On one day each year a nation holds its collective breadth & tunes in to the announcement of one person and one person only: the Finance Minister. This VIP (Very Important Person) is the one who will decide what taxes we will pay, how much tax we need to pay, what things will cost and, more importantly, how much we will be able to save within our monthly budgets. In short, the Finance Minister of India is in the spotlight when he presents the Union Budget of India.
2013-2014 Union Budget of India date
It will be presented by P. Chidambaram, the current finance minister, in the Parliament House in the Lok Sabha on February 28th 2013 at 11a.m. As is the tradition, the budget is always presented on the last working day of February.
2013-2014 India Budget Expectations
Budget expectations on Taxes
One thing about tax that people from all fields agree upon is that it should not increase! The common man is earnestly praying that the income tax exemption limit will be raised to Rs.3lakh and may be even higher for women. Due to the rise in costs of healthcare, education and transport, it is also hoped that the tax-free allowances for these three crucial segments is increased. The rich, though, are likely to face more taxes. Those earning more than Rs.20lakh may be facing additional surcharges.
Then there is the all-important goods and service tax (GST) which is expected to be introduced soon. As and when the GST is introduced, it is expected that the Central State Tax (CST) will be shelved for good, but till then State Governments are hoping for a 2% reduction in CST. The GST is one thing business people from the consumer sector are looking forward to.
Budget expectations on Infrastructure
The growth of any economy is dependent on infrastructure. If the costs to raise this infrastructure go up, be it roads or bridges or transport systems, then this would not be beneficial to companies which are in this sector. For example, something as simple as the rates for conveying goods from one place to another (freight charges) can have a cascading effect on the companies which supply cement or steel. Hence there are expectations that hopefully there will be no hike in freight. However, one setback could be the possibility of excise duties on cement being hiked.
Then there are the very useful tax free bonds which enables an infrastructure firm to raise funds. If the Govt. raises the limits for such bonds, it would greatly benefit.
Budget Expectations on Real Estate
First and foremost, it is expected that the Real Estate Regulation Bill, which has been pending now since 4 years, will be introduced. This Bill aims to keep an eagle eye on any wrongdoings in the real estate sector. Further, real estate deals often get caught up in disputes which go for a prolonged duration, often for many years & it is the buyer who loses out. The Bill aims to accelerate the decision making process on such disputes. There will thus be an official real estate regulatory authority in each & every State in India once the Bill is passed.
Another important aspect for the buyer is home loans. Interest rates on housing loans tend to be high & home buyers are having budget expectations that there will be an increase in limit for income tax deduction on this interest.
With property prices soaring, there are always expectations for affordable housing in the budget every year. It has been reported that the housing ministry is eager to have the external commercial borrowings (ECB) limit raised for affordable housing. Further, if affordable housing gets the tag of infrastructure status, it will be what the industry is looking for. Tax benefits too for constructing such housing units would help the sector to grow.
Budget expectations on Textiles
The textile industry clothes the nation. It is unfortunate that textile units in India have to compete with those of other countries, especially imported yarn & fabric. The main problem, say textile traders, is the anti-dumping duties they have to pay for yarn. They feel these duties should be removed entirely or, at the most, reduced drastically. It would then, they feel, give a good fillip to producing fabric which can compete with the best of the best globally.
Budget expectations on Automobiles
A 2% reduction in excise duty would help not just the manufacturers of automobiles, but also buyers as if costs of equipment is reduced then prices too of vehicles will be less. This will halt the slowdown in the sector.
Budget expectations on Agriculture
The budget should have a positive outlook for farmers if low cost loans are provided to them. Such loans will help them in purchasing essential farming equipment & necessities for crops. Farmers would also expect improvement in roads, transport and storage of their produce.
Budget expectations on Telecom
The telecom sector would like to have a uniform tax structure in place. This will bring down the costs of operations. Last year's budget saw the removal of basic custom duty on mobile phone parts. This created a huge market for low cost smart phones. It is hoped that this good trend continues!
What is confusing telecom entities, though, is lack of clarity in certain aspects. For example, why there is a tax of entertainment on a telecom service which provides ringtones is unclear. It needlessly creates an additional tax on top of the regular service tax. What's more, there should be clear cut guidelines on what comes under the purview of goods and what under the purview of services.
Govt. schemes expectations
1. Pass the National Food Security Bill, which aims to provide 5 or 7kgs. food grains (the amount not yet finalized) monthly per poor person with rice at Rs.3/- per kg, wheat at Rs.2/- per kg & Re.1/- per kg.
2. Make changes in the Rajiv Gandhi Equity Scheme (RGESS). At present, investment is allowed only for one time for a resident of India with an income below Rs 10 lakh per annum. Such an investor can avail of a deduction up to Rs.25,000/ under section 80CCG. It is hoped that the Budget will allow for investment every year rather than one-time investment. In addition, market expectations are for an increased tax benefit by providing an increase in the investment limit.
3. Jawaharlal Nehru National Urban Renewal Mission (JNNURM): This scheme aims to improve the economic and social infrastructure in urban areas of India and also improve the local governance of municipal authorities. With this scheme, it is hoped that growth in urban areas is planned systematically and halt the slide towards degradation. The focus of such a scheme would not be only improving transportation facilities and roads, but also on basics likes water supply and waste management. Development of slums would also come within the purview of the scheme. As per Budget expectations, it is believed that the scheme would be expanded. For example, the automobile industry is hoping that the Budget will launch some kind of scheme for commercial vehicles as part of JNNURM.
4. Black money accountability plan: It is expected that a Govt. plan will be introduced in the budget to make black money accountable.
Finally, what could become more expensive is the question on most minds. Some guesses (mind you, these are just guesses!):
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Vandana is based in India with over 15 years experience as a freelance writer. Writing, no doubt, is her primary passion! Having learned the art of blogging from ISC, Vandana is enjoying the thrills of blogging, taking pleasure in sharing information & getting good pageviews at her various blogs.
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