Bonanza for salaried class in Budget 2012-13.
New Delhi: Union Budget 2012-13 may bring cheer to the salaried class as the Centre is said to be mulling a restructuring of the income tax slab.
According to reports, Monday, Union Finance minister Pranab Mukherjee may announce a rejig in income tax slabs and also increase the income tax exemption limit from the existing Rs 1.8 lakh to at least Rs 2 lakh.
A newspaper report said that the new tax slabs could be in line with the Direct Taxes Code Bill, which was introduced in Parliament in 2010.
The proposed bill says that incomes between Rs 2-5 lakh be taxed 10 percent, Rs 5-10 lakh be taxed 20 percent and incomes above Rs 10 lakh per annum to be taxed 30 percent.
The present tax structure is that incomes between Rs 1.8 lakh and Rs 5 lakh are taxed 10 percent, those between Rs 5-8 lakh taxed 20 percent while 30 percent tax is slapped on incomes above Rs 8 lakh.
Clearly, the government appears in mood to provide succor to the aam admi as the proposed tax restructuring will lead to an increase in disposable incomes, consumption spending and savings.
Budget 2012-13: Hike in iron ore export duty unlikely
The iron ore industry is unlikely to face a further hike in export duty on their produce in the upcoming Budget, according to the Steel Ministry.
However, this is unlikely to provide much relief to the miners, whose margins are already under pressure due to the latest hike in export duty on this key steel-making ingredient to 30 per cent.
A senior Steel Ministry official said so far, there has been no discussion on raising the duty on iron ore exports and this is not likely to happen in the forthcoming Budget since iron ore miners are already paying 30 per cent duty on overseas shipments.
The government had increased export duty on both lumps and fines to 20 per cent from 15 per cent and 5 per cent, respectively, in the Budget for 2011-12. Subsequently, the rates were increased again toward the end of December last year, when the government raised it to 30 per cent for both varieties of iron ore.
However, the official justified the previous hikes, saying that even after levying duties, the huge margins enjoyed by iron ore miners were too high to bring exports to a standstill.
Meanwhile, the Federation of Indian Mineral Industries, which had written to the Finance Ministry urging the abolition of export duty on iron ore fines and a reduction in duty on lumps to 5 per cent, said Indian mining firms were being shifted into the non-competitive zone on the cost curve in global markets as a result of the repeated hikes.
"Export duty on iron ore fines should be abolished since there is no technology in India to use the low-grades fines and (duty on) lumps should be reduced to 5 per cent since it is against free trade and no steel plant is starved of iron ore," FIMI Secretary General R K Sharma said.
India, the world's third-largest iron ore exporter, shipped 117.3 million tonnes of iron ore overseas in 2009-10 and 70-80 per cent of this was in the form of fines, which do not have many takers among domestic steel-makers.
In 2010-11, iron ore exports from the country fell to 97.64 million tonnes and in the first eight months of the current fiscal, exports dipped by a little over 28 per cent to 40 million tonnes vis-a-vis the same period last fiscal.
Finance Minister Pranab Mukherjee said “The Union Budget is usually presented on the last date of February. The budget is likely to be placed on February 29. The elections to all the state Assemblies, except in Goa, will be over by that date. So, I don’t think there will be any problem”.Budget 2012-2013
As 2012 is the leap year, the last working day of the month falls on February 29. There are reports that the government might postpone the date of presentation of the budget in view of assembly elections in five states — Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur.
Expectations from Union Budget 2012-13:
a) Relaxation in service taxes.
b) Tax reforms like implementation of GST and DTC.
c) Subsidy on Gas, Oil, Fertilizer, Food etc.
d) Subsidies in FDI norms in sectors like Retail, Media and BFSI etc.
According to the sources in the government, Union Budget 2012-2013 is likely to be presented in Parliament on March 19, 2012.
The sources also said that the Budget Session of Parliament is likely to start from March 12, 2012.
The Economic Survey and the Railway Budget will be presented, as usual, before the Union Budget.
The budget is being delayed due to assembly polls which will start in less than a month's time. Elections will take place in the five states of Manipur, Uttar Pradesh, Goa , Uttrakhand and Punjab . The upcoming assembly polls are considered to be the game-changer in more than one ways.
The polls dates are spread between January 30 and March 3. The results are likely to change the political balance for or against the government in the Lok Sabha and the Rajya Sabha.
It is expected that the results of Uttar Pradesh elections are likely to give more space to the budget makers, mainly Finance Minister Pranab Mukherjee and Prime Minister Manmohan Singh to initiate economic reforms that are stalled due to various reasons.
The country is going to witness polls that will be conducted for 690 assembly seats for which more than 13.77 crore voters are being wooed by various parties.
It is believed that after the UP election, Mulayam Singh Yadav's Samjwadi Party will come to the rescue of the Congress led United Progressive Alliance government to thwart off the pressure of crucial ally Trinamool Congress .
The Congress leaders think that it makes sense for the government to delay the budget to frustrate its dissenting ally's constant protests against UPA's economic reforms.
The ministry of heavy industry is seeking a Rs 6,000 crore incentive package in the forthcoming Union Budget to boost the manufacturing of electric and hybrid cars and two-wheelers in the country.
"There has been constant demand from the manufacturers of green vehicles for some incentives from the government. So, the ministry has sent a proposal to the finance ministry for a Rs 6,000 crore incentive package under the national council on electric mobility," an official from the ministry of heavy industry told Mail Today.
"The fund will be used for providing infrastructure support and also setting up research and development centres for electric and hybrid vehicles," the official added.
The ministry has also proposed a further customs duty reduction on lithium ion batteries and other imported parts which are used to produce these vehicles. The current level of five per cent duty adds to the cost of manufacturing electric vehicles.
Last year, the ministry of new and renewable energy (MNRE) had announced a subsidy of up to Rs 1 lakh on the ex-factory price of electric and hybrid cars produced in India but this incentive is scheduled to expire by March 2012.
In the 2011-12 Budget, the government had announced that it would set up a National Mission for Hybrid and Electric Vehicles to encourage the manufacturing and selling of eco-friendly vehicles .
The government had also eliminated import fees on hybrid parts coming into the country, while proposing to cut excise duty on the development and manufacturing of hybrid vehicle kits to five per cent from 10 per cent earlier.
"However, with many more auto companies expressing their interest in manufacturing electric and hybrid vehicles, the government is looking at more duty cuts and other incentives to encourage them," the government official added.
At present only Mahindra Reva is manufacturing electric cars in India. Despite the growth potential most of the auto manufacturers had stayed away from the Indian market as they feel that there is no infrastructure support in terms of charging stations.
Moreover, the Indian consumers are very price sensitive and no one is ready to pay a premium price for clean technology. However, with the cost of petrol shooting up and with no clear government policy over the current subsidy on diesel, many automakers, including Maruti Suzuki, Mahindra and Mahindra, Hero Honda, TVS Motors and some commercial vehicle manufacturers have expressed interest in producing such vehicle if the government offers incentives to support them.
The government had earlier cut the excise duty on conversion kits that make internal combustion engine cars into hybrids, from 10 per cent to five per cent.
The government had in November 2010 announced incentives for electric vehicle manufacturers of up to 20 per cent on the ex-factory prices of the vehicles subject to a maximum ceiling.
The cap on the incentives was Rs 4,000 for low-speed electric two wheelers, Rs 5,000 for high speed electric two-wheelers, Rs 60,000 for seven-seater three-wheelers and Rs 1 lakh for electric cars. However, the incentive was considered too small to lure the automakers.
Companies like Honda Siel and TVS Scooters have launched their electric and hybrid vehicles but received poor response from customers as the prices were much higher than the petrol variants of these vehicles.
NEW DELHI: Iron ore producers may get incentives in the next Budget for adding value to the mineral, a move aimed at encouraging its conservation for domestic use.
"The government may announce incentives for the iron ore miners to encourage more value-addition and pelletisation. The Steel Ministry has already sent a proposal to the Finance Ministry in this regard," a source said.
The government in the Budget for the current fiscal had raised the export duty on iron ore, both fines and lumps, to 20 per cent from five per cent and 15 per cent, respectively and fully-exempted exports of iron ore pellets from any duty.
Justifying the hike in duty, Finance Minister Pranab Mukherjee had said, "This (iron ore) is a natural resource which needs to be conserved," and added that exemption of any duty on pellets is "to encourage the value addition process for fines".
Pellets are produced in globules form from very fine iron ore and mostly used for the production of sponge iron. However they are also used in blast furnaces in some countries.
Sources said the government is considering providing tax- holidays to miners to encourage setting up pellet capacities. They, however, he did not go into the specifics.
Though India is the one of the top exporters of iron ore in the world, its pellet making capacity is nothing significant. Against the world's 388 million tonnes of pellet production in 2010, India's contribution was just 18 million tonnes.
The government's initiative has paid off as iron ore exports fell by nearly 30 per cent during the April-November period to just 40 million tonnes from 51 million tonnes during a year ago.
Meanwhile, the government further increased export duty on iron ore to 30 per cent towards the end of 2011.
Sources said around 25 million tonne pellet capacity is in the pipeline in the country and if government provides further incentives to the miners, more capacity would certainly come.
