B U D G E T 2 0 1 2

Pranab ends his speech with a warning: "India stands on the brink of a recession"

Long cigarettes will now cost more, Pranab announces an increase in excise duty on cigarettes. 

Sensex begins to tank with increase in service taxes and excise duties

Duty on bicycle and bicycle parts has been reduced , duty on energy savings lamps have also been eased.

At 1230 hrs, the 30-share BSE Sensex is up 53 points at 17,729.09, a gain of 0.30%.

The NSE Nifty is up 20 points at 5,400.25, a gain of 0.37%.

Indirect Taxes

In a double whammy to the services sector Pranab has increased the service tax from 10 per cent to 12 per cent and has widened the service tax net to include most sectors . All services excepting those in the negative list will be taxed. Negative list to include pre-school and high school education, entertainment services. This increase in service tax will result in Rs 18,660 cr of additional revenues. 

Excise Duty on large cars have been increased from 22 per cent to 27 per cent

Full exemption on custom duty on coal has been proposed 

INCOME TAX EXEMPTION HIKED!

Pranab increases tax exemption limit to Rs 2,00,000 from 1,80,000. Senior citizens will have to pay no advance tax while there wil be no change in tax rates for corporates 

Upto 2,00,00 - Nil

2,00,000 - 5,00,00 - 10%

5,00,00 - 10,00,00 - 20%

Above 10,00,00  - 30%

"Life of the Finance Minister is not easy. I must be cruel to be kind" Pranab quips

Tax on stock trading has been reduced.The cut in STT the stock exchange toll fee for buying and selling share is cut by 20 percent. Just crumbs for traders 

Fiscal deficit for FY12 stand at 5.9%.

NEW SAVINGS SCHEME FOR TAX BENEFIT! 

The finance minister said that a new equity-linked savings scheme, named after former prime minister Rajiv Gandhi, will offer income tax deduction of up to 50 per cent for those who invest Rs 50,000 in the stock market. However, only those whose annual income is less than Rs 10 lakh will be eligible for the tax deduction.

In a  bid to increase India's literacy rate the FM proposes to set up 6,000 schools in 12th Five-Year Plan.  Rs 25,555 cr will be allotted for Right to Education in FY13. The FM also cuts interest rates on loans to women self help groupsThe government is considering issuing Resident i cards to all individuals above the age of 18 years to help in e governance procedure. Allocation toward UID will be at Rs 14,232 crore in FY13.

AGRICULTURE

The plan outlay for agriculture has been raised by 18% to Rs 20,208 crore in FY13. Irrigation and dams will be eligible for special funding, says the Finance Minister

The bank index extended gains to more than 2 percent after Pranab Mukherjee said the government will provide nearly Rs 160 billion capital infusion in state-run banks in fiscal year 2013 that starts in April.

The FM proposes  Rs 12,040cr for backward area projects and  Rs 14,000cr for rural drinking water and sanitation in FY13.

Retail stocks rise as the finance minister commits to multi-brand FDI in his budget speech. Shopper's Stop up 3.3%, Pantaloon up 1.5%, Trent rises 1.8%.

Market now slipping off day's highs as no major announcement on subsidy cuts 

FM promises tax incentive for new investors. A good move, considering that the share of household savings invested into the stock markets has declined. However, it remains to be seen if this works for the markets. Markets seem to be happy: The Sensex is at 17,796.19 points, up +120.34 (0.68%), while the NSE Nifty is at 5,423.10  points, up +42.60 (0.79%).

 AVIATION SOPS

The finance minister said that the move to allow foreign airlines to participate direct or indirectly in India being considered actively. The plan to allow foreign airlines to invest up to 49% in domestic airlines is being considered actively too. External commercial borrowings to the extent of $1 billion to be allowed for aviation sector for next year. Aviation sector stocks however remain limp, showing hardly any movement.

Micro-finance Institution Regulation Bill, National Housing Bank Regulation Bill, Bank Regulation Bill and Public Debt Management Bill likely to be passed this session. The finance minister also proposes to recapitalise banks -- rural, urban and argiculture-related banks -- to the extent of Rs 15,000 crores.

11:35 pm: Sensex at 17858, up 182 points, 

Good news for investors: Changes in IPO norms will also be introduced which will increase participation in small towns

The finance minister seeks to bring down subsidies to a level of 1.7% of the GDP over the next three years. He also plans to roll out a computerised scheme for transfer of fertilizer subsidy. 

The finance minister assured the Lok Sabha that he plans to implement the Direct Taxes Code "at the earliest". Speaking about the Goods and Services Tax, he said that GST would be operational by August 2012.

The Finance Minister has allotted  Rs 15,888 cr for capitalisation of PSUs. 

RETAIL SOPS

Pranab announces sops for new retail investors under the Rajiv Gandhi Equity Scheme. The  Rajiv Gandhi Equity Scheme that is to be introduced will have lock-in period of 3 years - details of which the FM says would be announced in due course.

An Income Tax deduction of 50 per cent on investments of up to Rs 50,000 in savings scheme named after Rajiv Gandhi has been proposed. Efforts are being made to arrive at broadbased consensus with state governments on allowing FDI in multi-brand retail up to 51 per cent, says FM.

The finance minister seems to have begun on a note that might get the hopes of the industry up a bit. He spoke about reforms, driving up growth, fighting corruption and the menace of black money. He also mentions the need to follow a roadmap that would help the nation arrive at the various checkpoints on time and in a planned manner.So will be bite the bullet and push through the reforms? Let's listen further...

Disinvestment

The FY13 divestment target is pegged at a whooping Rs 30,000 crore, Pranab proposes. The government's stake in PSUs where sell-off is decided would not be less than 51%.

Rate hikes hit growth

The Reserve Bank's hawkish stance has hit India's consumption and growth. The Finance Minister, however, promises lower inflation number and expects to narrow the fiscal deficit gap. The economy has been steadily turning around and manufacturing appears to be on revival, he adds.

India stands tall amidst crisis 

Performance this year was disappointing but as compared to peers India was better. Middle East crisis, debt worries in EU have intensified.

The FM says he will focus on five broad issues:

1. Focus on domestic investments and driving up growth

2. Stress on rapid revival in private sector investment.

3. Emphasis on removing supply die bottlenecks in sectors like agriculture, energy, etc.

4. Make timely intervention to address the scrourge of malnutrition in certain disctricts of the country.

5. Expedite coordinated efforts to improve governance, transperancy and address the problem of black money.

At 1110 hrs, the Sensex is up 82 points at 17,758.28, a gain of 0.47%. The NSE Nifty is up 31 points at 5,401.55, a gain of 0.39%.  The market is keeping its fingers crossed.

 "We have to improve the supply side management of the economy. Mere words are not enough and we need to take some action," says Pranab 

Pranab Mukherjee has started presenting the his seventh budget amid a lot of din in Parliament. 

This year has been one a year of recovery interupted, Pranab says. Despite global recession, Indian economy has been growing at an impressive pace, says the finance minister.  However he agrees that the global economic crisis has affected India.

Finance Minister Pranab Mukherjee has already arrived in Parliament and is ready to present his Budget. Of course, he stopped over at the Rashtrapati Bhavan to meet President Pratibha Patil

Meanwhile, the stock market is waiting with bated breath for the FM’s budget proposals. The Sensex at 10.48 am is at 17,745.59 points, up +69.74 (0.39%), while the NSE Nifty is at 5,409.10 points, up +28.60 (0.53%). So what can the FM do?  Will he give a push to the reforms process? Or will he make this one a populist budget given the trouble that the UPA-2 finds itself in today?

TAX RATES TO GO UP?

News reports suggest that the finance minister could increase the income tax exemptions available to the common man, but others speculate that the tax rates could even be hiked.

For those of you who are wondering what this Budget is all about and how it's important to you.Click here

Even as the General Budget is to be presented in just a couple of minutes, the drama over the Railway Budget continues. Also, the DMK MPs too are absent and are not attending Parliament. Apparently, they are readying for the by-polls.

The Budget will be presented against a backdrop of slowing economic growth and a soaring fiscal deficit. GDP growth for fiscal year 2011-12 is expected to be at a mere 6.8 per cent, the lowest in three years.

ONE-MINUTE BUDGET

- Customs duty on bicycles and parts increased - Core sector to get Rs 50 lakh cr investment - Gold jewellery not bearing brand name to be included in the 1% levy on precious metal jewellery - FY13 fertiliser subsidy at Rs 60,974 crore - Customs duty exempted on fertiliser plant imports - Sensex at 17,739, up 52pts - Doubled custom duty on refined gold - 5% customs duty exempted on fertiliser plant - Import of aircraft parts exempt from customs duty - Reduced customs duty on cigarettes - Thermal power projects exempt from customs duty for 2 yrs - LNG exempt from customs duty - Income tax on income above Rs 10 lakh at 30% - Income tax on income between Rs 5 lakh and Rs 10 lakh at 20% - Upper limit raised from Rs 8 lakh to Rs 10 lakh for 20% bracket - Automated shuttle looms exempted from customs duty - Income tax on income between Rs 2 lakh and Rs 5 lakh at 10% - Some infra construction services exempted from service tax - Full exemption on customs duty on coal - Large cars excise duty raised from 22% to 24% - Service tax raised from 10% to 12% - No change in peak customs duty - Common tax code for service tax and excise - Compulsory reporting of assets held abroad - FY13 net market borrowing at Rs 4.8 lakh cr - Weighted tax exemptions for in house R&D for extended by another 5 years - BROKERAGE STOCKS: IndiaInfoline and Religare Enterprises flat at Rs 73.65 and Rs 385, respectively - All services to be taxed except Clause 17 (negative list) - Tables a white paper on black money issue - No change in corporate tax rates - STT reduced 20% on delivery transactions - Non-plan expenditure at Rs 9.7 lakh cr - Remove cascading effect of dividend distribution tax - Witholding tax reduced to 5% from 20% - NO change in corporate tax rate - Personal income tax exemption limit for general category raised to Rs 2 lakh from Rs 1.8 lakh - Tax exemption upto 2 lakh for tax payers - Standard Chartered IDR hits 20% circuit on IDR fungibility announcement - FY13 Plan expenditure up 18% - Direct Tax collection short by Rs 32,000 cr in FY 12 - FY13 fiscal deficit at 5.1% - Fiscal deficit at 5.9% in FY12 - Gross tax estimates at 10.6% of GDP - Non-tax revenue receipts pegged at Rs 1.64 lakh cr - TOP GAINERS ON SENSEX: BHEL, ICICI Bank, Coal India, Wipro and ITC - Directorate of Criminal Investigation has been constituted - Rural development fund of 20,000 cr - Govt aims to trim subsidy burden - Rs 20,000 cr to be spent on rural infrastructure development, including Rs 5,000 cr for creating warehousing facilities - Dedicated exchange of information cell is needed - Rs 25,555 cr for Right to Education allocated in FY13; interest rates on loans to women self help groups slashed - Market Update: Sensex at 17,698 (up 22 points); Nifty 5,394 (up 14 points) - 1 lakh 93,000 cr has been allocated for the defence sector - CNX Pharma Index jumps 0.7% at 4,930. - Funds to be provided to women self help group. - NRHM allocation hiked to Rs 20,820 cr - IPO equity offer above Rs 10 crore will have to be made electronically in capital market reforms - FY13 Mid-day meals scheme outlay at Rs 11,937 cr - Rs 15,888 cr to be provided for capitalisation of public sector and regional rural banks and NABARD - Tax free bonds of Rs 10,000 cr for IRFC - UID allocation at 14,232 cr ib FY13 - Infrastructure investment in 12th Plan to go up to Rs 50 lakh crore; half of it to come from pvt sector: FM - PHARMA SHARES: Parabolic Drugs jumps 6%, Medi Caps gains 5.7%, Piramal Life Sciences up 2.3% - Agri credit target raised to 5.75 lakh cr - STT may be abolished - FDI of 49% in aviation under active consideration - DTC Implementation deferred - Sensex touches a high of 17,871. Index now up 133 pts at 17,806 - Allow ECB for low cost housing projects - IMG to review coal allocation blocks - 7,300 km of road projects awarded in FY12 - Coal India advised t sign FSA with Power plants - FY13 tax free bonds of Rs 10,000 cr for NHAI - Irrigation eligible for viability gap funding - Pilot project for direct transfer of subsidiary for kerosene has been initiated in Alwar, Rajasthan - 81 out of 82 RRBs move to core banking solutions - To move national housing amendment bill - Propose central KYC depositary - Direct Tax Code (DTC) Bill to be enacted at the earliest, says FM - To increase investments in infra through PPP - Infrastructure go upto 50 lakh cr - Rs 50,000 tax exemtion for retail investors - 10% of IPO above Rs 10 cr - To introduce new laws for micro finance companies - Rs 50,000 tax exemption for retail investors - RETAIL SHARES: Brandhouse Retail gain 6.6%, V2 Retail up 3.6%, Shoppers Stop, Pantaloons and Trent up 1-3% each. - Two way fungibility of Indian depository receipts - Qualified foreign investors allowed to invest in corporate bond market - To reach more retail investors in small towns - New Rajiv Gandhi Equity scheme announced for small investors, allows deduction up to Rs 50,000 - OMC shares gain. HPCL up 1.6% at Rs 298, BPCL up 1% at Rs 673, IOC up 1.8% at Rs 277 - To encourage role of saving- new scheme-Rajiv Ganghi scheme has been introduced - PSU banks gain. Bank of India up 2.5%, followed by Indian Bank, State Bank of Mysore and Allahabad Bank - Effort on for consensus on FDI in multi-brand retail - Reforms in financial sector have been pursued with the objective - Min 51% govt ownership in PSUs to remain - Rs 30,000 cr for divestment in FY13 - Fast track policy decisions - Central subsidies to be under 2% of GDP - GST to become operational by August 2012 - To examine parliamentary panel report on DTC - Structure of GST networks approved y state FMs - Markets surge to day's high. Sensex up 151 points at 17,826. Nifty up 51 points at 5,431 - Realty and bankex surge nearly 2% each to 1,856 and 12,425, respectively - Working for direct subsidy transfer in case of LPG and kerosene - Direct transfer of subsidy to retailer and farmer - Subsidy for food security to be fully provided - Need to raise tax-GDP ratio - Will make some amendment in FRBM ACT - FRBM implementation back on track - Fiscal balance deteriorated due to subsidy - Avg price of crude to exceed $115 dollar/barrel in 2012 - 7.6% GDP growth in FY13 - Current account deficit at 6.3% of GDP in FY12 - Have identified 5 objectives that need to be addressed: FM - India has successfully achieved diversified exports and imports markets - Headline inflation to moderate in next few months - Expects headline inflation to moderate going forward, and then stabilise - To address supply bottleneck in agriculture - India's GDP to grow 6.9% - Need to address the problem of black money - Necessary to take hard decisions now - India's manufacturing sector is recovering - This year's performance has been diappointing - Agriculture, services continue to do well, suggesting that industry is the laggard - We had to battle double digit inflation - This year's performance has been diappointing - Had to battle double digit inflation - GDP seen growing at 6.9% in FY12 after doing 8.4% preceding two years - Opposition obstructs the Budget speech - It was a year of recovery interrupted for the Indian economy: FM - Pranab Mukherjee starts 2012 Union Budget Speech - Fertiliser shares gain on Budget allocation hopes - Pranab promised a lot in the 2011 Budget. Did he deliver? Find out - Titan Inds dips as markets expect higher import duty on gold in Budget - Govt to unveil budget amid slowing growth, political crisis - Economic survey gives vital inputs for Budget making: Pranab - What is Ficci's estimate for fiscal deficit in FY13 - Mr FM, states want CST losses compensated - Parliament panel spoke on behalf of salaried class. Find out what it is - Majority of employees expects tax exemption limit to Rs 3 lakh. Do you? - Watch Budget telecast Live on Business Standard - Pranab Mukherjee presented his first Budget in 1982 - MARG chief wants some goodies too from Pranab da - How will this Budget be? Like the one of the eighties?