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Markets gave thumbs-down to finance minister P Chidambaram's Budget 2013-14, with BSE benchmark Sensex nosediving 291 points to close below 19,000 level as FII tax issues and new surcharge on domestic corporates left investors disappointed.
Aiming to "entice" a large number of assessees to return to the tax fold, the government today proposed a one-time scheme called 'Voluntary Compliance Encouragement Scheme' for service tax defaulters.
Defence minister AK Antony said on Thursday finance minister P Chidambaram had done a good job in the union budget.
Boosting domestic growth is his mantra. But global icons - spanning generations - on Thursday became the mascots of finance minister P Chidambaram's arguments, as he tried to convince skeptics that the union budget would satisfy the aam aadmi without spooking investors.
The last year's reforms measures, particularly the capping of the fuel subsidy, had seen many Congress leaders expressing anxiety to the party brass over the political fallout.
The central assistance to Delhi has been increased to Rs. 1,143 crore ($213.187 million) in the 2013-14 budget presented today, a 27% hike from the last year's allocation.
Global rating agency Standard & Poor's on Thursday said the Union Budget for fiscal year 2013-14 will have no impact on the country's sovereign credit rating.
The government on Thursday proposed an increase in the surcharge on dividend distribution tax from 5% to 10%. This means it will become more expensive for companies to distribute dividends.
Focussing strongly on infrastructure development, the budget has proposed setting up of two ports in West Bengal and Andhra Pradesh, which would increase the cargo handling capacity in the country.
Except for offering concessions for those who earn between Rs. 2-5 lakh and a 10% surcharge on India's super-rich whose annual taxable income is more than Rs. 1 crore, the finance minister did not tinker too much with existing tax rates as well as slabs.
In a bid to bring clarity in tax laws, a stable tax regime, a just tax administration and a fair mechanism for dispute resolution, and an independent judiciary, finance minister P Chidamabaram has proposed the setting up of a Tax Administration Reform Commission.
The Direct Taxes Code (DTC) Bill, a plan to modernise and simplify India's complex 50-year-old tax regime, will be introduced in the current budget session of Parliament.
Personal income tax slabs, which have remained unchanged for 17 years, have survived four governments and four finance ministers, and have got another extension.
Finance minister P Chidambaram, who had to do a strict balancing act of generating revenue on the one hand and offer sops to revive the investment climate on the other, proposed to increase the surcharge from 5% to 10% on taxable incomes of more than Rs. 10 crore per year earned by domestic firms.
In a bid to increase the penetration of insurance products in semi-urban and rural areas, the finance minister announced various measures, such as allowing banks to act as brokers for the products of insurance companies, and permitting banking correspondents to sell micro-insurance products.