Union Budget 2012: What you must know of the speech so far

[caption id=“attachment_246483” align=“alignleft” width=“380” caption=“PTI”]  [/caption] Finance Minister Pranab Mukherjee has begun presenting the Union Budget 2012 in Parliament.  It may be Pranab’s last attempt to bring economic reforms back on track. Here are the highlights of the budget so far: Taxes: Hike in personal income tax slab to Rs2 lakh from Rs 1.8 lakh as expected. Income up to  only Rs 2 lakh will be exempted from tax **Tax relief for the middle class:**Upper limit of 20 percent increased to up to Rs 10 lakh Income between Rs 2 and 5 lakh will pay less than 10 percent tax. Income between Rs 5 lakh and Rs 10 lakh to be taxed at 20 percent Income above Rs 10 lakh to be taxed at 30 percent Senior citizens to be exempt from advance tax payments Health insurance deduction up to Rs 5,000 for preventive health checkup No change in tax structure for corporates Witholding tax reduced to 5 percent from 20 percent  for sectors like airlines, affordable housing, power, roads and fertilisers. Direct taxes proposals to result in net revenue loss of Rs 4,500 crore. Tax on stock trading reduced STT reduced to 0.1 percent. Pranab states reduction of  20 percent on deliverables. This reduction of Securities Transaction Tax  on delivery trades is a surprise and big positive for stock markets and broking firms. Service tax net is set to widen by 2 percentage points, now stands at 12 percent All service sectors will be taxed, except for the ones on the negative list.Govt services, education, entertainment, public transport exempted from service tax. Negative list to include  pre-school and high school education, entertainment service. More secifically, Copyright relating to cinematography in film industry exempted from service tax. Service taxes are expected to generate revenue of Rs 18,660 crore for the government. No change in peak custom  duty, but standard excise duty hiked from 10 to 12 percent • Large cars duty raised from 22 percent  to 24 percent, big cars to get costlier • FM taxes upmarket bicycles like Trek; import duty on bicycles up from 10  percent  to 20 percent • Exemption of customs duty of 5 percent on equipment for fertiliser plants • Thermal power companies exempted from customs duty for two years. • full exemption on imported equipments for road construction projects and even automated shuttle looms are exempted from customs duty • Full exemption on import duty on coal, some good news for IPPs? • Excise duty on handmade and semi-mechanised matches reduced from 10 to 6 percent • Customs duty on import of parts of aircraft, tyres and testing equipment fully exempted. •  Oil cess on domestic crude raised to Rs 4,500 per ton from Rs 2,500 per ton What is going to get more expensive this year: Diamonds, bicycles, luxury items, eating out, white goods like AC and fridges. Even telephone bills are set to get more expensive. Expenditure and Revenue : • The finance minister says the total expenditure outlay for FY13 stands at Rs 15 lakh crore. 1.8 percent of the gross domestic product is the fiscal deficit for the current year. The fiscal target for FY13 is 5.1 percent. • Non-tax revenue receipts estimated at Rs1. 64 lakh crore GROWTH • FY12 GDP Seen At 6.9% • 7.6% GDP Growth In FY13 • Current A/C Deficit Likely To Be At 3.6% For FY12 • To Make Some Amendments To FRBM Act • Subsidy For Food Security Bill To Be Fully Provided • To Keep FY13 Subsidy Under 2% Of GDP • GST Will Become Operational By August 2012 • FY13 Disinvestment Target of Rs 30,000 Crore • Efforts are on for consensus on FDI in multi-brand retail • Will examine the parliamentary panel report on DTC •  Government examining the possibility of creating a financial holding committee to meet the financial needs of public sector banks • Pension, Insurance and Banking Amendments, Microfinance Bill to be moved in Budget Session. •  Hoping to raise Rs 14,000 cr through disinvestment • Will introduce new law for microfinance companies • Proposes  Rs15,888 crore  For Capitalisation of PSUs • To increase investment in in infrastructure through public-private partnership Infra Through PPPs Cheer for investors: • Tax-free bonds have been doubled to Rs 60,000 crore to benefit individual taxpayers. • IPO equity offer above Rs 10 crore will have to be made electronically in capital market reforms • Tax exemption on individual share investment below Rs 10 lakh, • new equity saving scheme announced for small investors. The Rajiv Gandhi scheme on equity investment sounds positive for wider equity market participation • Investment upto Rs 50,000 in stock markets will get concessions. For real estate sector: Allow ECB for low cost housing projects or house below Rs 25 lakh, interest subvention of 1 percent of loans upto Rs 15 lakh • To encourage Public private partnership,FM  propose ECB for capital expenditure Aviation Sector: • External commercial borrowings to the extent of $1 billion to be allowed for aviation sector for next year Agriculture sector • Government to work on national food security system, sustainable agriculture and more oil seeds to increase productivity. • FM allocated an additional Rs 600 crore for green revolution in Eastern India as initiative of green revolution has increased paddy production. • Agri loan target for banks raised to Rs 5,75,000 crore,  up by Rs 1 lakh crore. This ia a negative for banks because their exposure to non-performing assets are already high. • Rs 200 crore for Research Rewards for agri researchers for breakthroughs • Government to provide Rs 10,000 crore to NABARD for refinancing regional rural banks. • Debt waiver package of Rs 3884 crore  for weavers. • Additional 3 percent interest subvention to farmers for promptly repaying their dues. Food security • Govt to create Public Distribution System  through Adhaar platform by December to realise objectives of Food Security Bill. • Mid day meal scheme to get around Rs 12,000 crore Rural and Health Budget • Allocation for rural drinking water and sanitation scheme increased from Rs 11,000 cr in FY 12 to Rs 14,000 cr in 2012-13 • Pranab Mukherjee allots of 24,000 crore  for rural road plan in FY13 • Rs 20,000 crore to be spent on rural infrastructure development, including Rs 5,000 cr for creating warehousing facilities. • Rs 15,850 cr to be allocated to Integrated Child Development Scheme in 2012-13 as against Rs 10,000 cr this fiscal. • Maternal and child nutrition scheme to be launched in 200 districts • Rs 20,822 crore earmarked for National Rural Health Mission against Rs 18,115 crore this year. Self-Help Groups: Interest subvention of 7  percent to women self groups for loans up to Rs 3 lakh, additional 3 pc for those making timely repayment. Education: • Pranab announces an in crease in funds  educational institutes in Haryana, Kolkata, Tamil Nadu and other cities. • Pranab allocates Rs 1,000 crore  for National Skill Development Corporation in 2012-13 • Seven  medical colleges to be upgraded to All India Institutes. •  FM proposes Credit guarantee fund for education loan •  6,000 schools proposed to be set up in 12th year plan