Overview of the Union Budget, 2014-15

Overview ofUnion Budget

2014 - 15

3.8

9.68.9

7.4

6

FY'10 FY'11 FY'12 FY'13 FY'14

WPI

8.6 8.9

6.7

4.5 4.7

FY'10 FY'11 FY'12 FY'13 FY'14

GDP Growth (%)

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GDP Growth Inflation ( WPI )

Index of Industrial Production (IIP) Trends in Fiscal Deficit

Source : Central Statistical Office Source : Reserve Bank of India

Source : Reserve Bank of IndiaSource : Economy Survey 2012 – 13

6.5

4.8

5.74.9

4.5

FY'10 FY'11 FY'12 FY'13 FY'14

Gross Fiscal Deficit as % of GDP

5.3

8.2

2.9

1.1

-0.7FY'10 FY'11 FY'12 FY'13 FY'14

Index of Industrial Production

Overview: Indian Economy


Overview: Union Budget 2014 - 2015

• Total budget expenditure is seen at INR 17.95tr in 2014 – 15

• Non- planned expenditure estimated at about INR 12.20tr in 2014 – 15

• India’s 2014 – 15 planned expenditure is seen at INR 5.75tr

Spending

• Gross market borrowing stands at INR 6tr in 2014-15

• Net borrowings will be INR 4.61tr, after considering repayments of past loans and interests Borrowing

• Total payments towards subsidies earmarked at INR 2.51tr in 2014-15

• Petroleum subsidy seen at INR 634.27bn in 2014-15

• Revised food subsidies at INR 1.15tr in 2014-15

• Revised 2014-25 fertilizer subsidy at INR 729.70bn

Subsidies

• Capital receipts seen at INR 739.5bn in 2014-15

• Non-tax revenues are estimated to rise by a more modest 10% to INR 2.13trRevenue


Direct Tax

Personal Tax

1) No change in tax rates

2) Income Tax exemption limit raised from INR 2 lacs to INR2.5 lacs per annum for all tax payers below the age of 60years and from INR 2.5 lacs to INR 3 lacs per annum forall senior citizens

3) Raised investment cap under section 80C from INR 1 lacto INR 1.5 lacs

Indirect Tax

Customs/Excise

1) Additional 5% excise tax to be levied on aerated drinkswith added sugar (cold drinks)

2) Excise duty on tobacco products increased between 11%and 72%

3) Excise duty for specified food package industry reducedfrom 10% to 6%

4) Excise duty on footwear reduced from 12% to 6%

Corporate Tax

1) No change in the rate of surcharge either for thecorporate or the individuals, HUFs, firms etc

2) Investment allowance at the rate of 15% to amanufacturing company that invests more than INR 25crin any year in new plant and machinery. This benefitwill be available for the investments up to 31st

March, 2017

3) Extended the above investment linked deduction to twonew sectors, namely, slurry pipelines for thetransportation of iron ore and semiconductor waferfabrication manufacturing units

Service Tax

1) Taxes proposed on the service provided by radio-taxis toplace them on par with rent-a-cab service

2) Exemptions withdrawn, including those extended toservices by air-conditioned contract carriages andtechnical testing of newly developed drugs on humanparticipants

3) The government will work to introduce the much awaitedGoods and Service Tax (GST) this year. GST willstreamline tax administration and result in higher taxcollection for the centre and the states

Overview: Union Budget 2014 - 2015


Sector Policy Changes Budget Impact

Automobiles1. Extended the excise duty concessions beyond 30th June 2014 for a period of 6

months up to 31st December 2014

Banking and Non Banking

Financial Institutions

1. PSU Banks would need INR 2.4 lac cr government infusion by 2018

2. Finance Minister(FM) to examine proposal to give additional autonomy to banks

3. FDI in insurance to be increased from 26% to 49% through Foreign Investment

Promotion Board (FIPB) route

4. Banks will be encouraged to extend long term loans to infrastructure sector

5. RBI will create framework for licenses of small banks

6. INR 5,000cr short time rural credit refinance fund for 2014-15

7. FM proposes to up cap gains tax cut-off for Mutual Funds, other than equity

oriented funds, to 36 months

8. FM aims for INR 8 lac cr farm credit in FY’15

9. FM proposes additional 3% interest subsidy on farm loans

FMCG

1. Excise duty for specified food processing and packaging machinery reduced from

10% to 6%

2. Excise duty on footwear reduced from 12% to 6%

3. Basic custom duty on LCD and LED panels below 19 inch made nil

4. Additional 5% excise tax to be levied on aerated drinks with added sugar (cold

drinks)

5. Excise duty on tobacco products increased between 11% and 72%

Post Budget Impact: Sector Summary

Positive Neutral



Information Technology

1. Impose basic customs duty at 10% on specified telecommunication products that are

outside the purview of the Information Technology Agreement

2. Exempt all inputs/components used in the manufacture of personal computers from

4% Special Additional Duty (SAD)

Mining

1. Rationalize coal linkages which will optimize transport of coal and reduce cost of

power

2. Custom duty cut on steel grade limestone and steel grade dolomite from 5% to 2.5%

3. Increased the basic customs duty on imported flat-rolled products of stainless steel

from 5% to 7.5%

4. The current impasse in mining sector, including, iron ore mining, will be resolved

swiftly. Changes, if necessary, in the MMDR Act, 1957 would be introduced to

facilitate this

Infrastructure

1. INR 37, 800cr allotted for National Highways

2. New airports to be created in Tier I and Tier II cities

3. Proposal for 15,000km gas pipelines using appropriate PPP model

4. INR 1,000cr provided for rail connectivity in northeastern region

5. INR 7,060cr fund earmarked for smart cities

6. Ultra modern power projects to be taken up in Rajasthan, Tamil Nadu, Ladakh with

INR 500cr




Capital Goods1. Extended the excise duty concessions beyond 30th June 2014 for a period of 6 months up

to 31st December 2014

Oil & Gas1. Proposal for 15,000km gas pipelines using appropriate PPP models

2. Accelerate production and exploitation of Coal Bed Methane reserves

Real Estate

1. Increase the deduction limit on account of interest on loan in respect of self occupied

house property from INR 1.5 lac to INR 2 lac to reduce burden on middle and lower income

groups

2. PM has vision of developing 100 new cities; INR 7,060cr fund earmarked for smart cities

3. Government proposes National Housing Banking programme; sets aside INR 8,000cr for

this program

4. New mission for low cost affordable housing for urban poor -INR 4,000cr allocated

Manufacturing1. The manufacturing units will be allowed to sell its products through retail including E-

commerce platforms without any additional approval

Power

1. Extend the 10 year tax holiday to the undertakings which begin generation, distribution

and transmission of power by 31st March 2017


Thank you

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Overview of the Union Budget, 2014-15

Economy & Finance

Transcript of Overview of the Union Budget, 2014-15