New Delhi: The Finance Minister Pranab Mukherjee has presented Union Budget 2012-13 in the Parliament.

 

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New tax slabs for individuals:

Upto Rs 2 Lakh                                 Nil

Rs 2 lakh to Rs 5 lakh                       10 pc

Rs 5 lakh to Rs 10 lakh                     20 pc

Above Rs 10 lakh                             30 pc

*No changes in corporate tax for FY 2012-13

*No advance tax for senior citizens

What goes up:

Gold, AC, Fridge, Mobiles, Cigarettes, Luxury items, Eating out, Air travel  

What goes down:

LCDs, LEDs, branded silver jewelleries, bicycles, HIV and cancer drug, cinema, housing society charges

BUDGET HIGHLIGHTS:

GROWTH

* FY13 GDP seen 7.6% plus or minus 25 bps
* India GDP seen growing 6.9% in FY12
* FY12 fiscal gap revised to 5.9% of GDP vs 4.6% target
* Met 99% of total plan outlay FY12
* Growth moderated, fiscal balance deteriorated FY12
* India is still global frontrunner in econ growth
* FY12 econ performance has been disappointing
* FY12 reality turned different from anticipation
* FY12 was a year of recovery interrupted for economy
* Need credible roadmap to meet objectives
* Demand driven growth is objective of budget
* FY12 services growth seen 9.4%
* FY12 industry growth seen 3.9%
* FY12 farm growth seen 2.5%
* Farm, services continued to perform well
* Need to improve supply side management
* Need to accelerate pace of reforms
* Manufacturing sector on path of recovery
* "Mere words are not enough"

INFLATION
* Headline inflation remained hard for most of FY12
* Inflation to be lower in FY13 than in FY12
* Inflation largely structural in nature
* Headline inflation seen stable after few mos
* Prolonged period of high inflation tends to get generalised
* Inflation driven by farm supply constraints

FY13 TARGETS
* Revenue gap seen 1.8% of GDP
* Tax proposals move forward on DTC, GST
* To fund around 93% of FY13 fisc gap via borrowing
* Fiscal deficit pegged at 5.13590 trln rupees
* Revenue deficit seen 1.85 trln rupees
* Net market borrow pegged at 4.79 trln rupees
* Oil subsidy to be paid in cash, not as bonds
* Fiscal gap estimated 5.1% of GDP
* Non plan spend seen up 18.8% vs FY12 budget estimate
* Non plan spend seen up 8.7% vs FY12 revised estimate
* 3.65 trln rupees total transfer to states
* Subsidy has pushed up non-plan spend
* Plan expenditure seen 5.21 trln rupees, up 18%
* Non plan expenditure seen 9.69 trln rupees
* Total expenditure 14.9 trln rupees
* Non-tax revenue receipts 1.6 trln rupees
* Net tax receipt estimated 7.7 trln rupees
* Aim Gross Tax to GDP ratio at 10.6%
* Aim gross tax receipt of 10.77 trln rupee, up 15.6%
* Aim to trim revenue deficit FY13
* To implement advance pricing for foreign investors
* Allocated 1.9 trln rupees for defence
* Expect FY13 current acct deficit to be smaller than FY12

FISCAL HEALTH
* FY12 current account gap seen around 3.6% of GDP
* To introduce new law for micro finance cos
* External sector development encouraging in H1 FY12
* Tight monetary policy impacted investment in FY12
* FRBM implementation now back on track
* To make some amendments to FRBM Act
* To provide for medium term expenditure target
* FY12 fiscal balance worsened on direct tax mop-up slippage
* FY12 average crude price seen $115/bbl vs $90 estimated
* High interest rates hurt corporate taxes FY12
* FY12 fiscal balance deteriorated due to subsidies
* External trade in FY12 first half was encouraging
* India successfully diversified export, import markets
* Signs of recovery in coal, fertilizer, cement sectors
* Indian manufacturing appears to be on curve of revival
* Concept of effective revenue deficit to be fisc parameter
* Slowdown can almost totally be ascribed to industry
* Global crisis has affected us

INDIRECT TAX
* Securities transaction tax cut 20% to 0.1%
* 15% tax on dividends from foreign arms extended 1 more yr
* Withholding tax on ECB interest cut to 5% for power cos
* Corporate tax rate left unchanged
* To reopen tax assessment for 15 yrs for overseas assets
* 20% additional depreciation on assets bought by power cos
* Weighted cut of 200% extended to 5 yrs for in-house R&D
* Adds ad valorem duty on some cigarettes
* Duty on refined gold hiked to 3.0% from 1.5%
* Excise duty on processed food products cut to 6%
* Excise duty on all raw food products cut to 6% merit rate
* Customs duty up on gold imports
* Concessions on hybrid vehicle extended
* Solar power equipment, CFL exempt from CVD
* Excise duty on LED lamps cut to 6%
* Tax collection at source for coal, lignite, iron ore

DIRECT TAX
* 10% tax on 200,000-500,000 rupees personal income
* 20% tax on 0.5-1.0 mln rupees personal income
* 30% tax on personal income above 1 mln rupees
* 5,000 rupees exemption for preventive health check up
* 10,000 rupees tax deduction on savings bank interest
* FY13 general tax exemption limit hiked to 200,000 rupees
* To tax unexplained money at highest rate of 30%
* Tax on undeclared income 30% irrespective of income slabs
* Revenue loss of 45 bln rupee on direct tax sops FY13

TAX REFORMS
* 82 double tax pacts finalised FY12
* To table white paper on black money in current session
* New tax exemption on individual share invest with lock-in
* Advanced pricing agreement in DTC to be in Finance Bill
* GST under progress, talks with states on for draft law
* GST network to get operational from Aug
* To examine Parliament panel report on Direct Taxes Code
* Rajiv Gandhi Equity Savings Scheme launched
* Rajiv plan equity invest lock in period to be 3 yrs
* 50,000 rupee tax exempt for shr invest in new Rajiv plan
* To allow 100 bln rupees power sector tax free bonds FY13
* To allow 50 bln rupees SIDBI tax free bonds FY13
* To allow 50 bln rupees HUDCO tax free bonds FY13
* To allow 100 bln rupees IRFC tax free bonds FY13
* To allow 100 bln rupees NHAI tax free bonds FY13
* To allow 600 bln rupees tax free bonds FY13
* To OK 50 bln rupee National Housing Bk tax free bonds
* 1% loan sop plan for home loans up to 2.5 mln rupees
* Interest subvention on low cost homes extended by 1 yr
* Only 2.5% customs duty on iodine
* 6 specialised life saving drugs exempt from excise duty
* Raised customs duty on bicycles to 30% vs 10%
* Fully exempt from basic customs duty mobile phone parts
* Fully exempt from basic customs duty LCD, LED panels parts
* Customs duty cut on some parts for low cost medical device
* 10% excise duty on branded retail garments
* Cut basic customs duty on titanium dioxide to 7.5%
* Tunnel boring machine import duty free, no end use limit
* Cut import duty on equipment used in iron ore pellet unit
* Customs duty cut on plant, machinery for iron ore, pellets
* Customs duty on iron ore mine machine cut to 2.5% vs 7.5%
* Full import duty exemption for road construction machinery
* Some aircraft parts exempt from customs duty
* Cut customs duty on mining machinery to 7.5% from 10.0%
* To cut customs duty on rail equipment to 7.5% vs 10%
* Full exempt coal mining projects from basic customs duty
* Coal for thermal power cos exempted from customs duty
* Customs duty on surveying, mining equipment cut
* Full customs duty exemption on coal for thermal plants
* Full customs exemption for imports to set up fert units
* Water soluble fertilisers customs duty cut to 5% vs 7.5%
* Basic customs duty 5% on coffee plantations equipment
* No change in peak rate of customs duty
* Standard excise rate hiked to 12% vs 10%
* Svc tax hike to yield 186.6 bln rupee extra revenue FY13
* Panel to study svcs tax, central excise for common code
* Common return form for service tax, excise duty
* Service tax exemption for some svcs related to cinema
* Only 17 items in negative list for service tax
* Introduces exemption list for service tax
* To tax all services except those in negative list
* Service tax needs to be aligned with excise duty

FARM, FOOD
* FY13 farm outlay 202 bln rupees, up 18% on yr
* More 3% rate subvention for farmers repaying loans on time
* To raise target for farm credit to 5.75 trln rupees FY13
* 5.75 trln rupees farm credit FY13
* Allocated 2 bln rupees for R&D of seeds
* Allot 5 bln rupees for aquaculture FY13
* Allocation to farm dev plan RKVY hiked to 92.17 bln rupee
* Allotted 4 bln rupee to up kharif output in northeast FY12
* Allot 10 bln rupees to up kharif output in northeast FY13
* Allocated 3 bln rupees for FY13 irrigation plan
* 5-bln-rupee pilot plan in 12th Plan for geo textiles in NE
* Green Revolution in east has boosted paddy output
* East Indian states produced 7 mln tn more of paddy
* To set up govt-owned irrigation promotion company
* Need to bridge gap in food storage, transportation
* To add 5 mln tn more grain storage capacity by FY13
* To start national food processing mission FY13
* Allocates 2 bln rupee for farm research
* Micro-irrigation allotment up 13% to 142.42 bln rupees.
* Agriculture continues to be govt's priority
* To set up 3 technical assistance centres for textiles
* India to be self sufficient in urea production in 5 yrs
* Announces 2 new handloom mega clusters
* 1 bln rupees to N G Ranga farm university in Hyderabad
* 1 bln rupees allotted for Kerala Agriculture University

RURAL, SOCIAL SECTOR
* PDS network created via UID platform to start Dec
* Allocated 250 mln rupees for institute of rural mgmt FY13
* 84.47 bln rupees for natl social assistance plan FY13
* To set up credit guarantee fund for skill development
* Allocates 12.76 bln rupee for micro-enterprises, up 23%
* To set up credit guarantee fund for poor students
* 12.76 bln rupee FY13 for PM employment generation plan
* Allotted 10 bln rupees for skill development plan FY13
* Women self-help group sops on loans up to 300,000 rupees
* 39.15 bln rupee FY13 for Rural Livelihood Mission, up 34%
* 3% more interest subvention to women self help groups
* Allocated 255.55 bln rupee under Right to Education
* Allotted 208.22 bln rupees for rural health plan FY13
* No new case of polio reported in last one year
* Credit guarantee fund proposed for poor students
* Voluntary Savings for Pension plan has 500,000 subscriber
* To up pension to disabled to 300 rupees/mo
* To give 100 bln rupees to NABARD to refinance rural bks
* Allocated 31.24 bln rupees for secondary education FY13
* To set up credit guarantee fund for education
* Allot 120.4 bln rupees for backward region growth FY13
* Allocated 50 bln rupee for warehousing expansion
* Allotted 200 bln rupees for rural infra dev fund FY13
* 140 bln rupees for rural drinking water plan FY13
* Allotted 240 bln rupees for rural road plan FY13
* FY13 mid-day meal allocation 119.4 bln rupee vs 103.8 bln
* Allotted 158.50 bln rupees for child development FY13
* Allotted 371 bln rupees for SC, ST inclusive growth FY13
* Computerisation of PDS to be completed by Dec
* Divest funds for social sector extended for 1 more yr
* 150 mln rupees for Natl Centre for Applied Econ Research
* To allocate funds for 400 mln more UID registration FY13

FINANCIAL SECTOR, BANKS
* India Opportunity Venture Fund via SIDBI
* SIBDI to start 50 bln rupee India Opportunity Venture Fund
* To issue revised norms for bks' priority sector lending
* To move National Housing Bank Amendment bill
* To move Regional Rural Bank Amendment bill
* To create financial holding co to help banks raise funds
* To set up fincl holding co for recapitalisation of bks
* To move bills for Public Debt Mgmt, NABARD Act amendment
* 158.88 bln rupees for capitalization of PSU banks FY13
* Propose electronic voting to up shareholder involvement

INFRASTRUCTURE
* 12th Plan invest for infra at 50 trln rupees
* ECBs allowed to part finance rupee debt of power project
* Inter-ministerial panel to monitor allocated coal mines
* Coal India told to sign coal supply pacts with power cos
* Viability gap funding for oil, gas pipelines, storage
* Telecom towers to get Viability gap funding FY13
* Irrigation, fertiliser, terminal mkt under viability gap funding
* Irrigation including dams under viability gap funding FY13
* Lack of adequate infrastructure major constraint to growth
* Extend plan to capitalize regional rural banks by 2 yrs
* Lack of adequate infra major constraint to growth
* IPOs of over 100 mln rupees have to be in electronic form
* To set up 2 handloom mega clusters
* Allot 700 mln rupees for Maharashtra power loom cluster
* Gives 40 bln rupees FY13 for rural housing vs 30 bln FY12
* Realtors can borrow overseas for low-cost home projects
* To allow External Commercial loans for affordable housing
* Airlines can borrow overseas to meet working capital needs
* To allow 1 yr ECBs of $1 bln for airline cos
* To allow 49% FDI in airlines under active consideration
* Foreign borrow for capex to maintain, operate toll roads
* Mulling 49% FDI by foreign airlines in local carriers
* Up NHDP allocation 14% to 253.6 bln rupees FY13
* Allowed direct import of ATF by Airlines
* Targeting 8,800 km projects under NHDP FY13

SUBSIDY
* Subsidy for food security law to be fully provided for
* Some subsidies are inevitable in a growing econ
* Fiscal policy had to absorb subsidy payments
* Aim is to directly transfer kerosene subsidy to individual
* Testing kerosene subsidy transfer to beneficiaries in Rajasthan
* Aim to directly transfer subsidy on LPG to consumers
* Direct kerosene subsidy transfer pilot for 50 districts
* Direct transfer of fertiliser subsidy to retailer, farmers soon
* To bring subsidies to 1.7% of GDP next 3 years
* Direct transfer of subsidy to be gradually rolled out
* To try to restrict subsidies to 2% of GDP in FY13
* Subsidies inevitable but not good if they hit macro econ

DIVESTMENT
* To raise 300 bln rupees via divestment FY13
* Raised around 140 bln rupee via divest FY12

MISCELLANEOUS
* Need to address the issue of black money, corruption
* Cos to file compulsory report on assets held abroad
* Effort on for consensus on FDI in multi-brand retail
* To complete national population register in 2 years
* Govt to retain 51% control in central PSUs
* To allow qualified foreign investors in corp bond mkt
* Have to address problem of malnutrition
* To extend Swabhimaan scheme to some NE areas FY13
* Pranab acknowledges guidance from Manmohan, Sonia


(JPN/Agencies)