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Budget 2011: I-T exemption limit hiked

New Delhi: 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

Personal 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
  • 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%
  • 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
  • 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
  • Agriculture and Inflation

  • 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
  • Farm

  • 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
  • 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 terest 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
  • Manufacturing share in GDP from 16% to 25% in next ten years
  • GoM to consider all environmental concerns
  • Indian automobile market is the second fastest growing in the world
  • 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
  • Delhi metro phase three, Mumbai metro line 2 to be taken up
  • Financial assistance to other metro projects
  • 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
  • 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
  • Share indices rise more, up 1.4%; oil and gas, realty companies lead
  • 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
  • Financial sector reforms to move forward
  • Insurance amendment bill, LIC bill and Pension Development Authority Bill in current session
  • Five fold strategy to combat Black Money
  • Infra spending to be raised by 23%
  • NREGA wages to indexed to inflation
  • Increased outlay in social sector
  • RS 58,000 cr for Bharat Nirman
  • Rs 52000 crore for education
  • Capital investment in fertiliser production to be considered as infrastructure sub-sector
  • 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
  • Educational scholarships for SC/ST and needy
  • 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
  • Banking Laws amendment Bill, SBI subsidiaries bill and BIFR bill also in current session
  • Indian micro finance equity with SIDBI to be formed at Rs 100 crore
  • Government plans to create a Women Self Help Group development fund with a corpus of Rs 500 crore
  • 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
  • State innovation councils to be set up

  • National mission for hybrid electric machines
  • Anganwadiu workers salary icreased from Rs 1500 to Rs 3000 per month
  • National Knowledge Network by 2013
  • Rs 54 crore each for AMU centres
  • New international award for Rs 1 cr in memory of Tagore
  • 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
  • Health

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

  • 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
  • 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 region

  • 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

  • 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
  • Gross tax collections at Rs 9.32 lakh
  • Fiscal Deficit Fiscal deficit for current year at 5.1%; lower than estimate
  • Fiscal deficit for next fiscal at 4.6%
  • Estimates and fundamentals

  • 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
  • Tax loss

  • 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
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