 "FM does delicate balancing act on Budget")
Over 18 million tax payers, earning an annual income of Rs 2-5 lakh, have been given a tax credit of Rs 2,000, even as an estimated 42,800 super-rich individuals earning over Rs 1 crore have been made to pay a one-year surcharge of ten per cent on their existing tax.
In addition, sports utility vehicles for private use, often considered a symbol of luxury, have been slapped with a higher excise duty 30 per cent, up from 27 per cent earlier. And the tax on mobile phones priced higher than Rs 2,000 was raised from one per cent to six per cent.
All the flagship schemes for social sector development have been fully funded and an additional provision of Rs 10,000 crore, over and above the existing food subsidy bill, has been made to fund the food security law that Chidambaram hoped Parliament would be passing during the year.
In his Budget for 2013-14, presented in the backdrop of an economic slowdown and growing concerns over fiscal slippages and a deteriorating balance of payments situation, Chidambaram presented a revised fiscal deficit figure of 5.2 per cent of gross domestic product or GDP for the current year, which was lower than the promised figure of 5.3 per cent. For next year, he has projected a lower deficit level at 4.8 per cent of GDP.
Chidambaram’s fiscal consolidation plan is dependent on a Rs 13,000 crore additional tax gain from changes in direct taxes and another additional gain of Rs 4,700 crore from indirect tax changes. The expenditure of the government, however, will go up by around 16 per cent to around Rs 16.6 lakh crore next year.
For investment revival, Chidambaram announced an investment allowance for projects above Rs 100 crore, while he proposed to give a boost to new house purchases by providing an additional tax deduction on interest payments up to Rs 1 lakh for first-time house buyers. For the markets, he proposed make investments norms for foreign institutional investors easier.
While reducing the securities transaction tax marginally on stocks transaction, he also introduced the commodities transaction tax for non-agricultural commodities. There was also a levy of one per cent tax deduction at source for all transactions in immovable property above Rs 50 lakh.
The stock markets were, however, not impressed. The BSE benchmark index has been in the red, showing a fall of over 190 points over yesterday’s close of 19152.
The Budget, the last to be presented by the UPA government before the elections due in 2014, also provided assurance to Parliament that the government was committed to introducing the goods and services tax as soon as the Constitution amendment bill in this respect got cleared by the two houses. There was also a proposal to set up an tax administration review apparatus that would clean up the tax system and bring it up to date with regard to sectors such as the information technology and development centres, in particular. The baggage rules for individuals were also relaxed.