FinMin Pranab Mukherjee presents Budget 2012-13
New Delhi: Every tax payer in India is set to gain at least Rs 2,000 per annum, thanks to the relief proposed by Finance Minister Pranab Mukherjee. But the happy story ends there! With a hike of 2 percentage points in service tax and higher excise and customs duty on a host of other items, your household budget is actually set to rise.
In his seventh national budget presented in the Lok Sabha on Friday, Mukherjee raised the income tax exemption limit for individuals to Rs 2 lakh from Rs 1.8 lakh and revised the tax slabs to bring relief to some 35 million people in the country.
But by bringing virtually all services under the tax net and by hiking the rate from 10 percent to 12 per cent — as also by raising the standard excise rate to 12 per cent from 10 per cent — he also ensured you pay more indirect taxes than before.
This is why the net impact of his proposals is such that while direct tax measures will result in a net revenue loss of Rs 4,500 crore, the indirect tax changes will fetch a net revenue gain of Rs 45,940 crore — over 10 times more.
You may have to pay more for dining out, gold jewellery, luxury cars and smoking, even as you get relief while watching a movie in cinema halls, investing in equities, going for a preventive health check or paying for your child’s education.
On Income Tax front, the Finance Minister proposed new tax slabs in which income up to Rs 2 lakh will be totally exempt, levy 10 per cent on Rs 2 lakh to Rs 5 lakh then 20 per cent on Rs 5 lakh to Rs 10 lakh and 30 per cent on income above Rs 10 lakh.
Overall, in the Rs 14,90,925 crore budget, the fiscal deficit — which is the total projected expenditure less tax and non-tax revenue, as also loan recoveries — is pegged at 5.1 per cent of GDP, which is lower than 5.9 per cent for the current fiscal.
He said with the economy getting back on rails, it was time for some tough measures — a statement endorsed by Prime Minister Dr Manmohan Singh who said it was necessary to ‘bite the bullet’, especially on issues such as subsidies.
Mukherjee said he also proposed to tax every service, but for 17 items specified in what he termed as a negative list, and enhanced the rate of such levy to 12 per cent from 10 per cent.
Assuring further liberalisation of capital markets, he announced a new equity savings scheme to extend income tax deduction of 50 per cent to those who invest up to Rs 50,000 in equities and whose annual income is less than Rs 10 lakh.
Mukherjee spelt out some far-reaching reforms in the budget, notably on the subsidy front, which he promised to cut to 2 per cent of India’s gross domestic product (GDP).
He hoped for an early implementation of the direct tax code and a pan-India goods and services tax to unify federal and state taxes, even as he promised incentives to attract capital for infrastructure development.
He also said the government will make an all-out effort to curb outflow of black money and bring back such ill-gotten funds stashed away in tax havens abroad.
Mukherjee began his speech touching on the cascading ill-effects of the global slowdown on the Indian economy, but assured people there were clear signs of recovery that should see the country grow at 7.6 per cent in 2012-12, against 6.9 per cent this fiscal.
At the same time, Mukherjee also said the Indian economy was at the ‘cusp of a revival’, as agriculture and services have continued to grow at a decent pace. It was industrial performance that was acting as a drag, he noted. (IANS)