28 February 2011

Budget 2011: Synposis by Anand Wadadekar

GENERAL:
 
Economy to grow at 9%, plus or minus 0.25% in 2012
Agriculture growth at 5.4%, industry at 8.1% in 2010-11
Agricultural credit limit raised to Rs 4,75,000 crore
Food inflation declined to less than half to 9.30%
Food inflation is a big concern
Economy has regained pre-crisis growth momentum
States to cut down fiscal deficit to 3% of Gross State GDP by 2014
Growth rate of services sector expected at 9.3%
Exports up 9.4% in 2010-11
FY2012 Divestment Target at Rs 40,000 crore
Removal of supply bottlenecks in food sector in focus in 2011/12
Food Security Bill to be introduced in this year
FY 2012 defence capital expenditure seen at Rs 69,199 crore
Allocation to Department of Justice increased 3 fold to Rs 3000 cr
Plan expenditure at Rs 4.14 lakh crore
To distribute 1 million Unique Identification (UID) cards per day shortly
Fiscal deficit down at 5.1% from 5.4%
Fiscal deficit seen at 4.1% in FY 13, 3.5% in FY 14
Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per cent

FINANCE:
 
FIIs allowed to invest in Mutual Funds and in 5-year unlisted bonds with minimum lock in period of 3 yrs
Plan to allow FII limit in infrastructure bonds to $25billion
FII limit in corporate bonds raised to $ 40billion
Plan to introduce Companies Bill in current session

Infrastructure spending to be raised by 23%
Priority home loan limit raised to Rs 25 lakh from Rs 20 lakh
Tax-free bonds worth Rs 30,000 cr proposed to boost infrastructure
To introduce self assessment in customs to facilitate fast clearance
General Sales Tax (GST) Bill to be introduced in the current session
To introduce Public Debt Management Bill in 2012; To set up independent debt management office
To provide Rs 200 cr grant to IIT Kharagpur, Rs 20 crore to IIM Calcutta
Banks to cover 20,00 villages for opening accounts in FY12
Have set up dedicated cell on transfer pricing monitoring
To amend Indian Stamp Act shortly
Gross Tax Receipts at Rs 9.32 lakh crore, up 25%
Tax sops of Rs 20,000 on Infra Bonds extended for one year
Revenue deficit for FY11 seen at 3.4%
 
DIRECT TAX:
 
Direct tax code will be effective from April 1, 2012; DTC after getting Standing Committee Report; Direct Tax Code likely to be passed by parliament next fiscal year
No Tax Return to be filed if TDS deducted by employer
Age for being classified as Senior Citizen cut to 60 years from 65 years
 
Corporate Tax reduced to 5%
Minimum Alternate Tax (MAT) raised to 18.5% of book profits
Surcharge on domestic companies cut to 5% from 7.5%
Foreign unit dividend tax rate cut to 15 percent for Indian companies
Special Economic Zones to come under MAT
 
Personal Taxation:
 
Individuals:
Income up to Rs 1.80 lakh: NIL tax
Income between Rs 1.80-5 lakh: Tax at 10%
Income between 5-8 lakh: Tax at 20%
Income above Rs 8 lakh: Tax at 30%
 
Senior Citizen: Minimum Tax Exemption limit raised to Rs. 2,50,000 from Rs. 2,40,000
women Citizens: Remains unchanged; i.e. at Rs. 1,90,000
New category of very senior citizens introduced under which Senior Citizens above the age of 80 years to get Rs. 5,00,000 as minimum tax exemption
 
Rs 20,000 deduction made available for investment in Infrastructure Bonds extended for one year. This is above Rs. 1,00,000 80C exemption
 
INDIRECT TAX:
 
Service Tax rates unchanged at 10%;
Service tax to cover more areas:
Service tax net extended to include health check-ups
Domestic travel to pay Rs 50 service tax, Rs 250 on international travel
Service tax on hotel accomodation above Rs 1500 per day
Legal representation for businesses under service tax
To tax life insurance service providers
 
Peak excise duty unchanged at 10%; To withdraw 130 items from exemption under Central Excise; Base rate on excise duty raised to 5% from 4%
No change in peak customs duty rate i.e. customs duty remains unchanged at 10%
No change in CENVAT rates
 
 
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Disclaimer: This Synposis prepared by Anand Wadadekar, has been prepared with utmost care and accuracy, however errors or omissions cannot be fully ruled out and the Author is not responsible for the same. The recipient is advised to go through the original Finance Bill if required.
Source: The Economic Times, Rediff.com

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