You are on page 1of 31

Smita

1

Budget Making Process
 1. 2.

Stage I An Estimation of Expenditure is made by various Ministries. An estimation of Plan expenditure is prepared by the Planning commission. Stage II An Assessment of Revenue receipts and Capital receipts is made by the Revenue Secretary. Stage III First estimates of Deficit are prepared. Stage IV The Tax rates are revised or new taxes are proposed. Expenditures are adjusted.

 1.

 1.  1. 2.

2

How Budget is prepared?

How the Indian Budget is prepared - Sify_com.ht

3

Revenue Receipts and Revenue Expenditure
 1. 2. 3. 4. 5. 6.  1. 2.

Tax Revenue Income Tax Corporate Tax Wealth tax Central Excise Duties Custom duties Service Tax and others. Non Tax Revenue Interest Receipts Dividend and profits of PSUs’ and other government bodies

 1. 2. 3. 4. 5. 6.

Non Plan Expenditure Interest Payments Defence payments Subsidies Pension Postal Deficit Expenditure on Economic/ General and social services etc. Plan Expenditure

4

Current Tax Rates(200809)
 current

tax rates.htm

5

Revenue Receipts of Central Government (In Crores)
Head 1950-51 1980- 2001-022006-072008-09 81 Budget Budget Tax Revenu e Non -Tax Revenu e Total 357 9,390 1,33,66 3,27,20 5,07,15 0 0 0 3,440 67,790 76,260 95,785

49

406

12,830 2,01,45 4,03,46 6,02,93
6

Central government-Tax Revenue (In Crores)
Head Income Tax Corporate Tax Other Direct taxes Excise Duties Custom 1950-51 140 40 2001-02 32,000 36,610 450 2006-07 Budget 77,410 1,33,010 150 2008-09 Budget 1,38,314 2,26,361 325

70 160

68,530 47,540

1,19,000 77,070

1,37,874 1,18,930
7

Budget of Central Government Revenue Account (In crores)
Head 1950-51 1980- 2001-02 2006-07 2008-09 2008-09 81 budget budget Actual 406 347 12,830 2,01,450 4,03,460 6,02,935 5,62,173 14,540 3,01,610 4,88,190 6,58,119 -

Revenue receipts Revenue Expenditure Surplus/ Deficit

+59

-1,710

-84,730 -55,184 1,00,160

-

8

Capital Receipts and Expenditure

Receipts

 1.

Non Plan Expenditure

1. 2. 3.

Recovery of Loans Disinvestment of PSUs’ Borrowings

Loans to States/ UT/ Foreign Governments and PSU’s. 2. Defence capital expenditure

Plan Expenditure

9

Capital Receipts/ Expenditure of Central Government
195051 Capital Receipts 120 198081 8,770 2001-02 2006-07 2008-09 2008-09 budget Budget Actual 1,61,000 1,60,530 1,47,949 3,38,780

Capital Expenditur e Surplus / Deficit

182

9,630

60,840

75,800

92,765

-

-62

- 860

+ + 84,730 +55,184 1,00,160

-

10

Sources and Uses of Funds (08-09)
 1. 2. 3. 4. 5. 6. 7. 8.

Source Corporation tax – 24% Customs – 13% Non tax Revenue – 10% Non-Debt Capital Receipts – 2% Income Tax -15% Service & Other taxes – 7% Excise – 15% Borrowings & other Liabilities – 14%

 1. 2. 3. 4. 5. 6. 7. 8.

Use Interest – 21% Defence – 11% Other non plan expenditure – 10% Subsidies – 8% Central plan -19% State & UT Plan assistance – 7% Non plan assistance to states – 5% States’ share of taxes – 19%

11

Actual Receipts/Expenditures
 Receipts.htm  Expenditure.htm  Central

Plan outlay by sectors.htm

12

Deficit in Budget
   

Revenue Deficit = Revenue Rec. – Revenue Exp. Capital Deficit = Capital Rec. – Capital exp. Budget Deficit = Total Exp. – Total Rec. Fiscal Deficit = Total Exp. – (RR + Recovery of Loans + Disinvestment Funds) Primary Deficit = Fiscal Deficit – Interest obligations of the government

13

Details of Actual Budget
 Budget

at Glance.htm  Budget2008-09_speech.pdf

14

Budget 2008-09 – Revised Estimates
Head Revenue Receipts Capital Receipts Total Receipts Non-plan Expenditure Plan Expenditure Total Expenditure Fiscal Deficit 2008-09 (Budget) 6,02,935 1,47,949 7,50,884 5,07,498 2,43,386 7,50,884 1,33,267 (2.5% of GDP) 2008-09 (Revised) 5,62,173 3,38,780 9,00,953 6,17,996 2,82,957 9,00,953 2,41,273 (6% of GDP)

15

Deficit Financing

The fiscal Deficit gap is filled by government borrowings from the followingDomestic Market External Sector Reserve bank of India Problems of deficit FinancingIncrease in the government debt. Inflation Increase in consumption.
16

1. 2. 3.  1. 2. 3.

What is FRBM?

Some targets to be achieved by 2009 now Postponed to 2011: To bring down Fiscal Deficit to the level of 3% of GDP To completely eliminate Revenue Deficit

1. 2.

17

Highlights of Budget 2008-09
    

 

60,000 Cr. Loan waiver for small and medium farmers having holding size up to 2 hectare. Settlement (OTS) for other. Income tax slabs modified . No tax up to income of 1,50,000. For Females same up to income of 1,80,000 and for senior citizen up to income of 2,25,000. Corporate Tax rate unchanged. Surcharge and Cess continues. Short term capital gains tax up from 10% to 15%. No change in Securities Transaction Tax rate . STT currently paid is allowed as a rebate against tax liability but from April 2008 STT paid will be treated like any other deductible business expense against business income. STT on options premium only, where the option is not exercised and burden will be on the seller. Introduction of Commodities Transaction Tax on Options and Futures trades.

18

Budget Highlights (Excise) on all goods down from 16% to 14%. General CENVAT
   

 

Excise lowered on small cars, two wheelers ,buses and their chassis( 16% to 12%). Reduction in excise duty on all goods produced by the Pharmaceutical sector from 16% to 8%. Reduced excise on paper, paper boards made from nonconventional raw material(12% to 8%). Excise duty on writing, printing and packaging paper reduced from 12 to 8%. Excise reduced from 16% to nil for wireless data cards, Packaged coconut water, Tea and Coffee mixes, Puffed rice. No excise on Anti AIDS drug and bulk drug used to manufacture it.

19

Budget Highlights… (Excise)
    

Reduced excise on water purification devices, Veneers, flush doors, sterile dressing pads, breakfast cereals. Increase in excise on packaged software from 8% to 12%. Higher excise on non filter cigarettes. Specific duty on unbranded Petrol and Diesel instead of ad valorem tax. No excise on polyester filament yarn and 1% excise on cellular handsets.

20

Budget Highlights (Custom D.) Lower
  

    

Project Imports from 7.5% to 5%. Steel Melting Scrap 5% to Nil. On certain specified life saving drugs, Bulk Drugs used to manufacture above, duty down from10% to 5%. Lower duty on Animal feed mixtures(30% to 20%). Lower duty on Bactofuges (7.5% to Nil) No Duty on specified parts of set top box and certain raw materials used in IT/electronic industry. No duty on Helicopter simulators. Lower duty on crude and unrefined sulphur (5% to 2%

21

Budget Highlights ….
       

No DDT on Parent company on dividend received from subsidiary company and distributed by it. BTT done away with. Capital Gains Tax on corporate acquisitions in India. Service Tax exemption limit up from income of Rs.8 lakhs per annum to Rs. 10 Lakhs per annum. Service tax on Stock and commodity exchanges, Moneychangers, AMC providing ULIP, persons running game of chance etc. Reverse mortgage scheme encouraged. No FBT on crèche facilities, sponsorship of employee-sportsperson, organizing sports events for employees, and guest house facility. Central Sales tax reduced from 4% TO 3%

22

Budget Implementation

Implementation Report.pdf

23

Interim Budget 2009-10
Head Revenue Receipts Tax Revenue Non Tax Revenue Capital Receipts Of Which Borrowings Total Receipts Revenue Expenditure Capital Expenditure Revenue Deficit Fiscal Deficit Primary Deficit 2009-10 (Interim Budget) 6,09,551 4,97,596 1,11,955 3,43,680 3,32,835 9,53,231 8,48,085 1,05,146 2,38,534 3,32,835 1,07,324

24

Source and Use of Funds (2009-10 ) - %
1. 2. 3. 4. 5. 6. 7. 8.

Corporation Tax – 22 Non Tax Revenue – 10 Customs – 10 Income Tax – 12 Service Tax and Others – 6 Excise – 10 Non Debt Capital Receipt – 1 Borrowings - 29

1. 2. 3. 4. 5. 6. 7. 8.

Interest Payments – 20 Subsidies – 9 Defence – 13 Non Plan Assistance to States – 4 Other Non Plan Expenditure – 14 Central Plan – 18 State and UT Plan Assistance –7 State’s Share of Tax - 15

25

 Interim

Budget Speech.pdf

26

2009-10 – Budget Highlights
1. 2. 3. 4. 5. 6.

Launch of two new schemes – Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme National Rural Employment Guarantee Scheme – Allocation of Rs. 30,100 cr Sarva Shiksha Abhiyan – Rs. 13,100 cr Mid Day Meal Scheme – Rs. 8000 cr Integrated Child Development Scheme – Rs. 6,705 cr Allocation under Jawaharlal Nehru National Urban Renewal Mission - Rs. 11,842 cr.

27

2009-10 – Budget Highlights
7. Rajiv Gandhi Rural Drinking Water Mission – Rs. 7,400 cr
8. Total Rural Sanitation Programme – Rs. 1,200 cr 9. National Rural Health Mission – Rs. 12,070 cr 10. Bharat Nirman – Rs. 40,900 cr 11. Unique Identification Authority – Rs. 100 cr 12. RIDF – xv – Rs. 4000 cr 13. Interest subvention of 2% on pre-post shipment credit for certain employment oriented export sectors – Rs. 500 cr 14. Allocation for Defence – Rs. 1,41,703 crore out of which Rs. 54,824 crore for the capital expenditure.

28

Fiscal Stimulus Package
 December
1. 2. 3. 4. 5.

7, 2008

CENVAT Rates reduced by 4% across the board India Infrastructure Finance Co. authorised to raise Rs. 10,000 crore Additional Rs. 1,400 cr to clear Technology Up gradation Fund backlog PSU Bank Home Loan Package in two categories – 0-5 lakh and 5-20 lakh Import duty of Naptha completely lifted

29

Fiscal Stimulus Package
 Fiscal
1. 2. 3. 4. 5.

Stimulus: 2 January, 2009

ECB Relaxation of Guidelines with removal of cost cap on borrowings. Liquidity Support to NBFC’s – 25,000 crore Higher Credit Targets for PSU Banks – Rs. 56,000 crore Accelerated Depreciation for purchase of commercial vehicles Re-capitalisation of PSU Banks – Rs. 20,000 crore
30

Fresh Tax Cut Announcements: February 24, 2009
1. 2. 3.

4.

Service tax reduced from 12% to 10% Excise cut of 2% on goods that attracted excise duty of 10% till now. Imported Naptha for power sector fully exempted from custom duty beyond 31st March, 2009. Duty on Bulk Cement reduced

31