Budget Reactions: Deficit cut tough on higher tax, dull GDP growth: KM Global

KM Global has come out with its report on Union Budget 2013-14.

• The Finance Minister (FM) aims to reduce the Fiscal Deficit to 4.8 percent in FY14 from 5.2 percent in FY13
• Controlling the deficit will be a challenge as the government has projected a 19 percent increase in tax revenues although real GDP growth is currently 5 to 6 percent.
• A 10 percent surcharge has been imposed on individuals with taxable income more than Rs 1cr while the surcharge has been hiked to 10 percent for Corporates earning over 10cr.
• The Food Security Bill is expected to be passed in this session and an additional provision of Rs 10,000 cr has been made for it. We anticipate that the final provision will be much higher.
• The Chennai-Bengaluru and Delhi-Mumbai industrial corridors are being supported by the Centre. We expect these steps to help them win state support for GST.
• Tax proposals on the Direct Tax side are estimated to yield Rs 13,300 cr and Rs 4,700cr on the Indirect Tax side
• One time Service Tax Voluntary Compliance scheme proposed. Defaulter may avail of the scheme on the condition that he files truthful declaration of Service Tax dues since 1st October 2007.
• STT cut on equity futures from 0.17 percent to 0.10 percent. CTT introduced on non-agri commodities at 0.01 percent.

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