UNION BUDGET 2014-15 : HIGHLIGHTS !!!

GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT FY15 at 5.4 % - 5.90 %

AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2013 - 14 IS ₹ Rs. 105,39,605 LAKHS CR AND AT 2004-05 PRICES ITS AT Rs. 57,48,564 LAKHS CR.

FY15 FISCAL DEFICIT AT Rs. 5,31,177 CR.
FY15 TOTAL SUBSIDES AT Rs. 2,51,397 CR.

FY15 FERTILIZER SUBSIDIES AT  Rs. 72,970 CR,

FY15 FOOD SUBSIDIES AT  Rs. 1,15,000 CR

FY15 OIL & PETROLUEM SUBSIDIES AT  Rs. 63,427 CR.

FY15 NET MARKET LOANS = Rs. 4,61,205 CR

FY15 STATE PF = Rs. 12,000 CR.

FY15 EXTERNAL AID = Rs. 5,734 CR.

FY15 LESS OTHERS = Rs. 7,704 CR.

THE CENTER'S EXPENDITURE 2014-15 IS PROJECTED AT Rs. 17,94,892 Cr.

IN FLOW (Rs. in Cr)
TAX RECEIPTS	9,77,258
CORPORATE TAX	4,51,005
INCOME TAX	2,84,266
CUSTOMS DUTY	2,01,819
EXCISE DUTY	2,07,110
SERVICE TAX	2,15,973
TAX OF UNION TERRITORY	3,401

NON TAX RECEIPTS	AMOUNT
INTEREST RECEIPTS	19,751
DIVIDENDS & PROFITS	90,229
EXTERNAL GRANTS	2,405
OTHER NON TAX RECEIPTS	99,009
RECEIPTS OF UNION TERRITORY	1,111
TOTAL	2,12,505

NON DEBT CAPITAL RECEIPTS	73,952
RECOVERY OF LOANS & ADVANCES	10,527
MISC. CAPITAL RECEIPTS	63,425

* Out of the Tax Receipts the Center has to keep aside States share of Rs. 3,82,216 cr & for Calamity & Contingency Fund of Rs. 5,050 crs.

OUT FLOW (Rs. in Cr)
PLAN EXPENDITURE	5,75,000
NON PLAN EXPENDITURE	12,19,892
OR
REVENUE EXPENDITURE	15,68,111
CAPITAL EXPENDITURE	2,26,781
DEFENCE	2,29,000
SUBSIDIES	2,51,397
GRANTS TO STATES & UTs	69,084
PENSIONS	81,963
INTEREST PAYMENTS	4,27,011
LOANS TO PSUs	653
OTHER GENERAL SERVICES	36,569
Subsidity to Railway towards Dividend	4,059
CENTRAL PLAN	2,36,592
POSTAL DEFICIT	6,908
EXPENSES of UTs with out Legislature	4,402
NON PLAN CAPITAL OUTLAY	10,039
ECONOMIC SERVICES	22,075
GRANTS TO FOREIGN GOVT.	4,478
CENTRAL PLAN AID TO STATES	3,38,408
SOCIAL SERVICES	25,324
POLICE SERVICE	46,930

SOME MORE POINTS FROM BUDGET

®  Tax to GDP ratio to be at 10.60 % in FY15, and must be improved & Non-tax revenues should be increased.

®  Govt. committed to achieve Fiscal deficit target of 4.1 % of GDP followed by fiscal deficit of 3.6 % for 2015-16 and 3.00 % for 2016-17.  

®    Rs. 2,29,000 Cr allocated to Defence sector.

®    PSU Banks to be capitalized Rs. 2,40,000 Cr by 2018.

®    No Changes in Tax Rates for Individuals.

®   Personal Income Tax exemption limit raised by Rs. 50,000 from Rs.2,00,000 to Rs. 2,50,000 for people below 60 years.

®    Investment limit Under Section 80C raised from Rs. 1 lakh to Rs. 1,50,000.
®   Annual PPF ceiling to be raised to Rs. 1,50,000 from Rs. 1,00,000.

®    Housing Loan Rebate to raise from Rs. 1,50,000 to Rs. 2,00,000.

®    PSUs will invest through Capital Investment a total sum of Rs. 2,47,941 Cr in current financial year. 

®    Provided Rs. 7,060 Cr in the current fiscal for the project of developing "One Hundred Smart Cities".

®    E- Visas to be introduced at 9 airports and to facilitate visas on arrivals.

®   New Airports to be developed through PPP mode in tier -II and tier-III , 16 new          ports to be set up and Rs. 11,000 Cr to be allocated to that.

®    Retrospective Tax Amendment to be undertaken with extreme caution.

®  Incentives for Real Estate Investment Trusts (REITS) and will be given complete pass through for the purpose of taxation. A modified REITS type of structure for infrastructure projects as Infrastructure Investment Trusts (INVITS), the REITS & INVITS will attract long term finance from foreign and domestic sources including NRIs.

®    Govt. to provide investment allowance at 15 % for 3 years to manufacturing company which invest more than Rs. 25 Cr in plant and machinery.

®  A sum of Rs. 100 Cr provided to transform Employment exchanges into Career Centres.

®  The composite cap of Foreign Investment to be raised to 49 % with full Indian management & Control through the FIPB route this includes Insurance sector where the limit is raised from 26 % to 49 %. And the requirement of the built up area and capital conditions for FDI to be reduce from 50,000 Sq. meters to 20,000 Sq. meters and from $10 million to $5 million respectively for development of smart cities.

®    The Manufacturing Units to be allowed to sell its products through retail including E- Commerce platforms.

®   PSUs will invest through capital investment to a tune of Rs. 2,47,941 Cr in current  financial year.    

®    FY15 disinvestment target Rs. 63,425 Crs and 43,425 Cr through disinvestments in  PSUs.

®   For assured irrigation a sum of Rs. 1000 Cr provided for 'Pradhan Mantri Krishi  Sinchayee Yojna".

®     To provide Rs. 14,389 Cr for Pradhan Mantri Gram Sadak Yojna.

®      Bank loans for women Self Help Groups at 4% to be extended to another 100 districts   under Ajeevika scheme. 

®   Initial sum of Rs. 100 Cr for Start-up Village Entrepreneurship Programme for     encouragement of rural youth to take up local entrepreneurship programmes.

®  EPFO to launch the Uniform Account Number service for contributing members.  Government notified a minimum pension of Rs. 1000 per month to all subscribers’  members of EP Scheme for that initial provision of Rs. 250 Cr is made. Also another  Rs. 250 Cr provision is made for the increase in mandatory wage ceiling of  subscription to Rs. 15,000 Cr.

®   A sum of Rs. 500 Cr to be allotted to Pan India programme "Digital India" and a       programme for promoting Good Governance to be launched with a sum of Rs. 100 Cr.

®  A tune of Rs. 100 Cr to be allocated for 600 new and existing Community Radio Stations. Rs. 100 Cr is provided for Kisan TV to disseminate real time information to farmers on issues like farming techniques, water conservation, organic farming etc.

®   Allocation of Rs. 8000 Cr to National Housing Bank to support Rural Housing. And slum development to be included in the list of Corporate Social Responsibility activates to encourage the private sector to contribute more.

®   A sustainable growth of 4 % in Agriculture will be achieved, to mitigate the risk of Price volatility in the agri produce a sum of Rs. 500 Cr is provided for establishing a Price Stabilization Fund. A target of Rs. 8 lakh Cr has been set for agriculture credit during 2014-15. Allocation of Rs. 5,000 Cr provided for the Warehouse Infrastructure Fund.

®   Allocation of Rs. 100 Cr to be provided for setting up National Industrial Corridor  Authority.

®    Fund of Funds with a corpus of Rs. 10,000 Cr for providing equity through venture  capital funds, quasi equity, soft loans and other risk capital specially to encourage new  start-ups by youth to be set up. Entrepreneur friendly legal bankruptcy framework  will be developed for SMEs to enable easy exit.

®    A sum of Rs. 500 Cr for developing a textile mega cluster at Varanasi and six more at Bareilly, Lucknow, Surat, Kutch, Bhagalpur and Mysore.

®    A sum of Rs. 11,653 Cr will be allocated for the development of outer harbour Project  in Tuticorin for Phase I. SEZs will be developed in Kandla and JNPT.

®    An investment of an amount of Rs. 37,880 Cr in NHAI and State Roads is proposed  which includes Rs. 3,000 Cr of North East.

®  Allocation of Rs. 100 Cr for new scheme Ultra-Modern Super Critical Coal Based Thermal Power Technology.

®   Ultra-modern power project to be taken up in Rajasthan, Tamil Nadu, Ladakh with Rs. 500 Cr.

®  Rs. 3600 Cr set aside for National Rural Drinking Water. Rs. 2,037 Cr set aside for integration of Ganga Development Project under name Namami Ganga.

® Uniform KYC across the financial sector with single Demat for all the financial transactions.

®  Banks to be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and priority sector lending (PSL).

®    Service Tax exempt on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled.

®    To promote tourism, services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India to be taken out of tax net and Cenvat credit for services of rent-a-cab and tour operators to be allowed.

®  Sale of space or time for advertisement in broadcast media, extended to cover such sales on other segments like Online and Mobile advertising will now come under service tax, Sale of space in Print media however remains excluded. Services provided by Radio-Taxis brought under service tax.

®   Net effect of Direct Tax proposals is Revenue Loss of Rs. 22,200 Cr.  

®  Personal Computers, Electronic goods to be Cheaper, CRT TVs to be cheaper. Basic custom duty on LED panel below 19 inch made NIL.

® Excise duty on footwear reduced from 12 % to 6 %. Footwear below Rs. 500 is exempt, 6 % duty on footwear above Rs. 500 but below Rs. 1000.

®    Duty on packaging Machinery to be at 4 %; Specified Food Processing machinery to 6 %, Cigarettes at 22 %.

®    Clean Energy cess increased from Rs.0.50/ tonne to Re. 1/tonne. 

®    Tax proposals on Indirect tax front would yield Rs. 7,525 Cr.

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RETURN ON CAPITAL

UNION BUDGET 2016-17 : HIGHLIGHTS !!!

GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT at 7.60 % for FY15 - 16

AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2015 - 16 IS ₹ Rs. 113,51,000 LAKHS CR AND AT 2011-12 PRICES ITS AT Rs. 105,52,000 LAKHS CR. 

FY16 FISCAL DEFICIT AT Rs. 5,32,281 CR.

FY16 TOTAL SUBSIDES AT Rs. 2,50,000 CR.

FY15 FERTILIZER SUBSIDIES AT  Rs. 72,968 CR.

FY16 FOOD SUBSIDIES AT  Rs. 1,35,000 CR.

FY16 OIL-PETROLUEM SUBSIDIES AT Rs. 26,900 CR.

FY16 NET MARKET LOANS OF Rs. 4,25,000 CR. 

THE CENTER'S EXPENDITURE 2015-16 IS PROJECTED AT Rs. 19,78,060 Cr.

INFLOWS (Rs. in Crs)	AMOUNT
CORPORATE TAX	4,93,923
INCOME TAX	3,53,174
CUSTOMS DUTY	2,30,000
EXCISE DUTY	3,18,670
SERVICE TAX	2,31,000
TAX OF UNION TERRITORY	4,791
GROSS TAX REVENUES	16,30,888

NON TAX RECEIPTS (Rs. in Crs)	AMOUNT
INTEREST RECEIPTS	29,620
DIVIDENDS & PROFITS	1,23,780
EXTERNAL GRANTS	2,862
OTHER NON TAX RECEIPTS	1,65,320
RECEIPTS OF UNION TERRITORY	1,339
TOTAL	3,22,921

DEBT RECEIPT (Rs. in Crs)

5,20,709

NON DEBT CAPITAL RECEIPTS (Rs. in Crs)	AMOUNT
RECOVERY OF LOANS & ADVANCES	10,634
MISC. CAPITAL RECEIPTS	56,500
TOTAL	67,134

* Out of the Tax Receipts the Center has to keep aside Rs. 25,000 cr for bank recapitalisation

OUT FLOW (Rs. in Cr)	AMOUNT
PLAN EXPENDITURE	5,50,010
NON PLAN EXPENDITURE	14,28,030
DEFENCE	1,62,759
SUBSIDIES	2,50,433
GRANTS TO STATES & UTs	1,18,356
INTEREST PAYMENTS	4,92,670
OTHER GENERAL SERVICES	35,003
ECONOMIC SERVICES	34,266
Central Assistance to States & Union	2,27,551
CENTRAL PLAN	1,76,076
LOANS TO STATE & UT GOVT	81

SOME MORE POINTS FROM BUDGET  

® Govt. committed to achieve Fiscal deficit target of 3.9 % of GDP for FY16 followed by fiscal deficit of 3.5 % for 2017.

® Direct tax proposals results in Revenue loss of Rs. 1,060 Cr and the indirect tax proposal results in gain of Rs. 20,670 Cr.

® Proposes to imply additional 10 % tax on gross amount of dividend received by the recipients that is individuals, HUF’s, and firms receiving dividend in excess of Rs. 10 lakhs per annum. 

® Proposes a 15 % surcharge on income above Rs. 1 Cr and proposes to raise the ceiling of tax rebate under section 87A from Rs. 2,000 to Rs. 5,000 for individuals with income not more than Rs. 5 lakhs.

® Individuals who do not own any house and also do not get any Rent allowance from employer gets deduction of Rs. 24,000 per annum from their income, hence this limit increased u/s 80GG from Rs. 24,000 per annum to Rs. 60,000 per annum. For first home buyers, additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided the cost of house is not above Rs. 50 lakh.

® Proposes to levy infrastructure cess at the rate of 1 % on purchase of luxury cars exceeding value of Rs. 10 lakh and 1 % on purchase of goods and services in cash exceeding Rs. 2 lakh. Farmers and notified class of persons will have an option of giving a form by which TCS will not be charged. To levy 2.5 % on diesel cars of certain capacity and 4 % on other higher engine capacity vehicles and SUV’s.

® Proposes to give 100 % deduction for profits to an undertaking from a housing project for flats up to 30 sq. meters (322.917 sq.fts) in four metros cities and 60 sq. meters (645.835 sq.ft.) in other cities approved during June 2016 to March 2019 and is completed within 3 years of approval. Minimum Alternate Tax will apply to these undertaking. Service tax exemption to houses up to 60 square meters built under any scheme of the Central or State government including PPP schemes.     

® Presumptive taxation scheme u/s 44AD applicable to small & medium enterprises i.e. a non-corporate business with turnover or gross receipts not exceeding Rs. 1 Cr, at present these are free from maintain details books of accounts and getting audit done, hence are proposed to increase the turnover limit to Rs. 2 Cr, which would be paying 8 % tax on presumptive income. Presumptive taxation scheme on professionals with gross receipts up to Rs. 50 lakh with presumption of profit being 50 % of the gross receipts.

® MAT will be applicable for all the start ups that qualify for 100 % tax exemption. 100 % FDI in marketing of food products produced and marketed in India. Department of Disinvestment will be renamed as Department of Investment and Public Asset management. 

® The allocation of Rs. 1,000 Cr for new EPF scheme. Govt. will pay EPF contribution of 8.33 % for all new employees for first three years. Proposes to allocate Rs. 38,500 Cr for Mahtma Gandhi MGNREGA for 2016-17. Swacch Bharat Abhiyan to get allocation of Rs. 9,500 Cr. LPG connection to be provided under the name of the women members of the family and Rs. 2,000 Cr is allocated for 5 years for BPL families.

® Proposes to allocate Rs. 87,765 Cr to rural sector. And Rs. 2.87 lakh cr will be given as Grant in Aid to gram panchayats and Municipalities. A sum of Rs. 38,500 Cr allocated for MGNREGS. 100 % rural electrification by 1^St may 2018. Pradhan Mantri Krishi Sinchai Yojana will bring 28.5 lakh hectares under irrigation. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs. 20,000 Cr. Proposes to allocate Rs. 35,984 Cr for agriculture and famers welfare.

® Proposes to allocate Rs. 5,500 Cr under Prime Minister Bima Yojana. Also proposes to reduce the loan burden on farmers a provision of Rs. 15,000 cr has been made in BE 206-17 towards interest subvention. And Rs. 850 cr allocated for 4 dairying projects. Proposes to allocate Rs. 19,000 cr under Pradhan Mantri Gram Sadak Yojana and will connect remaining 65,000 eligible habitations by 2019.

® Proposes to allocate Rs. 1,51,581 Cr for social sector including education & health care. Rs. 2,000 Cr allocated for initial cost of LPG connection to BPL families. New health protection scheme will provide health cover upto Rs. 1 lakh per family, for senior citizens an additional top up package up to Rs. 30,000 will be provided. Proposes to build digital repository for all school leaving certificates and diplomas and Rs. 1,000 Cr for higher education financing being allocated. Proposes to allocate Rs. 500 Cr for promoting entrepreneurship among ST/SC and Rs. 1,700 Cr for 1500 multi skill development centres.

® Proposes to allocate Rs. 3,000 Cr for nuclear power generation. Proposes to spend Rs. 27,000 Cr on roadways. Total allocation for road construction including PMGSY is Rs. 97,000 Cr and Rs. 55,000 Cr for roads & Highways development. Total outlay for infrastructure in budget 2016 now stands at Rs. 2,21,246 Cr.

® Proposes to impose Cess called Krishi Kalyan Cess @ 0.50 % on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The cess will come to force with effect from 1 june 2016. Input tax credit of this cess will be available for payment of this cess. Shops to be given option to remain open all seven days in week across markets.

® New derivative products will be developed by SEBI in commodity Derivate market. Rate of Securities transaction tax in case of Options is proposed to be increased from 0.017 % to 0.05 %. Proposed that a person making payment to NRI who does not permanent establishment exceeding in aggregate Rs. 1 lakh a yr as consideration for online advertisement will withhold tax at 6 % of gross amount paid as Equalization levy. The levy will only apply to B2B transaction.

® Proposes to change the excise duty on branded readymade garments and made up articles of textiles with retail sales price of Rs. 1,000 and above from NIL without input tax credit or 6 %/ 12.5 % with input tax credit to 2 % without input tax credit or 12.5 % with input tax credit.

®  Proposes to impose an excise duty of 1 % without input tax credit or 12.5 % with input tax credit on articles of jewellery (excluding silver jewellery- other than studded with diamonds an some other precious stones) with higher exemption and eligibility limits of Rs. 6 Cr & 12 Cr respectively.

®    Proposes to rename the Clean Energy Cess levied on Coal, lignite and peat as Clean Environment Cess and simultaneously increase its rate from Rs. 200 per tonne to Rs. 400 per tonne. To reduce the consumption of tobacco products, excise duty on various tobacco products other than beedi by 10 % to 15 %.

®    NRI without PAN are currently subjected to higher rate of TDS. It is proposed to amend the relevant provision to provide that on furnishing of alternative documents the higher rate will not apply.

® Investment limit for foreign entities in Indian stock exchanges will be enhanced from 5 & to 15 % on par with domestic institutions. This will enhance global competitiveness of Indian Stock exchanges and accelerate adoption of best in class technology and global market practices. Also the period for getting benefit of long term capital gain regime in case of Un-listed companies is proposed to be reduced from three years to two years. GAAR would be implemented from 1 April 2017. To promote use of refrigerated containers, it is proposed to reduce the basic custom duty to 5 % and excise duty to 6 %. Banks to be recapitalize with Rs. 25,000 Cr. General Insurance companies will be listed on Stock Exchanges.       

®    Proposes to provide complete pass through of income tax to securitization trusts including trusts of Asset Reconstruction Companies. The income will be taxed in the hands of the investors instead of trusts. However the trust will be liable to deduct tax at source.

®     Plan and Non-plan classification to be done away with from 2017-2018.  Will phase out the deduction under Income Tax, Accelerated depreciation wherever provided in IT Act will be limited to maximum 40 % from 1 April 2020. The weighted deduction under section 35CCD for skill development will continue up to 1 April 2020. Benefit of section 10 AA to new SEZ units will be available to those units which commence activity before 31 March 2020.

®    New manufacturing companies incorporated on or after 1 march 2016 to be given an option to be taxed at 25 % + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation. Lower corporate tax rate for next fiscal year for SME i.e Companies with turnover not exceeding Rs. 5 Cr in the financial year ending March 2015 to 29 % + surcharge and cess.

®    Proposes a 100 % deduction of profits for 3 out of 5 years for start-ups setup during April 2016 to March 2019. MAT will apply to such cases. A 10 % of tax on income from worldwide exploitation of patents developed and registered in India by a resident.

®    Non-banking financial companies shall be eligible for deduction to the extent of 5 % of its income in respect of provision for bad and doubtful debts. 

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This is a personal blog and presents entirely personal views on stock market. Any statement made in this blog is merely an expression of my personal opinion. These informations are sourced from publicly available data. By using/reading this blog you agree to (i) not to take any investment decision or any other important decisions based on any information, opinion, suggestion, expressions or experience mentioned or presented in this blog (ii) Any investment decisions taken if any would be his/hers sole responsibility. (iii) the author of this blog is not responsible.  

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