Finance minister Pranab Mukherjee presented India’s budget 2012 on Friday for the coming financial year.
OVERVIEW OF THE ECONOMY:
* GDP growth estimated at 6.9 per cent in real terms in 2011-12. Slowdown in comparison to preceding two years is primarily due to deceleration in industrial growth.
* Headline inflation expected to moderate further in next few months and remain stable thereafter.
* Steps taken to bridge gaps in distribution, storage and marketing systems have helped in more effective management of inflation.
* Developments in India’s external trade in the first half of current year have been encouraging. Diversification in export and import market achieved.
* Current account deficit at 3.6 per cent of GDP for 2011-12 and reduced net capital inflow in the 2nd and 3rd quarters put pressure on exchange rate.
* India’s GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.
* Deterioration in fiscal balance in 2011-12 due to slippages in direct tax revenue and increased subsidies.
New Tax Slabs:
The Finance minister Pranab Mukherjee has increased the tax slabs and given relief to the common man. Especially for the people in the below 10 lakh slab. Greater news for those earning between 8 Lakh and 10 lakh, they move from a slab of 30% to a new slab of 20%.
The minimum tax slab has been increased from Rs.180000/- to Rs. 200000/-.
For people whose income level is between Rs. 200000 to Rs. 500000, the new tax rate is 10%, for income from Rs. 500000 to Rs. 1000000 the tax rate will be 20% and for income of Rs.1000000 and above the tax rate is 30 %.
The homeowners of apartments can enjoy tax exemption of Rs. 5000/. Spent on maintenance. This exemption level has been increased from Rs.3000/- to Rs. 5000/-.
The Capital Gains Tax will not be applicable for people who use the amount generated from the sale of their houses as an equity investment in small and medium businesses.
Exemption permitted upto Rs 5000/- for expenses incurred on Preventive Health Check up
Exemption of Rs 10000 on interest earned from Savings Bank depsosits for people with income upto Rs 5 Lakh
Agriculture will continue to be the priority Sector. The FM has announced 18% increase in outlay for agriculture. The Agri credit is up by one lakh to Rs.5.75 crore. The food prices are expected to ease over a long term.
Invest in Equity and get tax exemption:
Rajiv Gandhi Equity Saving Scheme will get income tax deduction. This will be applicable only to the New Retail Investors investing directly into equity up to Rs. 50000/, with a lock in period of three years.
The annual income of the investor should be less than Rs. 1000000/-. Changes have been made in the IPO guidelines in order to ensure the participation from small towns.
* Main points for Business- Service tax up from 10% to 12 %
* Viability Gap Funding- The FM has proposed to extend the Viability Gap Funding to improve Capital Infusion in irrigation, dams, Fertilizer Sector. Fertilizer, oil and Gas, LNG, Pipelines, fixed Network for telecom etc will help improve these sectors.
* Flight Charges to fall and services to go up- ECB for the welfare of the Airline Industry for a year is limited to be 1 billion USD and allow 49% from foreign airlines. This will make travel tickets cheaper and passengers can expect better services.
* Some subsidies, while being inevitable, may become undesirable if they compromise the macroeconomic fundamentals of economy.
* Subsidies related to administering the Food Security Act will be fully provided for.
* Endeavor to keep central subsidies under 2 per cent of GDP in 2012-13. Over next 3 year, to be further brought down to 1.75 per cent of GDP.
* Based on recommendation of task force headed by Shri Nandan Nilekani, a mobile-based Fertilizer Management System has been designed to provide endto-end information on movement of fertilizers and subsidies. Nation-wide roll out during 2012.
* All three public sector Oil Marketing Companies have launched LPG transparency portals to improve customer service and reduce leakage.
* Endeavour to scale up and roll out Aadhaar enabled payments for various government schemes in atleast 50 districts within next 6 months.
Small Businesses likely to receive benefits:
Entrepreneurs, especially the SMB sectors who have started SBM exchanges in Mumbai are to be benefited. The FM has forced the government to source up to 20% of its purchases from micro and small industries. The small business units are expected to be benefited out of this.
More number of Super malls to come up: The FM has said that multi-brand retail will be supported so we can expect more number of Malls and Super Malls in the country.
Power, Housing, and Road Construction: External Commercial Borrowing to be allowed for Power, Housing, and Road Constructions. This will improve the rationalization of these Industries.
* Government has further evolved its approach to divestment of Central Public Sector Enterprises by allowing them a level playing field vis-a-vis the private sector in respect of practices like buy backs and listing at stock exchanges.
* For 2012-13, ‘30,000 crore to be raised through disinvestment. At least 51 per cent ownership and management control to remain with Government.
Budget Estimates for Plan Expenditure and Non – Plan Expenditure. The Budget Estimates for Plan Expenditure will be 969900 crore instead of 816182 crore and Non – Plan Expenditure will be 521025 crore instead of 441547 crore.