UNION BUDGET TAX & INVESTMENT VIEW POINT

Reduction in Tax Rates, Increase in rates of Depreciation, Amnesty Scheme to fund infrastructure, Issue of Sovereign Bonds...

Stability & Growth gets prominence and not Election Politics. The Gujarat effect ?

UNION BUDGET BACKDROP Budget announcements before Presentation of the budget !  FDI in multibrand Retail.  Increase in price of petroleum products.  Increase in the Import Duty on Gold from 4% to 6%.  Ground work to pass the Insurance & Pension Bills.  Kick starting process for granting new banking licenses.

GDP Trend & Forecast Sector Agriculture0.8 %7.9 %3.6 %1.8 %2.8 % Industry9.2 % 3.5 %3.0 %5.1 % Services10.5 %9.8 %8.2 %7.8 %8.0 % GDP8.6 %9.3 %6.2 %5.0 %6.5 % Source : Central Statistics Office, RBI

Shares of various sectors of the economy in the GDP Sector Agriculture14.6 %14.5 %14.1 %13.7 % Industry28.3 %28.2 %27.5 %27.0 % Services57.1 %57.3 %58. 4%59.3 % Source : Central Statistics Office, RBI

Inflation Rate Year Wholesale Price Index (WPI) Consumer Price Index (CPI) (Jan - '13)

Savings Rate Gross Domestic Savings as a % of GDP

UNION BUDGET Trends in global stock markets % change during the year CountryIndex * IndiaNifty USADow Jones JapanNikkei UKFTSE ChinaShanghai BrazilBo * for the period from January 1 to February

Foreign Exchange Reserve, FDI & FII Flows Avg. exchange rate (Rs.) FDI $ Million 37,74532,90132,95522,158 FII $ Million 32,37631,47117,17115,629 Forex Reserves $ Billion Till Jan-'13 Till Dec'12 At Jan. end Source : indiabudget.nic.in

Foreign Trade Year In US $ Billion As a % of GDP4.2 %4.0 % Estimated Current Account Deficit Oil, Coal, Gold - Major drain on Forex Source : pmindia.gov.in & FM Speech Estimated

Fiscal Deficit %4.8%5.7%5.2%4.8%

Defence outlay  Defence budget total size : Rs. 2,03,000 crore.  Capital outlay for modernization of equipment : Rs. 86,740 crore.  Revenue outlay for pay and allowances and related expenses : Rs. 1,16,931 crore.  What the armed forces had to return : around Rs. 14,900 crore

Some Important Announcements Provision for GST Rs. 9,000 Crores

Some Important Announcements Investment Allowance A tax break given to companies for investment of Rs. 100 Cr. and above in plant and machinery and is over and above depreciation benefits enjoyed by them. Inflation - Indexed Bonds These bonds are aimed at helping savers protect the principal and interest their investments. The principal rises with higher inflation. Thrust on PPP in Coal Mining, Policy Soon Public Private Partnership to help boost supply of coal to power producers and other consumers. Big Push for Highway Sector Government to award contracts for 3,000 km roads by September and set up a regulator for the sector.

Some Important Announcements Dividend Distribution Tax on Mutual Fund Name Individual / HUF Upto 31st May 2013From 1st June 2013 Liquid % % Debt % % EquityNIL

Some Important Announcements Securities Transaction Tax Nature of TransactionPayable Upton 31st May 2013 From 1st June 2013 Sale of a unit of an equity oriented fund to the mutual fund On Redemption0.25 %0.001 % Delivery based purchase of units of an equity oriented fund entered into in a recognized stock exchange By Purchaser0.10 %NIL Delivery based sale of units of an equity oriented fund entered into in a recognized stock exchange By Seller0.10 %0.001 % Sale of futures in securitiesBy Seller0.017 %0.01 %

Some Important Announcements  Condition for Rajiv Gandhi Equity Scheme relaxed, a bit.  Infrastructure Tax Free Bonds for Rs. 50,000 corers to be issued in  MSME's Non Tax Benefits to stay for 3 years.

Income Tax  Rebate of Rs. 2,000/= for individual having Total income upto Rs. 5 lakhs.  Additional deduction for interest on borrowing loan Sec 80 EE - Virtually no benefit.  10% on Individual / HUF's having admitted income above Rs. 1 crore.

Personal Exemption Limit Rs. 22,000 Rs. 30,000 Rs. 40,000 Rs. 1,00,000 Rs. 1,50,000 Rs. 1,60,000 Rs. 2,00,000 Maximum Tax Rate 50 %40 %30 % Income limit for maximum tax 1 Lakh 1.5 Lakh2.5 Lakh5 Lakh8 Lakh10 Lakh Income Tax Collection Rs. 6,731 Cr. Rs. 9,123 Cr. Rs. 20,235 Cr. Rs. 57,308 Cr. Rs. 1,06,046 Cr. Rs. 1,39,069 Cr. Rs. 1,89,866 Cr. Income Tax Historically, lower tax rates have yielded higher tax revenue !

Income Tax We are fortunate... Unfortunately, we do not get in return the worth of the taxes paid.

Income Tax  TDS on transfer of Immovable property Rs. 50 Lac and above. Does not apply to agricultural lands. Dropped last year again reintroduced.  Wealth Tax Returns also to be filed electronically.  Keyman Insurance Policy even after assignment shall continue to be Keyman Insurance only. Effective on policies after 1st April 2014.

Income Tax  Transfer of immovable property below stamp duty valuation. The principle of Sec 50C (Capital Gains) made applicable to Stock in trade also under new Sec 43CA.  Transfer of Immovable property below stamp duty value, difference above Rs. 50,000/= shall be deemed income of the buyer under Sec. 56.  Return filed without payment of taxes shall be considered as a defective return.

Income Tax Definition of Capital Assets in regard to Agricultural Land changed. Existing :Land situated beyond 8 kms from limits of town / city with a population of and above, not considered as capital asset. Proposed : Population RangeDistance to 1 lakh 2 kms 1 lakh to 10 lakh 6 kms 10 lakh and above 8 kms Shortest distance - Aerial distance shall be considered.

Income Tax Some Amusing Facts...  There are just 3.5 corers Income Tax Payers in the country, which is just 2.5% of the total population  44% of the Income Tax Payers pay Rs. 1,000/= or less Income Tax.  89% Income Tax Payers contribute just 11% of the total tax collected.  33% of total Income Tax is collected from Mumbai.

Indirect Taxes  Presently all the offenses under Customs Act / Central Excise Act & Service Tax Act are bailable. Draconian provision to make arrest unbailable if default exceeds a certain amount.  Amnesty Scheme for Service Tax assesses.

Expections

Honestly, I have never expected anything from any budget ! My perspective is simply that, as a manager it's not my prerogative to dwell ON the system. My responsibility is to deliver IN the system by ensuring that, for the same external conditions, Bajaj does better than its comptition. Rajiv Bajaj - Managing Director Bajaj Auto Ltd. We should all look at the budget this way...

Thank you...