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Monday, 16 April 2012

Detailed Union budget 2012-13(4)

7.Rajiv Gandhi Equity Saving Scheme:To allow income tax deduction to retail investors on investing in equities.

The government has introduced a tax exemption scheme for equity markets. Currently , short term capital gains tax is levied at 15% on all listed securities and units of equity-oriented funds. 
Under this Scheme , a 50% deduction on short term capital gains tax will be allowed for new investors in the equity market upto an annual investment limit of Rs.50,000 means if equity shares or units of equity-oriented funds are held for less than 12 months, deduction of 50% of gains will be allowed and the balance will be taxed at gradual rates of 5%,10% and 15% depending on the income of the assessee...
Tax payers with an income of up to Rs.10 lakhs per annum will be eligible for it.
Just like ELSS, your money will be locked in for three years.
Further clarification is needed on how the government will ensure that your equity investments are locked -in for three years and whether premature redemptions will be allowed under special circumstances or not.

8.Rs.15,888 crore to be provided for capitalization of public sector banks and financial institutions.

 On 15 November 2011, the combined market capitalization of the 24 public sector banks was Rs.311877 crore. As against this the market capitalization of 14 private banks was 32,1613 crore.
This is a reversal of the position at the beginning of 2011. As on 1 April 2011 the total market-cap of Government owned banks was Rs.439600 crore much higher than the Rs.374218 crore for private banks.
There exists larger social burden on the public sector banks because of which they have had to restructure large loans and NPAs.

9.A central "Know you customer" depository to be developed.

Know Your Customer policies are becoming increasingly important globally to prevent identity theft, financial fraud,money laundering and terrorist financing.
KYC procedures also enable banks to know/understand their customers and their financial dealings better .

Banks should frame their KYC policies incorporating the following four key elements.

1.Customer Acceptance Policy(CAP)
2.Customer Identification Procedures(CIP)
3.Monitoring of Transactions
4. Risk Management.
Remaining habitations to be covered
To be extended to more habitations
Ultra small branches to be set up in Swabhimaan habitations.

Swabhimaan is a banking project launched to bring banking services to vast un banked rural areas in the country. 
It was launched on 9th February 2010. The government has set a target of covering 73,000 new habitations, with population of 2000 and above under the banking services by March 2012.

Tuesday, 10 April 2012

Detailed Union budget 2012-13(3)

5.Rs.30,000crore to be raised through disinvestment.

Disinvestment: Disinvestment is an action of government
Selling or liquidating an asset or subsidiary
The decision of a company not to fill up again the reduced numbers of capital goods.

6.Efforts to reach broad based consensus on FDI (Foreign Direct Investment) in multi-brand retail.

What is FDI?

FDI is direct investment by a company in production located in another country.It may be either by buying a company in the country(or) by expanding operations of an existing business in the country.
India is the second most important FDI destination after China during 2010-12. The sectors which attracted higher inflows were services,telecommunication, construction activities and computer software and hardware.
Mauritius,Singapore, The US and the UK were among the leading sources of FDI.

The world's largest retailer Walmart has termed India's decision to allow 51%. FDI in multi-brand retail as a first important step.However this decision of the Government is currently under suspension due to opposition from multiple political quarters.
FDI provides an inflow of foreign capital and funds,investment in addition to an increase in the transfer of skills,technology and job opportunities...