Budget Highlights, Income tax exemption limit hiked to Rs. 1.80 lakh

Bellevision Media Network

New Delhi, 28 February 2011: In a relief provided to the salaried class in Union Budget 2011-12, Finance Minister Pranab Mukherjee on Monday hiked the individual taxpayers’ Income Tax exemption limit from the current Rs 1.60 lakh to Rs 1.80 lakh. This will translate into an annual savings of Rs 2,000 on Income Tax.

 

The exemption limit for senior citizens has also been increased from the current Rs 2,40,000 to Rs 2,50,000, while senior citizens’ age limit has been reduced from 65 years to 60 years. A very senior citizens category has also been created for people with age 80 years and above and they will get a higher exemption limit of Rs 5 lakh. The exemption limit for women tax payers remains unchanged at Rs 1,90,000.

 

The tax sop of Rs 20,000 investment in infrastructure bonds, which results in a tax saving of Rs 2,000, has also been extended by a year. Pranab however told the Lok Sabha that all other tax rates and slabs for personal income tax would continue to remain same. He said the idea was to make taxes moderate, payment simple, and collection easy.

 

 

The Finance Minister also raised the housing loan limit to Rs 25 lakh for priority sector lending. Pranab told the Parliament that the government is also liberalising scheme of interest subversion of 1% on home loan by including loans upto 15 lakh for houses that cost upto Rs 25 lakh. He further announced Rs 3000 crore for Rural Housing Fund.

 

For the corporate sector, the Finance Minister reduced surcharge of 7.5% to 5%. He however hiked direct tax from 18% to 18.5% for corporate. Pranab said he was not proposing any roll back in either the service tax or excise duty, which both currently stand at 10%.

 

Pranab hiked the service tax on each domestic air ticket by Rs 50 and on international ticket by Rs 250. The Finance Minister also doled out sops for the agriculture sector and proposed Rs 7,860 crores for Farmer Development Program. The minister further proposed to raise farm loan target to Rs 4.75 lakh crores in the next fiscal year and said the government would also provide additional 3% interest benefit on some farm loans.

 

Pranab said inflation has remained above the comfort level for most part of the current fiscal and is another focus area. The overall inflation at 8.23% is higher than the comfort level of the Reserve Bank at 5-6%, he said. The minister added that food inflation had moderated to 9.3% in January this year from 20.2% in February 2010.

 

The Finance Minister further said that the new Companies Bill could be introduced in the current session of Parliament. On the Direct Tax Code, Pranab said the Bill was likely to be passed by Parliament in the next financial year after the Standing Committee’s report is received. GST, he assured, would roll out from April 1, 2012.

 

On the disinvestment front, Pranab promised to maintain the tempo and said the government had set a Rs 40,000 crore target this fiscal. The minister said discussions were on to further liberalise FDI Policy, while announcing that FIIs would be allowed to invest in mutual funds while their investment limit in corporate bonds to be hiked to USD 40 billion.

 

Budget Highlights

 

Income Tax

 

Idea to make tax moderate, payment simple, collection easy
Rs 1.80 lakh exemption for general tax payer; will accrue benefit Rs 2000
Senior citizens age limit reduced from 65 years to 60 years
Amount of exemption on senior citizens increased from Rs 2,40,000 to Rs 2,50,000
Very senior citizens category created for 80 years and above
Very senior citizens to get higher exemption limit of Rs 5 lakh
Expect net revenue loss of Rs 115 bn due to tax exemptions

 

Corporate Taxes

 

Corporate surcharge reduced to 55 from current 7.5%
Minimum Alternate Tax raised to 18%
Surcharge of 7.5 reduced to 5% on corporates
Direct Tax raised from 18& to 18.5% on corporates
MAT introduced on developers of SEZ
Tax sop on infra bonds investment increased by a year

 

Black Money

 

Five-fold strategy to deal black money
Discussions on double taxation avoidance agreements
1200 cases have been filed under the Money Laundering Law Money Laundering Legislation’s scope expanded
Strength of ED increased three-fold

 

Service Taxes

 

Ambit of service tax increased
Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor
Service tax on some category of hospitals, diagnostic tests
Net revenue loss on account of taxes and duties will be Rs 200 crore
Some legal services to be brought under service tax net
Service by an individual to another individual exempted
Service tax to result in a revenue gain of Rs 4,000 crore

 

Indirect Taxes

 

Peak rate of customs duty maintained at 10 per cent in view of the global economic situation
No change in CENVAT rates
Nominal one per cent central excise duty on 130 items entering the tax net
Basic food and fuel and precious stones, gold and silver jewellery will be exempted
Net loss from direct tax proposals estimated at Rs 11,500 crore
Central government debt in proportion to GDP will be 44.2 per cent in 2011-12
Standard rate of central exercise duty maintained at ten per cent
Excise and customs duty proposals to result in the net gain of Rs 7,300 crore
Net tax to Centre will be Rs 6,64,457 crore. Non-tax receipts pegged at Rs 1,25,435 crore
Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per cent
Excise and customs duty proposals to result in the net gain of Rs 7,300 crore
Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent
Basic customs duty on raw silk reduced from 30 to 5 per cent
Export duty rates on iron ore unified and kept at 20 per cent ad valorem
To Retain Factory Tax Rate At 10%
Iron-Ore Export Tax Raised To 20%
Changes In Excise Tax To Result In INR73B Gain Next FY
Stainless Steel Scrap Exempted From Import Tax
To Bring More Businesses Under Service Tax Ambit
To Raise Service Tax On Domestic Air Travel By Rs 50 per ticket
To Raise Service Tax On International Air Travel By Rs 250 Per Ticket
Propose Additional Tax Deduction Of INR20,000 For Infra Investments
Hike in service tax on domestic and international travel
No roll back in service tax, to stay at 10%
No roll back in excise duty, to stay at 10%
Proposal to introduce self-assessment of customs duty wherein importers and exporters will themselves assess payment of duty
A new scheme to be introduced for refund of service tax on lines of drawback of duties
Tax free bonds of Rs 30,000 cr to be issued for infrastructure development.
Tax free bonds to cover Warehousing Corporation, NHAI, IRFC and HUDCO

 

Growth

 

Could have done better
Growth broad based
Double digit growth in services
GDP growth at 8.2% last year
GDP growth to be 8.6% in FY 11
GDP growth to be around 9% in FY 12
Industry has grown at 8.1%
Services sector had grown at 9.6%
Exports grew at 24.1% in FY 11
Imports grow at 11.6% in FY11

 

Industry

 

Manufacturing share in GDP from 16% to 25% in next ten years
Indian automobile market is the second fastest growing in the world
Self-assessment in custom to be introduced
Mega clusters scheme for leather products – 7 new cluster to be developed
Jodhpur to be developed as handicraft mega cluster

 

Agriculture

 

Agricultural rebound
Idea to improve deliverance, PDS and governance
Food inflation 20.2% in Feb 2010 to 9.3% in January 2011
Need to ensure private investment
In 20-11, agriculture grew by 5.4%, industry by 8.4% and services by 9.6%
Agriculture has grown at 5.4%
Propose To Provide Rs 300 crore To Boost Output Of Pulses
To Provide Rs 300 crore To Increase Palm Oil Output
To Provide Rs 300 crore To Raise Coarse Cereal Output
Food grain stock in central pool 47500 metric tonnes
New storage capacity of 150000 metric tonne to be developed
Cold storage – 24 facilities have been sanctioned, 107 new facilities have been approved
Cold storage to be identified as infrastructure subsector
Propose to promote organic farming methods
Have to sustain farm productivity in long term
To give 3 b rupees to up output of nutri-cerials
3 bn rupees for animal-based protein production
3 bn rupees to bring 60,000 ha under palm oil plantation
To launch national protein mission with 3 bn rupee corpus
3 bn rupees for production of higher millets
To brovide 3 bn rupees to raise vegetable production
4 bn rupees to eastern states for green revolution
See 16.5 mn tn rpulses output this year
To give 3 bn rupees to promote pulses, production, marketing
To set up 5 bn rupee women self help development fund
Farm development plan allocation hiked to 78.6 bn rupees
Removing bottlenecks in fruits, vegetables, poultry supply
Considering Nutrient Based urea subsidy policy
Rs 7860 crore For Farmer Development Program
FM proposes 15 mega food parks
To Raise Farm Loan Target To Rs 4.75 lakh crore Next FY
To Provide Additional 3% Interest Benefit On Some Farm Loans
To Set Up Additional 4 Mln Ton Foodgrain Storage Facilities By March 2012
Capital investment in fertiliser production to be considered as infrastructure sub-sector
Existing interest subvention scheme on short term farm loans at 7 % interest to continue
Credit flows to farmers raised from Rs 3.75 lakh crore to Rs 4.75 lakh crores
Government proposes to promote organic farming methods to enable farmers get best from their land
Allocation under Rashtriya Krishi Vikas Yojana to be raised from Rs 6755 crore in the current year to Rs 7860 crore
Rs 300 cr provided to promote pulses cultivation in rain-fed areas, another Rs 300 cr to promote farm product cultivation

 

Fiscal Consolidation

 

Development needs to be inclusive
Service sector continues to grow in double digits
Resources not a major concern in medium term
Quality of outcome needs to improve
Leakages need to be plugged in schemes
Have to fight corruption collectively
Taking steps to simplify tax procedures
This Budget a transition towards more transparent economy in India
Stronger fiscal consolidation needed
Economy showed remarkable resilience to domestic and international shocks
Taking steps to simplify tax procedures
Economy showed remarkable resilience to domestic and international shocks
The 13th finance commission has worked out a fiscal consolidation roadmap
Combined states debt target of 23.4% of GDP
Public Debt Management of India Bill in next financial year
Direct Tax Code code enactment in 2011-12, effective from April 2012
GST decision have to be taken in consonance with states
Areas of divergence have been narrowed on GST
Public Debt Management Agency Bill soon
Work on model for GST roll out
GTC, GST will improve governance
Indian economy on pre-recession growth trajectory
Budget 2011-12 as transition towards more transparent and result-oriented economic management
Direct transfer of cash subsidy for kerosene, LPG and fertilizer to BPL
Nandan Nilikani committee to look at direct transfer
Some divestment decisions rescheduled
GST roll out from April 1, 2012
Considering news fertilizer subsidy policy
Need To Ensure That Private Investment Revival Is Sustained/li>
This FY Current Account Deficit Near Previous Year`s Level
Govt To Retain At Least 51% Ownership Of State-Run Companies
Discussions On To Further Liberalise FDI Policy
Need to ensure private investment
Development needs to be inclusive
Service sector continues to grow in double digits
Resources not a major concern in medium term
Quality of outcome needs to improve
Leakages need to be plugged in schemes
Corruption needs to be fought unitedly
Rs 100 cr equity fund for microfinance
Considering Nutrient Based urea subsidy policy
Housing loan limit raised to Rs 25 lakh for priority sector lending
India microfinance fund of Rs 1000 cr
Women self help group development fund with a corpus of Rs 500 cr
Home loan priority sector lending: Liberalising scheme of interest subversion scheme of 1% on home loan by including loans upto 15 lakh for houses that cost upto Rs 25 lakh
1% in interest subvention on housing loans up to Rs 15 lakh
Difference in wholesale and retail food prices is not acceptable
Portfolio investment would be permitted in SEBI registered mutual funds from foreign subscriptions
Direct Tax Code Bill likely to be passed by Parliament next financial year after getting Standing Committee report
Government to keep up tempo of disinvestment process
New Companies Bill in current session
Rs 6000 cr to capitalise public banks
Cash Subsidy Details For Fertilizers, Fuels By June
To Extend Interest Rate Benefits On Some Housing Loans
Propose To Provide Rs 300 crore To Boost Output Of Pulses
To Provide Rs 300 crore To Increase Palm Oil Output
To Provide Rs 300 crore To Raise Coarse Cereal Output
India microfinance fund of Rs 1000 cr
Women self help group development fund with a corpus of Rs 500 cr
Home loan priority sector lending: Liberalising scheme of interest subversion scheme of 1% on home loan by including loans upto 15 lakh for houses that cost upto Rs 25 lakh
15 more mega food parks
Food grain stock in central pool 47500 metric tonnes
New storage capacity of 150000 metric tonne to be developed
Cold storage – 24 facilities have been sanctioned, 107 new facilities have been approved
Cold storage to be identified as infrastructure subsector

 

Infrastructure

 

Rs 214000 cr for infrastructure, 23% higher than current allocation
IIFC to finance infrastructure targets, to disburse 25000 cr by March 2012
Tax free bonds worth 30000 cr to finance infrastructure
GoM to consider all environmental concerns
Rs 100 cr equity fund for microfinance
Housing loan limit raised to Rs 25 lakh for priority sector lending
Delhi metro phase three, Mumbai metro line 2 to be taken up
Financial assistance to other metro projects
To give 60 bn rupees for PSU banks to maintain CRAR norms
To create 1 bn rupees equity fund for micro financial companies
RDIF corpus increased to create warehousing capacity
Infra sector FII cap for bonds with 5 yr residual maturity
Infra spending to be raised by 23%
Indian micro finance equity with SIDBI to be formed at Rs 100 crore
State innovation councils to be set up
National mission for hybrid electric machines

 

Rural

 

Handloom weavers – 3000 cr to NABARD for handloom cooperative societies
To give 30 bn rupees to NABARD for handloom weavers
NABARD capital base to be strengthened with Rs 10,000 cr
The rural infrastructure development fund corpus to be raised Rs 18000 cr from the present 16000 cr
Rs 3000 crore for Rural Housing Fund
Proposal to increase rural housing fund to Rs 3,000 crore
Rs 10,000 croe for rural telephoney
NREGA wages to indexed to inflation
Increased outlay in social sector
RS 58,000 cr for Bharat Nirman
Government plans to create a Women Self Help Group development fund with a corpus of Rs 500 crore
Anganwadiu workers salary increased from Rs 1500 to Rs 3000 per month

 

Health

 

Unorganised sector workers in hazardous industries to be covered under health scheme

 

Banking & Finance

 

New 2000 cr to be covered this year
Indira Gandhi National Old Age Pension scheme age reduced to 60 years from 65 years
Those who are 80 years and above the pension amount increased from 200 to Rs 500
Financial sector reforms to move forward
Insurance amendment bill, LIC bill and Pension Development Authority Bill in current session
Banking Laws amendment Bill, SBI subsidiaries bill and BIFR bill also in current session

 

Green Initiatives

 

Rs 200 cr for national clean energy fund
New projects under nation Ganga River authority
Rs 200 cr for clean up some rivers and lakes other than Ganga

 

Backward Regions

 

Backward region fund increased to 8900 cr
Local bodies can spend amount as per local needs

 

Plan

 

National food security bill to be introduced this year
58000 cr for Bharat Nirman Yojna
Broadband connectivity to all panchayats in three years
New scheme for 22 Lakh anaganwadi workers
MNREGA wages to be indexed with inflation

 

Education

 

Rs 52000 crore for education
52057 CR for education, increase of 24% over the current year
21000 cr for sarva shika yojna up from Rs 15000 cr currently
National knowledge network will link 1500 institutes of higher learning by March 2012
National innovation Council under Sam Pitroda
50 cr each to Aligarh Muslim University centres coming up in Murshidabad and Malappuram
Rs 20 cr for Rajiv Gandhi National Youth Development Institute
Rs 10 cr for Delhi School of Economics
Rs 10 cr for Madras School of Economics
SC/STs students to get scholarship for class 9th and 10th
Relaxation in exit age for BLP pension scheme
To Spend Rs 267.6 Bln On Health Next Fiscal Year
To Spend Rs 1.64 lakh crore On Defense Next FY
Rs 9 lakh ex gratia for disabled defence personnel
Rs 30,000 cr tax free bonds for infratructure
Integrated development programme for Naxal affected areas
Old age pension to persons of over the age of 80 raised from Rs 200 to Rs 500
Rs 21,000 cr for literacy project Sarva Shikha Abhyan
Special allocation of funds for cleaning of rivers other than the Ganges
Relation in e-filing on taxes for small tax payers
Rs 25-30 crore for development in Naxal area
Budget allocation of Rs 100 cr for Ladakh and Rs 150 cr for Jammu for implementation of projects identified by taskforce
Educational scholarships for SC/ST and needy
National Knowledge Network by 2013
Rs 54 crore each for AMU centres
New international award for Rs 1 cr in memory of Tagore

 

Estimates and Fundamentals

 

Gross tax collections at Rs 9.32 lakh
Fiscal deficit for current year at 5.1%; lower than estimate
Fiscal deficit for next fiscal at 4.6%
Total plan expenditure will go up 100 per cent in nominal terms in the next year; first time in planning history
Revenue deficit fixed at 2.3 per cent in revised estimates of 2010-11 and 1.8 per cent in 2011-12
Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per cent
Rs 300 cr to be provided as assistance to states for modernising and stamps and registration administration
Expect Revenue Deficit To Be 3.4% Of GDP This FY
Expect Net Revenue Deficit To Be 1.8% Of GDP Next FY
Net Market Borrowing To Be INR3.43 lakh crore Next Fiscal Year
Expect Net Revenue Loss Of INR115 Bln Due To Tax Exemptions
Propose Additional Tax Deduction Of INR20,000 For Infra Investments

 

- Agencies