Resisting the temptation of election-year populism, the general Budget today offered no major tax sops but slapped a surchage on 'super-rich', raised duties on mobile phones, cigarettes and imported luxury vehicles and imposed a levy on property sale above Rs 50 lakh.
Presenting UPA-II's last full-fledged Budget ahead of net year's general Elections to net in an additional Rs 18,000 crore, Finance Minister P Chidambaram did a tight rope walk balancing growth needs with fiscal prudence by stepping up expenditure in social sectors and cutting subsidies.
In a Budget that pegs fiscal deficit at 4.8 per cent of GDP, Defence allocation has been stepped up by 14 per cent over the revised expenditure in the current year to Rs 2,03,672 crore in the next.
Without changing the basic slabs and rates in income tax rates, Chidambaram gave a benefit of Rs 2,000 to individual tax payers with taxable income of up to Rs 5 lakh, that will benefit 1.8 crore tax payers entailing a revenue sacrifice of Rs 3,600 crore.
First-time home buyers will get an additional deduction of interest of Rs 1 lakh for home loans above Rs 25 lakh and Rs 1.50 lakh for home loans up to Rs 25 lakh. This will be over and above the current Rs 1 lakh deduction allowed for self-occupation.
The much-talked about 'super-rich' tax was levied as a 10 per cent surcharge on "relatively prosperous" persons with an income over Rs 1 crore.
Similarly, on domestic corporates with taxable income of Rs 10 crore, the surcharge has been raised from 5 to 10 per cent. Foreign companies will pay an increased surcharge of 5 per cent, up from 2.
The Finance Minister proposed that the surcharges will be in existence for just a year, while continuing the 3 per cent education cess on all tax payers.
In a bid to eliminate tax evasion through under-valuation and under-reporting in property sale, the Budget proposes a TDS of one per cent on all transfers of immovable properties for a consideration above Rs 50 lakh. Agriculture land will however be exempted from this.
While Securities Transaction Tax (STT) has been marginally reduced, the Minister introduced a new Commodities Transaction Tax (CTT) on non-agricultural commodities futures.
In indirect taxes, the Budget does not make any change in the peak Customs and Excise Duties or Service Tax, but it sharply raised import duty on high-end luxury cars, motorcycles and yachts from 75 per cent to 100 per cent and excise duty on SUVs from 27 to 30 per cent.
The Finance Minister, like most of his predecessors, did not fail to touch smokers in raising resources. Cigarettes, cigars, cigarillos and cheroots will attract an additional 18 per cent excise duty.
Dining at air-conditioned restaurants will cost more as service tax has been extended such establishments which were earlier exempted if they did not serve liquor.
Mobile costing above Rs 2,000 will attract a 6 per cent excise duty instead of 1 per cent currently.
Under the fresh excise duty proposals, marbles and silver manufactured from smelting zinc or lead while readymade garments, carpets and floor covering of coir and jute will become cheaper.
Vocational courses in state-aided institutions and agriculture testing facilities have been exempted from service tax.
In a one-time amnesty scheme, 10 lakh service tax defaulters have been offered a voluntary compliance encouragement scheme under which penalty and interest will be waived for returning to the tax fold.
Aiming at higher growth rate for inclusive and sustainable development and revive manufacturing, Chidambaram hiked outlays for health, water and sanitation, SCs/STs and tribals and rural development.
While the direct tax proposals will bring in Rs 13,300 crore, those on indirect tax side will rake in Rs 4,700 crore.
Hoping to put behind a bad year on account of economic slowdown, Chidambaram said he has a confidence to be more ambitious in the coming year in pegging the total expenditure at Rs 16,65,297 crore and Plan expenditure of Rs 5,55,322 crore. Non-Plan expenditure is estimated at Rs 11,09,975 crore.
This is more than 29.4 per cent of the revised estimate in the current year.
"All flagship programmes have been fully and adequately funded. I dare say I have provided sufficient funds to each ministries or departments consistent with the capacity to spend the funds," he said in his Budget speech that lasted over 100 minutes.
However, during the current year the revised estimate for total expenditure was reduced to Rs 14,30,825 crore, down from Rs 14,90,925 crore.,
The fiscal deficit for the current year has been contained at 5.2 per cent and for the coming year it is estimated at 4.8 per cent. The current year estimate is less than previously predicted 5.3 per cent.
Chidambaram expressed optimism that 2016-17 the government would bring down the fiscal deficit to 3 per cent, the revenue deficit to 1.5 per cent of GDP and effective revenue deficit to zero.
Unusually, the Budget does not make any economic growth rate prediction for the current as well as next fiscal.
Presenting his eighth budget, the first after coming back to Finance Ministry last year, Chidambaram brought down the subsidy for 2013-14 to Rs 2,31,084 crore from Rs 2,57,654 crore.
He raised the target from disinvestment proceeds to over Rs 55,000 crore from current year's revised estimate of about Rs 24,000 crore.
In a bid to revive manufacturing, the Finance Minister announced the grant of investment allowance at the rate of 15 per cent to manufacturing companies that invest more than Rs 100 crore in plant and machinery between April 2013 and March 2015. This will be over and above currently allowable depreciation.
The Budget proposes three measures to promote household savings. The income limit for Rajiv Gandhi Equity Saving Scheme for first time investors is being raised from Rs 10 lakh to Rs 12 lakh.
To wean away investments in securities like gold, instruments such as inflation indexed bonds will be introduced to protect savings from inflation.
In order to encourage infrastructure sector, Chidambaram said the government will allow certain companies to raise tax free bonds up to Rs 50,000 crore and encourage infrastructure debt fund.
The Budget has increase allocation for education to Rs 65,867 crore, on health and family welfare scheme to Rs 37,330 crore, backward region grant fund to Rs 11,500 crore, drinking water and sanitation Rs 15,260 crore and on Jawarhar Lal Nehru Urban Renewal Mission to Rs 14,873 crore.
*No change in income tax slabs
*Relief of Rs 2,000 for tax payers in tax bracket of Rs 2-5 lakh
*10 pc surcharge on persons with taxable income of over Rs 1 crore
*Tobacco products, SUVs and mobile phones to cost more
*Income limit under Rajiv Gandhi Equity Savings Scheme raised to 12 lakh from Rs 10 lakh
*First home loan of up to Rs 25 lakh to get extra interest deduction of up to Rs 1 lakh
* Duty free limit of gold import increased to Rs 50,000 for male passengers and Rs 1 lakh for female passengers
*India's first women's bank to be set up by October
* Concessional six per cent interest on loans to weavers
* Rashtriya Swasthya Bima Yojana benefit extended to rickshaw pullers, auto and taxi drivers, among others
* 'Nirbhaya Fund' of Rs 1,000 crore to empower women and provide safety in the wake of Delhi gang-rape incident
*Fiscal deficit for 2013-14 pegged at 4.8 pc of GDP and 5.2 per cent in 2012-13
*Plan expenditure pegged at Rs 5,55,322 crore and non-Plan at Rs 11,09,975 crore
*New taxes to collect Rs 18,000 crore for government
*Voluntary Compliance Encouragement Scheme launched for recovering service tax dues
*Rs 14,000 crore earmarked for capital infusion in public sector banks in 2013-14
*Refinance capacity of SIDBI raised to Rs 10,000 crore
*TUF Scheme for textile sector to continue in 12th Plan with an investment of Rs 1.51 lakh crore
*Rs 9,000 crore earmarked as first instalment of balance of CST compensation to states
*Defence allocation at Rs 203,672 crore, education Rs 65,867 crore and Rural Development Ministry Rs 80,194 cr
*Rs 10,000 crore earmarked for National Food Security towards incremental cost
*Farm credit target set at Rs 7 lakh crore as against Rs 5.75 lakh crore in 2012-13
*Direct Benefit Transfer scheme to be rolled out in the entire country during tenure of UPA government
*Commodity transaction tax of 0.01 per cent proposed on non-agri futures traded on commodity bourses
*Securities Transaction Tax brought down to 0.01 per cent
*No change in basic customs duty; normal excise and service tax rates unchanged at 12 per cent
*Handmade carpets and textile floor coverings of coir or jute exempted from excise duty
*Excise duty on SUVs increased to 30 per cent from 27 per cent
*Chidambaram says India to become USD 5 trillion economy, and among top five in the world by 2025