India Budget 2014, What matters most!

New Modi Government, New Ideas and New Vision

Considering that the previous UPA Congress Sonia govt under FM P Chidambaram had run down the economy, the current FM Mr Arun Jaitley will have his hands full with repair and maintenance of the economy for a foreseeable period of time.

Rail budget was ok good, mainly because it was not a bihar or bengal rail budget but a National rail budget . Bullet trains are unviable idea for India considering the tickets will almost match airline costs and political interference for unviable routes. The JNR’s Shinkansen network cost 28 trillion Yen, and its privatization paid only 9.2 trillion yen. Japanese bullet or the German ICE are not very affordable to regular citizens of those countries, though they are great for businessmen, why not improve railways for millions of Mumbai rail commuters who bring immense value to the national GDP , and why not introduce more rajdhani style high speed intercity trains ?

Considering the difficulties faced by the govt, the raising of 80C limit by 50% and more importantly the basic exemption by 25% which directly affect the aam admi is commendable .

All that the govt has to do is focus on curbing INFLATION and streamlining the Supply Side and cutting out the layers of apmc rent seekers and middle men from food and essentials supply chain.

For ASSESSMENT YEAR 2015-2016
RELEVANT TO FINANCIAL YEAR 2014-2015

TAX FREE INCOME :

50000 increase in tax free income for Indls and Seniors.

INDIVIDUALS: Upto 2,50,000 – Nil

INDIVIDUAL RESIDENTS 60 TO 80 Yrs: Upto 3,00,000 – 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 Income over 500000}

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

1. Education Cess of  3% on Income-tax.

2. Maximum 80C exemption & PPF investment limit, now  Rs 1.5 lakh.

3. Housing loan: Rebate hiked to Rs 2 lakh for self occupied houses.

4. Tax on LTCG on debt funds to 20%, and time moved to 3 years… Bad for u if u own  a debt fund .

5. Single Demat Account for all ur financial assets & Unified KYC

6. E-Visas …to promote tourism

7. REITs policy changes to benefit investors in real estate sector.

8. NSC with Insurance … an attempt to make the small savings more attractive.

9. Im not positive on Sardar Patel Statue fund of 200 Crores, though i am a great fan of leaders like Sardar Patel and Bal Gangadhar Tilak, moneys could be better spent on improving PRIMARY EDUCATION ie better world class CBSE style primary education for all, especially for the deserving economically backward people. We desperately need IIT Styled, high quality primary schools for deserving poor kids !

What costs more ?

Cigarettes, Pan Masala, Gutka, chewing tobacco, Colas with sugar and soda, Radio Taxis.

What costs less ?

Footwear, LED lights,  LCD and LED TV prices below 19 inches to go down.

Reactions and observation :

1. Sonia Gandhi says : Jaitley copied Congress schemes, later says no spending on Social sector. Real estate Shares like DLF up 10% , Vadra will be happy with #Budget2014

2. Praful Patel of NCP , the beedi baron will not be happy with the taxes !

3. Ashutosh AAP : There is not a single big ticket idea which world was expecting. Where is the change in Budget?Just an extension of UPA policies.

 

 

 

 

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.