Part II: Indian Budget 2012-2013

Following Part I of the India's Annual Budget 2012-2013, major points are as follow:

INCLUSION

Scheduled Castes and Tribal Sub Plans

• Allocation for Scheduled Castes Sub Plan at `37,113 crore in BE 2012-13 represents an increase of 18 per cent over BE 2011-12.
• Allocation for Tribal Sub Plan at `21,710 crore in BE 2012-13 represents an increase of 17.6 per cent.

Food Security

• National Food Security Bill, 2011 is before Parliamentary Standing Committee.
• A national information utility for computerisation of PDS is being created. To become operational by December, 2012.

Multi-sectoral Nutrition Augmentation Programme

• A multi-sectoral programme to address maternal and child malnutrition in selected 200 high burden districts is being rolled out during 2012-13.
• Allocation of `15,850 crore made for Integrated Child Development Service (ICDS) scheme, representing an increase of 58 per cent over BE 2011-12.
• `11,937 crore allocated for National Programme of Mid Day Meals in schools.
• An allocation of `750 crore proposed for Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, SABLA.

Rural Development and Panchayati Raj

• Budgetary allocation for rural drinking water and sanitation increased from `11,000 crore to `14,000 crore representing an increase of over 27 per cent.
• Allocation for PMGSY increased by 20 per cent to Rs.24,000 crore to improve connectivity.
• Major initiative proposed to strengthen Panchayats through Rajiv Gandhi Panchayat Sashaktikaran Abhiyan.
• Backward Regions Grant Fund scheme to continue in twelfth plan with enhanced allocation of `12,040 crore in 2012-13, representing an increase of 22 per cent over the BE 2011-12.
• Rural Infrastructure Development Fund (RIDF)
• Allocation under RIDF enhanced to `20,000 crore. `5,000 crore earmarked exclusively for creating warehousing facilities.

EDUCATION

• For 2012-13, `25,555 crore provided for RTE-SSA representing an increase of 21.7 per cent over 2011-12.
• 6,000 schools proposed to be set up at block level as model schools in Twelfth Plan.
• `3,124 crore provided for Rashtriya Madhyamik Shiksha Abhiyan (RMSA) representing an increase of 29 per cent over BE 2011-12.
• To ensure better flow of credit to students, a Credit Guarantee Fund proposed to be set up.

HEALTH

• No new case of polio reported in last one year.
• Existing vaccine units to be modernised and new integrated vaccine unit to be set up in Chennai.
• Scope of ‘Accredited Social Health Activist’ – ‘ASHA’ is being enlarged. This will also enhance their remuneration.
• Allocation for NRHM proposed to be increased from `18,115 crore in 2011-12 to `20,822 crore in 2012-13.
• National Urban Health Mission is being launched.
• Pradhan Mantri Swasthya Suraksha Yojana being expanded to cover upgradation of 7 more Government medical colleges.

EMPLOYMENT AND SKILL DEVELOPMENT

• MGNREGS has had a positive impact on livelihood security.
• Need to bring about greater synergy between MGNREGA and agriculture and allied rural livelihoods.
• Allocation of `3915 crore made for National Rural Livelihood Mission representing an increase of 34 per cent.
• To ease access to bank credit, corpus for ‘Women’s SHG’s Development Fund’ enlarged.
• Proposal to establish Bharat Livelihoods Foundation of India through Aajeevika scheme.
• Allocation for Prime Minister’s Employment Generation Programme increased by 23 per cent to `1,276 crore in 2012-13.
• Skill Development Projects approved by National Skill Development Corporation expected to train 6.2 crore persons at the end of 10 years.
• `1,000 crore allocated for National Skill Development Fund in 2012-13.
• To improve the flow of institutional credit for skill development, a separate Credit Guarantee Fund to be set up.
• “Himayat” scheme introduced in J&K to provide skill training to 1 lakh youth in next 5 years. Entire cost to be borne by Centre.

SOCIAL SECURITY AND THE NEEDS OF WEAKER SECTIONS

• Allocation under NSAP raised by 37 per cent to `8,447 crore in 2012-13.
• In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, pension amount to be raised from `200 to `300 per month.
• Lump sum grant on the death of primary breadwinner of a BPL family, in the age group 18-64 years, doubled to `20,000.
• To enhance access under SWAVALAMBAN scheme, LIC appointed as an Aggregator and all Public Sector Banks appointed as Points of Presence (PoP) and Aggregators.
• Special grant provided to various universities and academic instiutions.
• Security
• A provision of `1,93,407 crore made for Defence services including `79,579 crore for capital expenditure. Any further requirement to be met.
• `1,185 crore proposed to be allocated for construction of nearly 4,000 residential quarters for Central Armed Police Forces.
• `3,280 crore proposed to be allocated for construction of office building of Central Armed Police Forces.
• Scheme to create National Population Register likely to be completed within next 2 years.

GOVERNANCE

UID-Aadhaar

• Enrolment of 20 crore persons completed under UID mission. Adequate funds to be allocated to complete enrolment of another 40 crore persons.
• Black Money
• Proposal to lay a White Paper on Black Money in current session of Parliament. Public Procurement Legislation
• Bill regarding Public Procurement Legislation to be introduced in the Budget Session of the Parliament.
• Legislative measures for strengthening anti-corruption framework are at various stages of enactment.

PART B — TAX PROPOSALS

DIRECT TAXES

• Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST.
• DTC rates proposed to be introduced for personal income tax.
• Exemption limit for the general category of individual taxpayers proposed to be enhanced from `1,80,000 to `2,00,000 giving tax relief of `2,000.
• Upper limit of 20 per cent tax slab proposed to be raised from `8 lakh to `10 lakh.
• Proposal to allow individual tax payers, a deduction of upto `10,000 for interest from savings bank accounts.
• Proposal to allow deduction of upto `5,000 for preventive health check up.
• Senior citizens not having income from business proposed to be exempted from payment of advance tax.
• To provide low cost funds to stressed infrastructure sectors, rate of withholding tax on interest payment on ECBs proposed to be reduced from 20 per cent to 5 per cent for 3 years for certain sectors.
• Restriction on Venture Capital Funds to invest only in 9 specified sectors proposed to be removed.
• Proposal to continue to allow repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 per cent upto 31.3.2013.
• Investment link deduction of capital expenditure for certain businesses proposed to be provided at the enhanced rate of 150 per cent.
• New sectors to be added for the purposes of investment linked deduction.
• Proposal to extend weighted deduction of 200 per cent for R&D expenditure in an inhouse facility for a further period of 5 years beyond March 31, 2012.
• Proposal to provide weighted deduction of 150 per cent on expenditure incurred for
• agri-extension services.
• Proposal to extend the sunset date for setting up power sector undertakings by one year for claiming 100 per cent deduction of profits for 10 years.
• Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from `60 lakhs to `1 crore.
• Exemption from Capital Gains tax on sale of residential property, if sale consideration
• is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.
• Proposal to provide weighted deduction at 150 per cent of expenditure incurred on skill development in manufacturing sector.
• Reduction in securities transaction tax by 20 per cent on cash delivery transactions.
• Proposal to extend the levy of Alternate Minimum Tax to all persons, other than companies, claiming profit linked deductions.
• Proposal to introduce General Anti Avoidance Rule to counter aggressive tax avoidance scheme.
• Measures proposed to deter the generation and use of unaccounted money.
• A net revenue loss of `4,500 crore estimated as a result of Direct Tax proposals.

INDIRECT TAXES

Service Tax

• Sevice tax confronts challenges of its share being below its potential, complexity in tax law, and need to bring it closer to Central Excise Law for eventual transition to GST.
• Overwhelming response to the new concept of taxing services based on negative list.
• Proposal to tax all services except those in the negative list comprising of 17 heads.
• Exemption from service tax is proposed for some sectors.
• Service tax law to be shorter by nearly 40 per cent.
• Number of alignment made to harmonise Central Excise and Service Tax. A common simplified registration form and a common return comprising of one page are steps in this direction.
• Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution.
• Utilization of input tax credit permitted in number of services to reduce cascading of taxes.
• Place of Supply Rules for determining the location of service to be put in public domain for stakeholders’ comments.
• Study team to examine the possibility of common tax code for Central Excise and Service Tax.
• New scheme announced for simplification of refunds.
• Rules pertaining to point of taxation are being rationalised.
• To maintain a healthy fiscal situation proposal to raise service tax rate from 10 per cent to 12 per cent, with corresponding changes in rates for individual services.
• Proposals from service tax expected to yield additional revenue of `18,660 crore. Other proposals for Indirect Taxes
• Given the imperative for fiscal correction, standard rate of excise duty to be raised from 10 per cent to 12 per cent, merit rate from 5 per cent to 6 per cent and the lower merit rate from 1 per cent to 2 per cent with few exemptions.
• Excise duty on large cars also proposed to be enhanced.
• No change proposed in the peak rate of customs duty of 10 per cent on nonagricultural goods.
• To stimulate investment relief proposals for specific sectors - especially those under stress.

Agriculture and Related Sectors

• Basic customs duty reduced for certain agricultural equipment and their parts;
• Full exemption from basic customs duty for import of equipment for expansion or setting up of fertiliser projects upto March 31, 2015.
• Infrastructure
• Proposal for full exemption from basic customs duty and a concessional CVD of 1 per cent to steam coal till 31st March, 2014.
• Full exemption from basic duty provided to certain fuels for power generation.
• Mining
• Full exemption from basic customs duty to coal mining project imports.
• Basic custom duty proposed to be reduced for machinery and instruments needed for surveying and prospecting for minerals.
• Railways
• Basic custom duty proposed to be reduced for equipments required for installation of train protection and warning system and upgradation of track structure for high speed trains.
• Roads
• Full exemption from import duty on certain categories of specified equipment needed for road construction, tunnel boring machines and parts of their assembly.
• Civil Aviation
• Tax concessions proposed for parts of aircraft and testing equipment for third party maintenance, repair and overhaul of civilian aircraft.
• Manufacturing
• Relief proposed to be extended to sectors such as steel, textiles, branded readymade garments, low-cost medical devices, labour-intensive sectors producing items of mass consumption and matches produced by semi-mechanised units.
• Health and Nutrition
• Proposal to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to 6 specified life saving drugs/vaccines.
• Basic customs duty and excise duty reduced on Soya products to address protein deficiency among women and children.
• Basic customs duty and excise duty reduced on Iodine.
• Basic customs duty reduced on Probiotics.
• Environment
• Concessions and exemptions proposed for encouraging the consumption of energy-saving devices, plant and equipment needed for solar thermal projects.
• Concession from basic customs duty and special CVD being extended to certain items imported for manufacture for hybrid or electric vehicle and battery packs for such vehicles.
• Proposal to increase basic customs duty on imports of gold and other precious metals.
• Additional resource mobilisation
• Proposals to increase excise duty on ‘demerit’ goods such as certain cigarettes, hand-rolled bidis, pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco.
• Cess on crude petroleum oil produced in India revised to `4,500 per metric tonne.
• Basic customs duty proposed to be enhanced for certain categories of completely built units of large cars/MUVs/SUVs.
• Rationalization measures
• Excise duty rationalised for packaged cement, whether manufactured by minicement plants or others.
• Levy of excise duty of 1 per cent on branded precious metal jewellery to be extended to include unbranded jewellery. Operations simplified and measures taken to minimise impact on small artisans and goldsmiths.
• Branded Silver jewellery exempted from excise duty.
• Chassis for building of commercial vehicle bodies to be charged excise duty at an ad valorem rate instead of mixed rate.
• Import of foreign-going vessels to be exempted from CVD of 5 per cent retrospectively.
• Duty-free allowances increased for eligible passengers and for children of upto 10 years.
• Proposals relating to Customs and Central excise to result in net revenue gain of `27,280 crore.
• Indirect taxes estimated to result in net revenue gain of `45,940 crore.
• Net gain of `41,440 crore in the Budget due to various taxation proposals.