Budget Reactions: Cheer on no populism, off-Budget policy key: Motilal Oswal

Motilal Oswal has come out with its report on Union Budget 2013-14.

• Budget 2013's headline arithmetic is commendable - fiscal deficit for FY13 at 5.2 percent of GDP (v/s 5.1 percent budget estimate) and for FY14 at 4.8 percent.
• The government prudently avoided pre-election year populism. Except 5 percent higher corporate tax surcharge and 10 percent super-rich surcharge, both direct and indirect tax structure and provisions remain broadly unchanged.
• Robust 29 percent increase in Plan Expenditure will aid some recovery in FY14.
• However, current account situation is not adequately addressed, and there are no major sops for the capital markets.
• Growth rates are still on a decline (GDP for Dec-12 quarter at mere 4.5 percent) and the budget didn't enthused much to boost the recovery process
• Budget is just one tool to manage the economy; off-budget policy measures (including monetary policy) will need to work in sync to achieve the desired mantra of "higher growth leading to inclusive and sustainable development".

• 'Higher growth leading to inclusive and sustainable development' to be the key mantra
• FY13 fiscal deficit at 5.2 percent of GDP, FY14 at 4.8 percent
• FY14 gross market borrowing placed at INR6.3t
• By FY17, fiscal deficit to be brought down to 3 percent, revenue deficit to 1.5 percent and effective revenue deficit to 0 percent
• Tax proposals on Direct Taxes estimated to yield to INR133b and on Indirect Taxes INR47b

• Income-tax credit of INR2,000 for individual assessees with total income up to INR500,000
• Surcharge of 10 percent on persons (other than companies) whose taxable income exceed INR10m
• Surcharge increased from 5 percent to 10 percent on domestic companies whose taxable income exceeds INR100m
• Dividend distribution tax surcharge increased from 5 percent to 10 percent
• All additional surcharges to be for one year only
• Investment allowance of 15 percent to manufacturing companies that invest more than INR1b in plant and machinery during the period 1.4.2013 to 31.3.2015
• 'Eligible date' for projects in the power sector to avail benefit under Section 80-IA extended from 31.3.2013 to 31.3.2014
• TDS of 1 percent on the value of immovable properties where transfer consideration exceeds INR5m; agricultural land to be exempted
• Reductions in Securities Transaction Tax rates e.g. Equity futures from 0.017 percent to 0.01 percent
• Commodities Transaction Tax introduced at 0.01 percent
• Modified provisions of GAAR will come into effect from 1.4.2016

• Customs duty on set-top boxes increased from 5 percent to 10 percent
• Specific excise duty on cigarettes increased by about 18 percent
• Excise duty on SUVs increased from 27 percent to 30 percent

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