disappointment to market participants,  I doubt if two bit schemes like Rajiv ESS will revive the govt disinvestment program which is in doldrums. All said and done people have to make money out of govt IPOs and tax exemption with a 3 yr lock-in is meaningless .

Fact:  1 yr plus return on govt IPOs: Punjab n Sind bank -31%   SCI FPO -50% SJVN -20% PTC finance -43.5% MOIL -26.5%  Equity / Large cap MFs 1 year return are negative.  Gold ETF has returned +29%  that after the cool off in gold prices.

Indirect Tax Proposals

Service tax,  Excise duty now 12% up 2%

GOLD bar duty doubled, increased to 4% and 10%

Negative list for Service tax introduced .

All services will be taxed except those in a 17-item negative list including  Govt services, school education, renting of residences, public transport, animal husbandry, agri produce. Healthcare, charities, sportsmen, car-parking are exempt.

Cost of everything will go up by 4 to 5% as businesses pass on the hikes…Gold , Cigarettes, bidis, Diamonds, bicycles, luxury items, eating out, white goods like AC and fridges. Even telephone bills are set to get more expensive.

Hiking duties on gold is a desperate attempt by a govt to curb investment in gold. This will make little difference in gold demand or asset price inflation if the govt cant curb its rash spending and resulting inflation expectations especially when EU and US are in low interest rate and QE mode and markets give sustained negative returns and an investor tries to protect his capital. 

All in all this budget hits the lower middle class and is most inflationary especially for the middle to lower middle class single income multiple kids household with an income of 2 lakh who sees no benefit from income tax rebate but has to pay double for his gas cylinder and between 2% to 5% more on every good and service from telephone to food to branded items.

Indian Govt unlikely to meet its fiscal deficit or market borrowings target

This UPA  govt is landing up in a royal soup!

The UPA govts fiscal policy is a total mess, as the fin secretary has come out today and said that the govt will need to borrow a bit more than 52800 crores in the markets, that too after repeatedly assuring the media that it would stick to targets.

The govt has  messed up on their calculations as they have seen a serious shortfall in  small savings collections due to outflows in the last quarter. Postal deposits, MIS, NSE, KVP etc have seen a steady decline, as the interest rates of 8% given by most of them have  become totally uncompetitive.

I also see an increase in fiscal deficit due to increase in oil subsidy because there is greater uncertainty in oil prices especially as winter draws in.

The govt will have to do some kind of window dressing in its books to plug the gap of 40 thousand crores it expected out of disinvestment which seems unlikely given the rapid decline in the markets. This might have a serious bearing on inflation and on value or rupee depending on how the RBI behaves in future.

The net result will be increase in short term rates, which directly hits valuations of bank treasury portfolios . Come Monday  bank nifty will see a decline.

More govt mkt borrowings in an already very tight market going into the Diwali festival season will mean more yield on the ultra st or liquid mfs .

UPAs PSU disinvestment challenge

After the recent psu issue ie Power Finance Co which saw an Over subscription of 6 times from QIBs, 2 times from public and 1.2 times from NIIs, i wonder how many issues the govt can push through on its own terms as it will soon face another impossible trinity of :-

1. Very  high oil prices , increase in subsidy bill and high fiscal deficits which directly leads to double digit inflation and interest rates.

2. Being cash strapped and wanting to finance its ballooning fiscal deficit and debt burden through PSU Disinvestment on its own terms , that too at close to market prices.

3. Using PSU companies as cash cows to bear subsidy burden , and increasing the burden on said shareholders resulting to crash in share prices of PSU Scripts.

One wonders how?

The solution is simple … look at QIB for subscription….

When there is LIC and Domestic Govt Institutions that are ready to bail it out and take losses on books everything is possible.

But then again will it be true disinvestment ? and why the drama?

Here are some stats:-

Equity	Issue Price	Current Price	%Gain/Loss
Punjab & Sind	120	99	-17.5
MOIL	375	368.4	-1.76
SCI FPO	133	105	-21.06
Coal India	245	396.05	61.65
SJVN	26	21.3	-18.08
NTPC FPO	201	170	-15.42
NHPC	36	24.7	-31.39

Indian Govt Postpones OIL company IPOs

The repeated postponement of GOIs stake sale in OIL companies ONGC and IOC make me conclude that this govt is attempting to Have the Cake and Eat it too.I had posted in  Indias double D conundrum about the UPA  govts difficulty in getting disinvestment funds unless they do a discount sale thanks to the high deficit politics it uses .

Not long ago ONGC boards saw a reshuffle with the current ONGC Chairman A.K. Hazarika given a lot of responsibility.

Bloomberg states

Finance Minister Pranab Mukherjee said Feb. 28 India needs to sell 400 billion rupees of stock in state-run companies to trim the budget deficit to a four-year low. His challenges include attracting investors to the world’s fourth-worst performing stock market and a 29 percent surge in crude oil in the past year, analyst Jagannadham Thunuguntla said.

In any case at least half a dozen previous GOI listings are in loss or are barely making profits … something that made the worried govt allow a partial increase in cost of coal sold by COAL INDIA its most successful IPO in recent times.

India Budget 2011/12 What matters most!

In my last years post India Budget 2010/11 What matters most! i had said  More spending = More deficit = More inflation, I was bang on target.

Finance Minister Pranab Mukherjee presented Union Budget 2011-12 amid rising inflation, tight liquidity, high interest rate, industrial slowdown, delayed reforms and negative market sentiment. The budget this yr is mixed and a tight exercise.

I expect the FM not to meet his targets and fiscal deficit to worsen.  People will pay more through Service Tax and Inflation. I suspect that the actual inflation may be twice as much as estimated and that the govt will find it difficult to stick to its target. There is nothing about organized retail and cutting down the influence of middlemen in the food chain. This is going to be a bad yr overall.

LED TVs, Diapers, Computer parts and mobile accessories to get cheaper while Branded Garments, A/C Hospital stay, A/c Hotels with Liquor Permit Bar bills,Air tickets etc  are costlier.

The Cash based subsidy program is revolutionary, so are attempts of getting back black money is swiss banks. But will it ever see the light of day considering the enormity of  malai or kickbacks and rents involved?  I doubt if the political and the babu class of the current regime will want anything to change substantially from status quo.

DIRECT TAX PROPOSALS

TAX SLABS
upto 1.8 lakhs, 1,90,000 for women Nil,
1.8 lakhs to 5 lakhs  10%
5 lakhs to 8 lakhs  20%
above 8 lakhs  30%

Each taxpayer will save Rs 2,000 per year, considering inflation taxpayers are all at a loss.

A Salaried individual who has no other income need not file tax returns if his salary is under 5 lakhs and his other incomes are included by his employer in his form 16.

Senior Citizens start paying taxes for an income above 2,50,000.

The qualifying age for tax exemption has been reduced from 65 years to 60 years. A very senior citizen 80 yrs and above gets an exemption limit of 500000 (5 lakhs)

The senior citizens see a marginal increase in tax relief of Rs 10000. Worst off are the 10% taxpayers and the non tax payers who get hit doubly due to price rise and loss of income due to the negative savings interest rates. There is no change in SCSS rates either to cushion for inflation.

Sec 80C Benefit Continues at 1 lakh + Sec 80cc 20000
Additional Rs 20,000 deduction available for investment in infrastructure bonds.

Tax Proposals

• Surcharge of 7.5 per cent on domestic companies proposed to be reduced to 5 per cent.
• Rate of Minimum Alternative Tax proposed to be increased from 18 per cent to
• 18.5 per cent of book profits.
• Tax incentives extended to attract foreign funds for financing of infrastructure.
• Lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary.
• Benefit of investment linked deduction extended to businesses engaged in the production of fertilisers.
• Investment linked deduction to businesses developing affordable housing.
• Weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to be enhanced to 200 per cent.
• System of collection of information from foreign tax jurisdictions to be strengthened.
• Government to introduce direct cash payments for those entitled to subsidies in kerosene, cooking gas and fertiliser by March, 2012.
• FIIs allowed to invest in MF schemes
• Some movement on GST
• DTC to be implemented from FY12

Indirect Taxes

• To stay on course for transition to GST.
• Central Excise Duty to be maintained at standard rate of 10 per cent.
• Reduction in number of exemptions in Central Excise rate structure.
• Nominal Central Excise Duty of 1 per cent imposed on 130 items entering in the tax net.
• Lower rate of Central Excise Duty enhanced from 4 per cent to 5 per cent.
• Optional levy on branded garments or made up proposed to be converted into a mandatory levy at unified rate of 10 per cent.
• Peak rate of Custom Duty held at its current level.
• Iron ore export duty raised to 20 percent

Service Tax Scope Increased

• Standard rate of Service Tax retained at 10 per cent, while seeking a closer fit between present regime and its GST successor.
• Service Tax payable for  Hotel accommodation in excess of  1,000 per day and air conditioned restaurants with liquor license.
• Tax on all services provided by hospitals with 25 or more beds with facility of central air conditioning.
• Service Tax on air travel both domestic and international raised.
• Services provided by life insurance companies in the area of investment and some more legal services proposed to be brought into tax net.
• All individual and sole proprietor tax payers with a turn over upto Rs 60 lakhs (Rs 6 million) freed from the formalities of audit.
• Penal provision for Service Tax Central Excise and Custom laws are being rationalised to encourage voluntary compliance.
• Proposals relating to Service Tax estimated to result in net revenue gain of Rs 4,000 crore (Rs 40 billion).

STATISTICS

• Direct tax sops to result in revenue loss of Rs 11,500 crore
• Net tax to Centre will be Rs 6,64,457 cr. Non-tax receipts pegged at Rs 1,25,435 crore.
• FY 12 fiscal deficit seen at Rs 4.12 lakh crore
• Budget estimates for 2011-12 projects Rs 9,32,440 crore – an increase of 24 per cent.
• Net market borrowing for 2011-12 seen at Rs 3.43 trillion.
• Revised gross market borrowing for 2010-11 at Rs 4.47 trillion
• Net market borrowing for 2011-12 seen at Rs 3.43 trillion.
• Revised gross market borrowing for 2010-11 at Rs 4.47 trillion.
• Disinvestment in 2011-12 seen at Rs 400 billion

FISCAL DEFICIT 

• Fiscal deficit seen at 5.1 percent of GDP in 2010-11
• Fiscal deficit seen at 4.6 percent of GDP in 2011-12
• Fiscal deficit seen at 3.5 percent of GDP in 2013-14

SPENDING

• Total expenditure in 2011-12 seen at 12.58 trillion rupees
• Plan expenditure seen at Rs 4.41 trillion in 2011-12, up 18.3 percent

REVENUE

• Gross tax receipts seen at Rs 9.32 trillion in 2011-12
• Corporate tax receipts seen at Rs 3.6 trillion in 2011-12
• Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8 percent in 2012-13
• Customs revenue seen at Rs 1.52 trillion in 2011-12
• Factory gate duties seen at Rs 1.64 trillion in 2011-12
• Non-tax revenue seen at Rs 1.25 trillion in 2011-12
• Service tax receipts seen at Rs 82,000 crore in 2011-12
• Telecom fees, auction of broadband spectrum to raise Es 296.5 billion in 2011-12

SUBSIDIES

• Subsidy bill in 2011-12 seen at Rs 1.44 trillion
• Food subsidy bill in 2011-12 seen at Rs 605.7 billion
• Revised food subsidy bill for 2010-11 at Rs 606 billion
• Fertiliser subsidy bill in 2011-12 seen at Rs 500 billion
• Revised fertiliser subsidy bill for 2010-11 at Rs 550 billion
• Petroleum subsidy bill in 2011-12 seen at Rs 236.4 billion
• Revised petroleum subsidy bill in 2010-11 at Rs 384 billion
• State-run oil retailers to be provided with Rs 200 billion cash subsidy in 2011-12

GROWTH, INFLATION EXPECTATIONS

• Inflation seen at 5 percent in 2011-12
• Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent.