Taxation and expenditure decisions of the government

Capital expenditure Capital flow Fiscal policy Revenue Capital receipt

Revenue expenditure
Revenue receipt

Capital expenditure + Revenue expenditure

GROSS FISCAL DEFICIT

Capital receipt + Revenue receipt + Loan recoveries

Regulate financial flow Efficient allocation of finances Reduction in inequalities of income & wealth Price stabilization & control of inflation Employment generation Reducing deficit in balance of payment Increasing national income Development of infrastructure

DIRECT TAXES

INDIRECT TAXES

TOTAL TAX

EXTERNA L BORROWI NG(DEBT)

INTERNAL CASH FLOW BY MONEY PRINTING( DEFICIT)

GOVERNMENT DEBT

REVENUE EXPENDI TURE

SUBSIDIE S

INTEREST

PUBLIC SECTOR EXPEND -ITURE

Indirect tax policies: Enhancement in the standard rate of Service tax from 10% to 12% Increase in excise duty on cars both small and large, MUVs, SUVs etc. Increase in excise duty on demerit goods such as cigarettes, bidis, and other tobacco products Enhancement in customs duty on standard gold bars and platinum bars from 2% to 4%

Direct tax policies: Introduction of compulsory reporting requirement in case of assets held abroad Tax collection at source on purchase in cash of bullion or jewellery in excess of ` 2 lakh Taxation of unexplained money, credits, investments, expenditures etc., at the highest rate of 30 per cent irrespective of slab of income Payment of taxes through Automatic Teller Machines (ATMs) and all India coverage of the Refund Bankers Scheme for refund of direct taxes E-payment of taxes

Central Plan Scheme Monitoring System (CPSMS) is an initiative towards establishing a suitable online management information and decision support system Allocation of Rs.43000 crore rather than 23000 crore last year as fuel subsidy(reliant on middle east unrest) Public sector banks, rural banks, co-operatives, NABARD allowed to grant loans upto Rs.3 lakh to farmers at 7% p.a. ; additional 3%subsidy on interest if loan repaid within a year

With ARM from indirect taxes, coupled with estimated receipts of `40,000 crore from telecommunication spectrum auction and disinvestment proceeds of `30,000 crore, the fiscal deficit for 2012-13 is estimated at 5.1 per cent of GDP The proposed amendment in the FRBM Act would address the structural issue of imbalance in the revenue account of the Government. With mandated elimination of effective revenue deficit by March 2015 Mobilisation of additional Rs.45000 crores from indirect taxes by increasing excise and customs duty With help of AADHAR cards, transfer of funds and accessibility to real time data of government, will improve transparency

http://finmin.nic.in/workingpaper/FPI_trends_T rajectory.pdf http://indiabudget.nic.in/ub201213/frbm/frbm3.pdf http://www.indianeconomy.net/category/25/go verment-and-rbi/fiscal-policy/ http://dbie.rbi.org.in/DBIE/dbie.rbi?site=home http://www.gktoday.in/union-cabinets-approvalto-interest-subsidy-for-farmer-loans/ http://www.pib.nic.in/newsite/erelease.aspx?reli d=87296 http://valueofdissent.wordpress.com/2012/05/22 /public-expenditure-defence-budget-in-india/