28th Feb 2013

What is a budget?

• A Plan• A Limit• A Schedule• A Reality Check• An Allocation

Budget – a definition“A planned expression of money”

For a defined activity Shows;• Income & Expenditure• Total estimated costs• Defined period of time

More definitionsBudget = Quantitative expression of a plan

Budgets involve – Planning &

Control

Forecasting & Planning

Control & Evaluation

Budgeting in ContextHistoric Information

Evaluating Performance

Controlling operations

Forecasting & Planning

Plus Effects of Outside Environment

Future

Information Current

Inform

ation

Current Operating Data

A budget helps

Want

Need

can

Budget

Types of budgetingThere are three common budgeting methods:

• Top-down Budgeting• Bottom-up Budgeting• Iterative Budgeting

Top Down Budgeting

Top-Down Budgeting is the term given to a budgeting process based on estimating the cost of higher level tasks first and using these estimates to constrain the estimates for lower level tasks

Bottom Up Budgeting Sometimes called Zero Based Budgeting

• Bottom-up budgeting begins with identifying all the constituent tasks that are involved in implementing a project and working out the resources and funding required by each

Iterative BudgetingIterative – to repeat or do again

A combination of top-down and bottom-up budget building

Higher project level estimated (top down)Lower level costed (bottom up)The two costs negotiated and reconciled

Budgetary Control

The ability to control anticipated

expenditures for your project using a

project cost budget.

Features of an effective budget

1. Accurate forecasting2. Based on organisational goals3. Information is timely and accurate4. Formed with multilevel input5. Regular reviews are built-in

Tax meaning A tax (from the Latin taxo; "I estimate") is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.

Objectives of Taxation

• Goals of taxation – Foster economic and social goals of a government

• Goals include:– Raising revenue– Redistributing wealth– Stabilizing prices– Full employment– Home ownership – Charitable contributions

Classification of

Taxes

Classification of Taxes• (1) According to the• incidence of tax• (a) Direct Tax• (b) Indirect Tax• (2) According to the • percentage of income• being taxed• (a) Progressive Tax• (b) Proportional Tax• ( c ) Regressive Tax

Direct Tax

• Tax on individuals directly

Tax burden cannot be shifted to other people

Examples of Direct Tax

Property TaxProfits Tax

Estate Duty

Salaries Tax

Indirect Tax

• Tax on goods and services

• Tax burden can be shifted to other people

Producers

Consumers

Indirect Tax

Examples of Indirect Tax

Rates

Entertainment Tax

Betting Duty

Motor Vehicles First Registration Tax

Stamp Duties

Tax on Alcoholic Liquor

Personal Tax

“No changes in personal Income

Tax slabs”

Normal Rates of taxWhere the total income does not

exceed Rs. 2,00,000/-.Nil

Where the total income exceeds Rs. 2,00,000 but does not exceed Rs.

5,00,000/-

10 per cent of the amount by which the total income exceeds

Rs.2,00,000/-

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs.

10,00,000/-.

Rs. 30,000/- plus 20 per cent of the amount by which the total income

exceeds Rs. 5,00,000/-.

Where the total income exceeds Rs. 10,00,000/-.

Rs. 130,000/- plus 30 per cent of the amount by which the total income

exceeds Rs. 10,00,000/-.

Rates of tax for an individual, resident in India and of the age of sixty years or more but less than eighty years at any time

during the financial year:

Where the total income does not exceed Rs. 2,50,000/-.

Nil

Where the total income exceeds Rs. 2,50,000 but does not exceed Rs.

5,00,000/-.

10 per cent, of the amount by which the total income exceeds Rs.

2,50,000/-

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs.

10,00,000/-.

Rs. 25,000/- plus 20 per cent of the amount by which the total income

exceeds Rs. 5,00,000/-.

Where the total income exceeds Rs. 10,00,000/-.

Rs. 125,000/- plus 30 per cent of the amount by which the total income

exceeds Rs. 10,00,000/-.

In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the

financial year

Where the total income does not exceed Rs. 5,00,000/-

Nil

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs.

10,00,000/-

20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-

Where the total income exceeds Rs.10,00,000/-

Rs. 1,00,000/- plus 30 per cent of the amount by which the total income

exceeds Rs.10,00,000/-

Other Major Direct taxes in budget 2013-14

Personal Tax• 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 • Surcharge to be applicable for individuals and corporate • 1% TDS for property sale worth more than Rs 50 lakh; agri land exempt • Tax credit of Rs 2000 on incomes between Rs2-5 lakh • 5.5% tax to GDP ratio for direct tax • Tax administration reform commission to be set up to strengthen the system

• Our tax to GDP ratio is very low • Should reclaim 11.9% Tax-GDP ratio in short-term • There are 42,800 persons in the country who admitted to a taxable

income exceeding Rs 1 cr per year

• 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 on Royalty for services provided abroad

increased by 10%

Corporate Tax

• Firms that invest Rs.100 cr or more in machinery can deduct an investment allowance.

• Surcharge increased to 10% on domestic companies.• For foreign companies, surcharge is increased from 2 to 5%.• Infrastructure tax-free bond of Rs.50,000 crore in 2013-14• Rs.5,000 crore to NABARD to finance construction for

warehousing.• TDS at 1% on value of transfer of immoveable properties

over Rs.50 lakh

Indirect Taxes

• No change in peak rate for Customs Duty on non-agri products• • Leather and goods duty reduced to 5%• • Luxury cars import duty at 100% (75%- 100%) , Motor Cycle 800cc

will go up to 60% to 75%• • Yachts duty at 25%• • No change in customs duty of 10%• • No change in excise duty or service tax of 12%

• 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 • Tax on SUVs increased from 27% to 30%; taxis exempt • Excise duty on set top box increased • 6% duty on mobiles costing more than Rs 2000 • Excise on service tax on all air-conditioned restaurants

• Handmade carpets exempt for excise duty • Increase in excise duty on cigarettes by 18%

• Excise on readymade garments reduced

• Excise on Service Tax defaulters from 1-10-2007 can submit tax without being penalised or interest charged

• Advocates need for GST

• 4.5% tax to GDP ratio for indirect tax

IMPACTS

No changes have been made to the existing tax slabs this year.

Rs.2,000 Tax credit for people income upto Rs.5 lakh

Pay more to eatPay more to talkImport duty on precious stones down from 10%

to 2%