Union Budget of India

A Budget is a financial plan, which a person , institution or Government has and which shows in detail how much money is available and how it is to be spent Budget is a systematic plan for the expenditure of a usually fixed resource during a financial year. It is a detailed plan of the governments finances and it is the most important economic and financial event in India. The budget is a detailed account of the Governments finances, in which revenues from various sources and expenses of all activities undertaken are aggregated. It consists of revenue budget and capital budget and the budget estimates, which is a financial projection for the next fiscal year.

1. Revenue Account :: Expenditure/Receipts

Revenue receipts consists of revenues from tax and other sources and the expenditure covered by these revenues. Tax revenues are made up of taxes such as income tax, corporate tax, excise, customs and other duties which the government levies. Non tax revenues are made up of interest and dividend on investments made by government, fees and other receipts for services rendered by Government. Revenue expenditure is the payment incurred for the normal day to day running of government departments and various services that it offers to its citizens. The other expenditure for the government would be interest on its borrowings, subsidies etc.

2. Capital Account :: Expenditure / Receipts

The Capital Account deals with expenditure incurred with the purpose of either increasing the concrete assets of durable nature or of reducing recurring liabilities. Under capital receipts the main subject would be loans by Government from public, which can also be termed as Market Loans, borrowing from Reserve Bank and other lenders through the sale of treasury bills, loans received from foreign governments and recovery loans granted by Central government to State and Union Territory, corporations and other parties.

Structure of the Government Account

Consolidated Fund: It is the main bank account of the government. All revenues received by Government by way of taxation ,debt (internal and external ) and other receipts are credited into the Consolidated Fund. All expenditure incurred by the Government for the conduct of its business including repayment of internal and external debt and release of loans to States/Union Territory Governments for various purposes is debited against this Fund. Contingency Fund: It is the amount kept in reserve to guard against losses. This fund is kept at the disposal of the President of India to enable the Government to meet unforeseen expenditure pending its authorization by the Parliament. The money is to be used to provide immediate relief to victims of natural calamities ,war etc. Public Account: Accounts which have funds provided by the entities of government for example sale of Savings Certificates, contributions into General Provident Fund and Public Provident Fund, Security Deposits . In respect of such receipts, the Government is acting as a Banker or Trustee and refunds the money after completion of the contract/event.

EXPENDITURE 2011-2012 2012-2013 (REVISED ( ESTIMATES ) ESTIMATES) (Rs CRORES) (Rs CRORES) DEFENCE SOCIAL 1,64,415 1,87,110 1,93,407 218,041

CHANGE IN PERCENTA AMOUNT GE (Rs CHANGE CRORES) 28,992 30,931 17 16.5

EDUCATION
AGRICULTURE HEALTH

51,772
17, 123 26,700

61,427
20,208 30,702

9,665
3,000 4002

18.6
18 15

TAX SHARE WITH STATES

4,47,927

5,27,682

79,755

18

DIRECT TAX Direct tax is a kind of charge, which is imposed directly on the taxpayer and paid directly to the government by the persons on whom it is imposed. A direct tax is one that cannot be shifted by the taxpayer to someone else.
Income

Tax

Corporation Tax Property Tax Inheritance Tax Gift Tax

INCOME

TAX

INCOME TAX
A charge imposed by government on the annual gains of a person, corporation, or other taxable unit derived through work, business pursuits, investments, property dealings, and other sources determined in accordance with the Internal Revenue Code or state law

The exemption limit were increased from Rs 1, 80,000 to 2,00,000 same level
The tax slabs for female below 60 years of age brought at same level. Increase in the income limit in the 20 % slab from Rs 500000-800000 to Rs 500000- 1000000 Reducing the age of Senior Citizens from 65 to 60 Persons with high income above Rs 20,00,000 will have to pay the MAT

 Interest income for bank and post office savings account up to Rs 10000 is
exempted .
Rs 5000 deduction for the preventive health care checkup . Launch of Rajiv Gandhi Equity Scheme to allow the income tax deduction of 50% to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakh with lock in period of three years . Deduction on payment of life insurance premium and exemption on maturity will be allowable if the premium payable in any year is less than 10% of the sum assured. Sale of immoveable property (other than agricultural land) with value more than 50 lakh in Urban and 20 lakh in other areas transferee or seller will have to deduct 1% TDS. Sale of gold and gold ornaments above 2 lakhs and more paid in cash will attract the 1% TDS

INDIRECT TAX
An indirect tax is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customer). An indirect tax is one that can be shifted by the taxpayer to someone else. An indirect tax may increase the price of a good so that consumers are actually paying the tax by paying more for the products.

SERVICE TAX
The rate of service tax has been increased from 10% to 12%. Proposal to tax all services except those in the negative list comprising of 17 heads. Some of the services of Negative List: Services provided by specified persons: By government or a local authority excluding certain select prescribed services Reserve Bank of India Foreign diplomatic mission located in India. Specified services related to Agriculture Education Financial services Transportation of passenger, with or without accompanied belongings, by specified persons. Transport of goods. Others Trading of goods Any process amounting to manufacture or production of goods Access to a road or a bridge on payment of toll charges Renting of residential dwelling for use as residence Proposals from service tax expected to yield additional revenue of 18,660 crore.

CUSTOM DUTY
Peak rate of customs duty for non-agricultural products retained at 10%, with few exceptions. Education cess and secondary and higher education cess on countervailing duty (CVD) component of customs duty has been exempted, so as to avoid double levy of such cess which will result in marginal reduction of the total customs duty. Full exemption from basic customs duty for import of equipment for expansion or setting up of fertilizer projects up to March 31, 2015.

Decrease in the Basic Customs Duty (%)

Increase in the Basic Customs Duty (%)

EXCISE DUTY
Given the imperative for fiscal correction, standard rate of excise duty to be raised from 10% to 12%, merit rate from 5 per cent to 6% and lower merit rate from 1% to 2% with few exemptions. Excise duty on large cars also proposed to be enhanced. Changes in Excise Duty structure on textile goods The excise duty on branded ready-made garments and textile made-ups has been increased from 10% to 12%. The tariff value for these items has been revised and an abatement of 70% compared to 55% earlier has been prescribed. (The above changes will be effective from 17 March 2012.)

Changes in Excise Duty structure on specified automobiles

Excise Duty Rates (%)

Increase in CENVAT Rate (%)

Decrease in CENVAT Rate (%)

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 measurestaken 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.

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