INTERIM BUDGET – HISTORICAL TREND, POSSIBLE TAX CHANGES & FARMER INCENTIVE

 

 

Interim Budget 2004 –

 

Fiscal Deficit –  Actual 4.8%          Next FY Estimate 4.4%

 

Major Announcements –

 

 Agri & MSME

-   Crop Loan rates were dropped to 9% in 2003 and shifted from mortgage to personal credit appraisal of the farmer.

-    Special Tea plantations Term Loans up to 2 Lakh provided at 9%.

-     Laghu Udhyami Credit Card – MSME Working Capital – Credit enhanced from Rs. 2 lakhs to Rs. 10 lakhs.

 

 Direct Tax

 

 “Some necessary changes in Income Tax procedures require the amendment of the Income Tax Act. While changes in the Act are currently not being proposed, it is the conviction of the Government, also our commitment that” : This was wording of the speech to introduce changes.

 

      -    LTCG exemption was extended by three years.

      -    Changes in % of Dearness Allowance

      -     Exemption from Capital Gain Tax as result of acquiring land from farmer.

 

 

Interim Budget 2009 –

 

Fiscal Deficit –  Actual 6%       Next FY Estimate 5.5%

 

Major Announcements –

 

 -    All India farm loan waiver amounting to Rs. 65,000cr.

-     Widow & Disabled Pension schemes introduce

-     Interest subvention of 2% on loans to SMEs and Textile, Leather, Gems & Jewellery sector extended by six months.

 

 

Interim Budget 2014 –

 

Fiscal Deficit –  Actual 4.6%         Next FY Estimate 4.1%

 

Major Announcements –

 

Agri & Others –

 

 -       27 schemes were under brought under DBT including LPG which benefited 2.1cr but was put on hold.

-       SC & Tribal Sub Plans were introduced.

-       Farm loan subvention of 2% plus 3% for timely payments.

-       Moratorium period for all education loans taken up in certain time period.

 

 

Indirect Taxes –

 

“In keeping with the conventions, I do not propose to make any announcements regarding changes to the tax laws. However, the current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost.” : This was wording of the speech to introduce changes.

 -      Central Excise duty cuts for capital goods and consumer non-durable

-       Excise cuts for Automobile Industry

-       Addition of rice related activities from service tax.

 

 

 Our View :

 

If Past trends are taken the government can proposes changes in direct and indirect taxes, though majority of industries are under GST regime the changes can be done through GST council only. Direct tax change might be proposed which can encourage the professionals to vote for them

 

Farmer loan relief has been included in all three budgets previous but only 2009 farm loan waiver might have been most influencing as far as elections are concerned. This means current government needs to provide more than a interest subvention to encourage the farmers to vote for them.

 

There might be certain initiative or schemes might not be included in the budget but can be notified via approval of cabinet meeting. As EC is expected to announce dates in first week of March that gives government full February to announce schemes.