The countdown has begun for the biggest business and economic event of the year, the release of India’s annual budget at the end of February, and Finance Minister P. Chidambaram has a tough job on his hands. With general elections a year away, he must please voters, boost growth and control deficits.
In the last five years, the finance minister has always relaxed income tax slabs — by either increasing the basic exemption limit or widening the tax slabs. As far as markets go, the 2009 budget day was the worst for stocks as the index fell around 950 points during trade. However, the focus has always been on the government’s fiscal deficit targets, which have hovered around the 5 percent mark in recent years.
As India’s economy battles slowing growth, investors will take cues from Chidambaram’s plans to rein in spending and boost growth. Here’s a look at budgets between 2008 and 2012 — the hits, the misses and how they affected the common man.
FINANCE MINISTER: Pranab Mukherjee
India projects a decline in the fiscal deficit to 5.1 percent of GDP in 2012/13. GDP expected to grow at 7.6 percent.
Controversial proposal to retrospectively tax cross-border transactions in which the underlying assets are located in India. The move amounts to a push to get foreign companies that have invested millions in India to pay more taxes. Or in India’s words, it’s supposed to fight “counter aggressive tax avoidance schemes”.
Service tax rate raised to 12 percent from 10 percent, double basic customs duty on gold.
No change in corporate tax rates. Personal Taxation: minimum threshold of income not chargeable to tax increased to 200,000 rupees. The 30 percent tax slab applicable on income above 10,00,000 rupees.
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