Overview of the Budget 2012-2013

        

Amidst much speculations and expectations, the Union Budget for the year 2012-2013 was released in the month of March click here. At the time when the people seek the much needed support for financial security, the budget proved hard on the pockets of the ‘Aam janata’ of India as it has imposed additional indirect taxes. The imposition of these taxes, that too with sky rocketing inflation most certainly has failed to live up to the ‘aam aadmis’ expectations. The increased indirect taxes will be pushed by the manufacturers and the service providers to their retail consumers thus proving to be hard on the consumers pocket. It came up with a radically exceptional provision on ‘Retrospectively’ amending the tax laws and the applicability of the same. The issue will be settled if the Parliament passes the amendments and makes it a ‘Law of Land’. The Budget proposed a retrospective amendment of the provisions of the Income tax act. The provisions of Section 2, 9, 195 of the Income Tax act has been amended to include ‘cross border’ transactions to be made taxable. This was one  of the most critical parts of the Budget as it has given more power to the legislation and that the independence of the judiciary is threatened as the proposed amendments are in clear contrast with the decision  of the Supreme Court on a celebrated case.

The Government has hiked the indirect taxes like the Service Tax, by including all services except 17 in the negative list in the net along with the 2 percentage point increase in the rate of taxation that would yield an additional amount of Rs.  18,650 crore & the hike in the Excise duty in most of the items by 2 percentage points.

The Budget has encouraged the FDI in the Defense, infra sector. Rs. 15000 crore was allocated to revive the PSUs with an objective of ensuring increasing and stable contribution of the PSUs in the economy.

The Union Budget 2012 has been industry, growth centric. It focuses much on revival of the economy and providing social security from the turbulent global financial conditions. The increased indirect taxes gives the government the much needed leverage to reduce its fiscal deficit and achieve its goal of higher growth rate.