Transcript Document

UNION BUDGET
2014-15
INVESTMENT & TAXATION
VIEW POINT
Tall Expectations
from the Union Budget...
First government after 30
years, which has a clear
majority of its own.
First time in Indian history,
people of India voted for
development & growth.
UNION BUDGET 2014–15 – BACKDROP
Tall Expectations
from the Union Budget...
India needed comprehensive action plan
in current economic environment.
But
Just 45 days to do this all !
UNION BUDGET 2014–15 – BACKDROP
GDP Trends & Forecasts
Sector
2011 – 12 2012 – 13 2013 – 14 2014 – 15 *
Agriculture
5.0%
1.4%
4.7%
3.3%
Industries
7.8%
1.0%
0.4%
3.3%
Service
6.6%
7.0%
6.8%
7.0%
GDP
6.7%
4.5%
4.7%
5.4% - 5.9%
* Expected
Urgent need to bring the economy on track
UNION BUDGET 2014–15 – BACKDROP
World GDP Trends
GDP of Gujarat has grown by 10% since 2001
UNION BUDGET 2014–15 – BACKDROP
Shares of Various Sectors of
the economy in the GDP
Sector
Agriculture
Industries
Service
2010 – 11 2011 – 12 2012 – 13 2013 – 14
14.6%
14.4%
13.9%
13.9%
27.9%
28.2%
27.3%
26.0%
57.5%
57.4%
58.8%
59.9%
Sources : Central Statistics Office, RBI
UNION BUDGET 2014–15 – BACKDROP
Inflation Rate
Year
Wholesale Price
Index
(WPI)
Consumer Price
Index
(CPI)
2011 – 12 2012 – 13 2013 – 14
8.9
7.4
6.0
8.4
10.4
9.7
Effects Interest Rate & Exchange rates.
UNION BUDGET 2014–15 – BACKDROP
Savings Rate
Gross Domestic Savings as a % of GDP
2009 – 10 2010 – 11 2011 – 12 2012 – 13 2013 – 14
33.7
33.7
31.3
30.1
30.5
Unfortunately savings diverted to unproductive
assets like Gold & Real Estate...
UNION BUDGET 2014–15 – BACKDROP
Foreign Exchange Reserve,
FDI & FII Flows
2010 - 11 2011 - 12 2012 - 13
Avg. Exchange
Rate (Rs.)
FDI
$ Million
FII
$ Million
Forex
Reserves
$ Billion
2013 - 14
45.56
47.92
54.4
60.5
11,834
22,061
19,819
21,564
30,293
17,170
26,891
4,822
304.8
294.4
292.0
304.2
UNION BUDGET 2014–15 – BACKDROP
Stock Markets & FII’s
2009 – 10
2010 - 11
2011 - 12
2012 - 13
2013 - 14
July
2014 #
2014 15
Sensex
17258
19445
17404
18836
22386
25445
29685
?
Sensex PE
21
21
18
17
18
18
21
?
Market Cap *
62,61,787
69,07,788
62,45,365
64,16,268
75,21,057
89,98,036
•Market Cap Rs. in Cr.
•# as on July 09 2014
FII Holding In India as on date
INR (in crores)
$ 156 Billion
$ 35 Billion
$ 191 Billion
Equity
Debt
Total
9,36,000
2,10,000
11,46,000
Rs. 60 = 1 USD
UNION BUDGET 2014–15 – BACKDROP
Foreign Trade
Current Account Deficit
Year
2012 – 13 2013 – 14 2014 – 15
As a % of
4.7%
1.7%
2.1%
GDP
Still remains a concern...
UNION BUDGET 2014–15 – BACKDROP
Trends in global stock markets
Country
India
USA
Japan
UK
China
Index
Nifty
Dow Jones
Nikkei
FTSE
Shanghai
2010
17.3
9.4
-4.0
7.3
-13.4
2011 2012 2013 2014
-24.9 27.3 3.12 27.31
4.7
5.7 13.26 8.72
-18.7 21.4 33.9
3.5
-7.3
3.5
3.7
5.47
-22.9 4.6 -7.14 6.86
India the top performing market...
UNION BUDGET 2014–15 – BACKDROP
We will have to decide
Should we allow this drift to carry on and
watch helplessly?
Should we allow our future to suffer
because of indecisiveness?
Should we be victims of more populisum
or wasteful expenditure?
- Finance Minister's Speech
UNION BUDGET 2014-15
Important
Announcements in the
Budget Speech
Retrospective amendments to be made with
extreme caution and judiciousness in
future.
Fresh cases to be referred before action to
a high powered committee formed by CBDT.
Existing cases shall go ahead as they are.
GAAR (General Anti Avoidance Rules)
deffered?
UNION BUDGET 2014-15
Important
Announcements in the
Budget Speech
Real Estate Investment Trusts (REITS),
Infrastructure Investment Trusts (INVITS) to
become operational.
UNION BUDGET 2014-15
Important
Announcements in the
Budget Speech
FDI at 49% in Insurance & Defence
with full Indian Management Control
through FIPB route.
UNION BUDGET 2014-15
Important
Announcements in the
Budget Speech
GST implementation to get priority.
DTC to be reviewed.
UNION BUDGET 2014-15
Important Announcements
in the Budget Speech
Kisan Vikas Patras to be
reintroduced – banked &
unbanked savings.
PPF
investment
limit
extended to Rs. 1.5 lac.
UNION BUDGET 2014-15
Budget at a glance
2012 – 13
Rs. Crore
1
4
8
9
Revenue receipts
2 Tax revenues (net to centre)
3 Non - tax revenue
Capital receipts (5+6+7)
5 Recoveries of loans
6 Other receipts
7 Borrowings and other liabilities
Total receipts (1+4)
Non - plan expenditure
10 On revenue account of which,
11 Interest payments
12 On capital account
13 Plan expenditure
14 On revenue account
15 On capital account
16 Total expenditure (9+13)
17 Revenue expenditure (10+14)
18 Of which, grants for creation of capital assets
19 Capital expenditure (12+15)
20 Revenue Deficit (17-1)
21 Effective revenue deficit (20-18)
22 Fiscal Deficit (16-(1+5+6))
23 Primary deficit (22-11)
8,79,232
7,41,877
1,37,355
5,31,140
15,060
25,890
4,90,190
14,10,372
9,96,747
9,14,306
3,13,170
82,441
4,13,625
3,29,208
84,417
14,10,372
12,43,514
1,15,170
1,66,858,
3,64,282
(3.6)
2,48,572
(2.5)
4,90,190
(4.8)
1,77,020
(1.8)
2013 – 14
10,29,252
8,36,062
1,93,226
5,61,182
10,802
25,814
5,24,539
15,90,434
11,17,902
10,27,689
3,80,066
87,214
4,75,532
3,71,851
1,03,681
15,90,434
13,99,540
1,38,228
1,90,894
3,70,288
(3.3)
2,32,060
(2.0)
5,21,539
(4.6)
1,44,473
(1.3)
2014 - 15
Budget estimates
11,89,763
9,77,528
2,12,505
6,05,129
10,527
63,425
5,31,177
17,94,892
12,19,892
11,14,609
4,27,011
1,05,283
5,75,000
4,53,503
1,21,497
17,94,892
15,68,111
1,68,104
2,26,781
3,78,348
(2.9)
2,10,244
(1.6)
5,31,177
(4.1)
1,04,166
(0.8)
UNION BUDGET 2014-15
Where Rupee comes from and
where it goes
UNION BUDGET 2014-15
Fiscal Deficit
Year
2010 – 2011 – 2012 – 2013 – 2014 – 15
11
12
13
14 Estimated
Fiscal
4.9%
Deficit
5.7%
4.9%
4.5%
4.1%
UNION BUDGET 2014-15
Share of Subsidies – as it is,
whether it is BJP or Congress
Year
2007 2008 2009 2010 2011 2012 2013 2014
– 08 – 09 – 10 – 11 – 12 – 13 – 14 – 15
Share of
subsidy as
1.3% 2.2% 2.2% 2.2% 2.4% 2.6% 2.3% 1.9%
a % of
GDP
UNION BUDGET 2014-15
Defence Outlay
Total Capital Budget
Total Revenue Budget
Total Defence Budget
94,588
1,34,412
2,29,000
Huge opportunity for Indian Industry to
tap Defence Sector
UNION BUDGET 2014-15
Boost to Real Estate Sector
REITS to become operational.
FDI in Real Estate relaxed.
Cheaper credit to low cost housing.
Tax deduction limits for Housing Loan interest raised
from Rs. 1.5 to Rs. 2 lacs U/S 24.
Sec 80 – C Limits from Housing Loan instalment
deduction raised.
Development of 100 Smart Cities.
UNION BUDGET 2014-15
Income Tax
Exemption limits for Indi. / HUF raised
From 2,00,000 to 2,50,000
From 2,50,000 to 3,00,000 (Person above 60 yrs.)
No change – Rs. 5,00,000 (Person above 80 yrs.)
Dividend Distribution Tax increased from 15% to
17.64%.
Debt based Mutual Fund to qualify as long term
capital asset only if held for 36 months and shall
be taxed @ 20% after indexation.
UNION BUDGET 2014-15
Income Tax
Taxation of REITS – shall be listed on stock exchange
will be taxed as Equity Shares.
Long term gain – NIL Short term gain – 15%
Dividend – NIL Interest – Taxable on slab rates.
Investment limit for deduction @ 15% U/S 32AC reduced
to 25 Cr from 100 Cr for investment in Plant & Machinery.
Limit for deduction U/S 80C raised from Rs. 1 lac to Rs.
1.5 lac.
Limit for deduction U/S 24 raised from Rs. 1.5 lac to Rs. 2
Lac.
UNION BUDGET 2014-15
Income Tax
U/S 40 (a) (i) for non deduction of TDS, only 30%
expenditure will be disallowed. All payments
where TDS is supposed to be made now
covered.
TDS defaults can be reopened parallel with
reopening of assessment proceedings.
Deductions U/S 54 & 54 F available only for
investment in residential house in India.
UNION BUDGET 2014-15
Income Tax
TDS from insurance policy payments which are
not exempt U/S 10 (10D) @ 2% on amount
exceeding Rs. 1,00,000/-.
Powers of the Income Tax Commissioners to
cancel the registration of the trust widened.
Benefit of 12AA
retrospectively.
registration
to
be
given
UNION BUDGET 2014-15
Income Tax
Capital gain exemptions in specified Bonds now
limited to Rs. 50 lacs. Cannot be split in 2 years
to claim Rs. 1 Cr deduction.
Under Section 145 method of computation (not
method of accounting) income shall be notified.
Where a survey is carried out to verify the
compliance of TDS, books of accounts cannot
be impounded nor inventory stock, cash
valuables can be made.
UNION BUDGET 2014-15
Income Tax
Advance Ruling Authority for resident tax payers
above a defined threshold.
To enlarge the scope of Settlement Commission.
No provision for the same in the Finance Bill
UNION BUDGET 2014-15
Sale of PSU shares to Retail
Public
Government Plans to sell shares of Public
sector undertakings to the tune of Rs.
43,425 Crores. Highest ever target.
Plans to sell shares of PSU Banks after
retaining 51% holding.
UNION BUDGET 2014-15
Budget does nothing to address this issue
UNION BUDGET 2014-15
Interesting
allocations in
Budget…
Budgetary
allocation to Indian
Space Research
Organisation
(ISRO) at Rs. 6000
Cr, up by 50%
UNION BUDGET 2014-15
What can derail the dream
Uncertain monsoon
Situation in Iraq
Global Economic disturbances
UNION BUDGET 2014-15
The Challenge
P. Chidambaram quoted
in his 2008 Budget speech – Henry David Thoreau
“If you have built castles in the
air, your work need not be lost…
that is where they should be…
Now put the foundations under
them.”
UNION BUDGET 2014-15
Finally…
In the words of the Shri Atal Behari Vajpayee – quoted by
Shri Yashwant Sinha in his Budget speech 1999 – 2000.
With dreams of prosperity and marching at a stormy pace, the tide of
patriotism will not recede. Let the courageous come forward to join me.
UNION BUDGET 2014-15
Thank you…
UNION BUDGET 2014-15