Live UNION BUDGET 2012
Income tax exemption limit raised to Rs 2 lakh
Unveiling the Budget proposals for 2012-13 in the Lok Sabha, Pranab Mukherjee raised the limit to Rs 10 lakh under the 20 pc tax slab.
Budget 2012: No reforms, minor tax tweaks, service & excise tax increased
Announcing major sops for the farmers, rural sector, aviation and power sector, Mukherjee tweaked the income tax rates raising the exemption limit by Rs 20,000. He also increased service tax and standard excise duty by 2 per cent across the board to net an additional Rs 41,440 crore a year leading to several items getting costlier.
The Budget for 2012-13 presented by Finance Minister Pranab Mukherjee in the Lok Sabha, however, left corporate tax rate and peak customs duty unchanged while the import duty on gold bars and platinum and excise duty on cigarettes, bidis, pan masala and chewing tobacco were raised.
Customs duty on completely built large cars, SUVs and MUVs of value exceeding $40,000 (Rs 20 lakh) was also raised. While the direct tax proposals in the Budget will result in a revenue loss of Rs 4,500 crore, indirect tax proposals would result in a revenue gain of Rs 45,940 crore. Thus the tax proposals lead to a net gain of Rs 41,440 crore.
The Budget makes a provision of Rs 1,93,407 crore for defence services including Rs 79,579 crore for capital expenditure. The allocation is based on present needs and any further requirement would be met, Mukherjee said.
Under the budget proposals, individual income up to Rs 2 lakh will be free from income tax as against Rs 1.80 lakh currently.
Income between Rs 2 lakh and 5 lakh will be taxed at the rate of 10 per cent while that above Rs 5 lakh but less than Rs 10 lakh would attract 20 per cent, and above Rs 10 lakh it would be 30 per cent.
The Budget also allows individual tax payers a deduction of up to Rs 10,000 for interest from savings bank account which would help a large number of small tax payers with salary income up to Rs 5 lakh and interest from saving banks accounts up to Rs 10,000 as they would be they would not be required to file income tax returns.
Within the existing limit for deduction allows for health insurance, the Minister proposed to allow a deduction of Rs 5,000 for preventive health check-up.
Senior citizens who do not have any income from business are proposed to be exempted from payment of advance tax, reducing their compliance burden.
While not proposing any change in the tax rate, the Budget proposes certain measures to allow corporates to access lower cost funds and to promote higher level of investments in several sectors.
Large cars currently attract excise duty depending on their engine capacity and length. In keeping with the increase proposed in the standard rate, the Budget now enhances the duty from 20 to 22 per cent.
In the case of cars which attract a mix rate of duties, 22 per cent plus Rs 15,000 per vehicle, it is proposed to increase the duty and switch over to an ad valoren rate of 27 per cent.
Noting that the share of service taxes remains far below its potential, the Budget proposed to tax all services except those in the negative list which contains 17 heads.
The important inclusions in the negative list comprise all services provided by government and local authorities except a few services where they compete with the private sector.
The negative list also include pre-school and school education, recognised education at higher level and approved vocational education, renting of residential dwellings, entertainment and amusement services and large part of public transportation including inland waterways, urban railways and metered cabs.
In addition to the negative list, there is a list of exemptions which include health care, services provided by charities, religious persons, sportspersons, folk and classical artists, individual advocate providing services to non-business entities, independent journalists, animal care and car parking.
Service tax proposals alone are expected to yield an additional revenue of Rs 18,660 crore.
The standard rate of excise duty on non-petroleum products was reduced from 14 to 8 per cent in the wake of global financial crisis in 2008-09 and was raised to 10 per cent in the Budget of 2010.
Proposing a fiscal correction that would result in higher prices across-the-board, the Budget now proposed to raise the standard rate from 10 to 12 per cent, the merit rate from 5 to 6 per cent and lower merit rate from 1 to 2 per cent.
However, the lower merit rate for coal, fertilisers, mobile phones and precious metal jewellery is being retained at 1 per cent.
No change is proposed in the peak rate of customs duty of 10 per cent on non-agriculture goods. Barring a few individual items, the rates below the peak are also being retained.
Duty free baggage allowance for People of Indian Origin has been raised from Rs 25,000 to Rs 35,000 and for children up to 10 years from Rs 12,000 to Rs 15,000.
The Budget fully exempted branded silver jewellery from excise duty. Unbranded precious metal jewellery will attract excise duty on lines of branded jewellery.
Customs duty has been raised for gold bars and coins of certain categories, platinum and gold ore. Customs duty is also to be imposed on coloured gem stones.
The proposals relating to customs and central excise are estimated to net a revenue gain of Rs 27,280 crore in a full year.
The Budget identified five objectives to be addressed effectively in the coming fiscal year. These will include focus on domestic demand driven growth recovery, create conditions for revival of high growth in private investment, address supply bottlenecks in agriculture, energy and transport sectors and intervene decisively to address the problem of malnutrition in 200 high burden districts.
The Budget also intends to address the problem of blackmoney and corruption in public life. A white paper on blackmoney will be placed in Parliament during the current session.
Gross tax receipts for 2012-13 are estimated at Rs 10,77,612 crore, an increase of 15.6 per cent over budget estimates and 19.5 per cent over the revised estimates for 2011-12.
Total expenditure for 2012-13 is budgeted at Rs 14,90,925 crore, of which Plan expenditure is Rs 5,21,025 crore and non-Plan Rs 9,69,900 crore.
The combined effect of lower tax and disinvestment receipts and higher expenditure, mainly on account of subsidies, has pushed the fiscal deficit to 5.9 per cent of GDP in the revised estimates for current fiscal.
However, the Finance Minister said, he has made a determined attempt to come back to the path of fiscal consolidation in the Budget for 2012-13 by pegging the fiscal deficit at Rs 5,13,590 crore, which is 5.1 per cent of the GDP.
Hon’ble Finance Minister will be Presenting Union Budget in the Parliament today 16th March, 2012 watch Live streaming of budget 2012 & online highlights16.03.2012
Union Budget 2012-2013, Indian Budget News 2012
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