Presenting the budget in the Lok Sabha today, Finance Minister P. Chidambaram said there is no case to revise the income tax slabs or the rates but he is inclined to give 2000 rupees as a relief to the tax payers in the first bracket of 2 lakh rupees to 5 lakhs. This will work out to an increase in the exemption to them from 2 lakh rupees to 2 lakh 20 thousand. About 1.8 crore tax payers are to benefit.
To make the rich pay more, the budget proposes a 10 percent surcharge for those getting income over one crore rupees a year. Domestic companies with income exceeding ten crore rupees a year will pay 10 per cent surcharge instead of present five. Foreign companies will pay five per cent surcharge, an increase of three per cent.
Turning to indirect taxes, Chidambaram said there will be no change in the peak rate of ten per cent for non-agricultural products. To encourage exports, the budget proposes to reduce the customs duty on pre-forms of precious and semi-precious stones from ten per cent to two per cent. Export duty on de-oiled rice bran oil cakes withdrawn. Duty on specified machinery for manufacture of leather and leather goods including footwear is to come down from 7.5 to five per cent. Concession has been announced to aircraft maintenance, repair and overall industry. Duty on set top boxes goes up from five to 10 per cent. Raw silk to cost more with customs duty going up from five to 15 per cent. Duty on imported luxury goods including high end motor vehicles, motor cycles and yachts is to go up from 75 to hundred per cent. On motor cycles with 800 CC engine capacity, the duty will increase from 60 to 75 per cent. To redress the complaints of passengers because of increase in gold prices, duty free gold limit for male passengers increased to 50 thousand rupees and for females to one lakh rupees.
Announcing the excise duty concessions, the budget provides relief to readymade garment industry and handmade carpets and textile floor coverings of coir and jute are exempted from duty. Ship building industry, ships and vessels are also exempted from duty. Smokers were not spared as specific excise duty on cigarettes will go up by 18 per cent. Similar increase will also be made for cigars and other products. The excise duty on sports utility vehicles is to go up from 27 to 30 per cent but it will not be applicable for the vehicles registered as taxies. Marble to cost more with higher duty of 60 rupees per square meter, double of the present rate. Silver manufactured from smelting zinc or lead will attract four per cent excise duty. Mobile phones will cost more. Six per cent higher duty is proposed for the sets costing more than two thousand rupees. Branded Ayurveda, Unani and such medical systems will be cheaper.
No change has been made in the service sector but the budget proposes to include all airconditioned restaurants. To promote better compliance, a Voluntary Compliance Encouragement Scheme will be introduced. Defaulters may avail the scheme on truthful declaration of service tax dues since 1st October, 2007.
To develop a robust manufacturing sector, the budget proposes an investment allowance of 15 per cent to a company that invests more than one hundred crore rupees in plant and machinery in the next two years. Transactions in immovable properties are undervalued and to check the trend, TDS will be applied at the rate of one per cent on the value of transfer of immovable property costing over 50 lakh rupees. Agricultural lands will be exempted.
Making three promises for women, youth and the poor, the Finance Minister said as the nation has a collective responsibility to ensure the dignity and safety of women, a number of initiatives are now under way. He proposed one thousand crore rupees to set up the Nirbhaya Fund to meet the commitments to womens’ safety. The budget proposes one thousand crore rupees to promote skill development of the youth and promises to cover the entire country with the direct benefit transfer scheme for the poor during the term of the UPA Government.
An additional 10 thousand crore rupees is proposed for the ambitious National Food Security Scheme. The cheaper loan of interest subvention scheme for short term crops will continue to benefit the farmers. The allocation for the agricultural sector has been increased by 22 per cent. The social sectors get higher allocation with provision for rural development going up by a whopping 46 per cent to cross 80 thousand crore rupees. Health and education for all remaining the main priorities, the health sector will get an increased allocation of 24.3 per cent and education 17 per cent. The Rashtriya Swasthya Bima Yojana is to be extended to Rickshaw pullers, taxi drivers, sanitation workers, rag pickers and mine workers. It already covers 34 million families. Eligibility for Life Insurance Policies for persons suffering from disability will be relaxed.
The allocation for the welfare programmes of Scheduled Castes and Scheduled Tribes children, the budget proposes 41 thousand 561 crore rupees, an increase of 12.5 per cent for the scheduled castes sub plan and 24 thousand 598 crore rupees, an increase of 31 per cent for the tribal sub-plan. The allocation for the programmes for the welfare of minorities has been increased by 12 per cent.
To bring green revolution to eastern India, the budget proposes one thousand crore rupees to increase rise production in Assam, Bihar, Chhattisgarh and West Bengal.
Integrated Child Development Programme is proposed to get 17 thousand 700 crore rupees, an increase of 11.7 per cent with focus on early childhood care and education. 100 districts are to be covered to remove maternal and child mal nutrition. Over 15 thousand crore rupees will be spent for safe drinking water and sanitation.
Two new ports are proposed to be set up in Sagar in West Bengal and in Andhra Pradesh to add one million tones capacity. Besides a new outer harbour will be developed at Thoothukkudi Port in Tamil Nadu at a cost of seven thousand five hundred crore rupees. The budget proposes 226 crore rupees for improving power supply in the Leh-Kargil region and to connect the Laddakh region to the Northern grid.
The budget also proposes to set up India’s first Women’s Bank as a public sector bank and allocates one thousand crore rupees as initial capital for the project.
New home buyers are to get an additional tax benefit with deduction of interest of one lakh rupees. If this limit is not exhausted the balance can be claimed in 2015-16 financial year as well. Contributions made to the Central Government Health Scheme are already eligible for deduction under section 80D and it will be extended to similar schemes of the Central and State Governments.
The budget proposes to increase allocation for defence to over two lakh three thousand crore rupees. It also proposes to expand private FM Radio Services to 294 more cities to cover all cities having more than one lakh population. About 839 new FM Radio Channels will be auctioned.
A Bill on the Direct Tax Code will be brought before the House in this budget session. A consensus on goods and services tax is being evolved and in the meanwhile the budget proposes nine thousand crore rupees towards the first installment of the balance of Central Sales Tax compensation.
Rajiv Gandhi Equity Savings Scheme to be liberalized. Additional deduction of interest upto one lakh rupees for those taking the first home loan upto 25 lakhs rupees proposed. Instruments protecting savings from inflation are to be introduced in consultation with the RBI.
The budget proposes to peg the fiscal deficit at 4.8 per cent. After presenting the budget, the Finance Minister also placed the Finance Bill for 2013-14 before the House.
