Transcript Sudhir Kapadia, Partner & National Tax Leader

Indian Merchants’ Chamber
Discussion on Amendments
proposed in Finance Bill 2013
21 March 2013
The number game
Macro assumptions
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GDP Growth at 6.1% - 6.7%
Nominal GDP Growth at 13.4%
Assumed inflation rate at 7% if real GDP growth is about
6.4%
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Budget 2013–2014— Thought sharing by EY
Non Plan Expenditure / Subsidies
Rs crores
Expenditure
(1)
BE 2012-13
(2)
RE 2012-13
(3)
BE 2013-14
(4)
% change in
(4) over (3)
Non Plan
969900
1001638
1109975
10.8
Plan
521025
429187
555322
29.4
1490925
1430825
1665297
16.4
TOTAL
Major
Subsidies
(2)
RE 2012-13
(3)
BE 2013-14
(4)
% change in (4)
over (3)
Food
85000
90000
5.9
Fertilisers
65974
65972
0
Petroleum
96880
65000
(33.0)
247854
220972
(10.8)
TOTAL
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Budget 2013–2014— Thought sharing by EY
Revenue
Rs crores
Revenue
RE 2012-13
Gross Tax Revenue
BE 2013-14
% change
1038037
1235870
19.1%
129713
172252
32.8%
8718276
1056331
21.2%
333417
376782
13%
Surcharge
15004
30519
103%
Education Cess
10453
12219
16.9%
Taxes on income
193932
229502
18.3%
-
4400
-
5998
7017
17%
Customs
164853
187308
13.6%
Excise
171996
197554
14.9%
Service Tax
132697
180141
35.8%
Non tax Revenue
Total Revenue Receipts
Corporate Tax
Surcharge
Education Cess
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Budget 2013–2014— Thought sharing by EY
Implied tax buoyancies
FY14 Tax buoyancy (% change
in tax revenue/ % change in
GDP at market prices)
#
Type of tax
1
Gross Tax Revenue
1.48
2
Corporation Tax
1.26
4
T axes on Income other than Corporation
Tax
Customs
5
Union Excise duties
1.11
6
Service Tax
2.67
3
1.53
1.02
Overall expenditure increase of 16.4% is being financed by assuming a nominal
growth of 13.4% and a buoyancy of nearly 1.5 in gross tax revenues. This seems
unrealistic.
This buoyancy was 0.93 in FY12 and 1.3 with respect to RE in FY13.
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Budget 2013–2014— Thought sharing by EY
Reaction to the Budget:
EY – ET Budget Poll
EY – ET Budget Poll
Majority of the respondents agreed that:
► More was expected from the Budget in terms of
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Clear road map on GST
Clarification on indirect transfer
Guidelines on step taken to implement the Shome committee reports on
GAAR and Indirect transfer
60% of the respondents felt that foreign investors had no cause for
cheer with the Budget provisions
On the policy front, the Budget lacked incentives to attract foreign
investments which could impact growth
While the FM has kept the indirect tax rates steady and sought to
regularize the property market, increase in surcharge rates and
ambiguity on TRC have not gone down well.
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Budget 2013–2014— Thought sharing by EY