The country's economic growth, as per official estimates, decelerated to 5 percent and 6.2 percent in the past two years, from 8.6 percent and 9.1 percent in the two years preceding them.
This was the reason why the finance minister began his speech by seeking the support of stakeholders in helping navigate the Indian economy through the current crisis. He said getting back to high growth rates of over 8-9 percent seen some years ago was the main challenge.
"We have done it before. We can do it again," Chidambaram said in the budget before the general elections slated next year. "Whatever may be the final outcome, growth is below potential. But there is no need for gloom." For the aam admi the finance minister did not tinker with the Income Tax slabs.
Chidambaram however said a surcharge of 10% would be imposed on those earning over Rs 1 crore in a year, for 2013-14. This would be applicable for both individuals and corporates.
He announced that housing loan for first time loan takers of up to Rs 25 lakh would get additional deduction of interest of up to Rs 1 lakh in 2013-14. The additional exemption would mean tax benefit gets raised from Rs 1.5 lakh to Rs 2.5 lakh.
He also focused on savings by households and has comeout with schemes to encourage the saving habits.
With the ensuing general elections in mind, the finance minister also significantly enhanced the outlays for areas such as women development, health, Scheduled Caste welfare, farm credit, malnutrition, rural job scheme, water and urban development.
He also announced a new public sector bank exclusively for women and a special women's fund of Rs 1000 crore.
Besides, outlays were enhanced for human resource development, midday meal scheme, food security and integrated child development, while new schemes were announced to promote micro nutrients and encourage the use and repayment of farm credit.
The finance minister gave a lot of attention to infrastructure development and said the ensuing year will kick-start the process to invest $1 trillion in this key area during the 12th Plan period (2012-13 to 2116-17).
His measures included a regulatory authority for the road sector, scheme to spruce up the financial health of state-run power utilities and issuance of tax-free bonds.
- No changes in personal Income Tax slabs
- Surcharge on super rich
- Surcharge of 10% for income of Rs 1 cr or more per annum for one year. There are 42,800 persons in the country who admitted to a taxable income exceeding Rs 1 cr per year
- Surcharge to be applicable for individuals and corporate
- 1% TDS for property sale worth more than Rs 50 lakh; agri land exempt
- 5.5% tax to GDP ratio for direct tax
- 4.5% tax to GDP ratio for indirect tax
- Tax administration reform commission to be set up to strengthen the system
- Tax credits of Rs 2000 to every person who has total income upto Rs 5 lakh
- Donations to National Children's Fund will be eligible for 100% tax deduction
- Long-term infra bonds also eligible for tax deduction; additional Rs 1 lakh deduction for home loans
- TDS on value of immovable property as transaction on immovable properties are usually undervalued
- Extends tax cuts benefits to Rupee Infrastructure Funds
- Educational Cess to continue at 3 %
- Securitization Trust income to be exempt
- Tax credit of Rs 2000 on incomes between Rs2-5 lakh
- Tax on Royalty for services provided abroad increased by 10%
- CTT on non-commodities futures at 0.1%
- Surcharge on DDT doubled to 10%
- No change in peak rate for CD non-agri products
- Eco friendly concessions to be prolonged till 2015
- Leather and goods duty reduced to 5%
- Luxury cars import duty at 100%
- Yachts duty at 25%
- Luxury motorcycle duty at 75%
- No change in customs duty of 10%
- No change in excise duty or service tax
- Precious, semi-precious duty reduced
- Luxury motor vehicles to be taxed more
- Baggage rules to permit bringing jewellery duty free limit raised to Rs 50000 for males and Rs 1 lakh for females