- Corporate tax surcharge reduced from 7.5% to 5%. Minimum alternate tax rate up from 18% to 18.5%.
- IT exemption for taxpayers raised from Rs 1.6 lakh to Rs 1.8 lakh. Tax relief is about Rs 2,000 across-the-board.
- Senior citizens to get higher IT deduction limit of Rs 2.5 lakh. Entitlement age reduced to 60 from current 65
- New category of senior citizens above 80 years to get higher IT deduction limit of Rs 5 lakh from this year
- Service tax levels and excise stay at 10%; Peak rate of customs duty remains unchanged
- Excise exemptions withdrawn on 130 items; to pay minimum excise of 1% from next year
- Foreign individual investors allowed to invest directly in mutual funds subject to KYC requirements
- Govt to allow issue of Rs 30,000 crore worth of tax-free bonds by infrastructure companies in 2011-12
- Tax deduction for investment in infrastructure bonds of Rs 20,000 extended for one more year
- Investment in fertiliser plants and machinery to be treated as infrastructure investment
- Fiscal deficit for 2010-11 seen at 5.1% against 5.5% budgeted; deficit for 2011-12 projected at 4.6% of GDP
- Government to introduce direct cash payments for those entitled to subsidies in kerosene, cooking gas and fertiliser by March, 2012.
- Government considering extension of nutrient-based subsidy for urea, the largest chunk of fertilisers used in agriculture
- National mission for electric and hybrid vehicles to be set up to create environment-friendly automobiles
- Priority sector home loans limit raised to Rs 25 lakh from Rs 20 lakh.
- Interest subvention on home loans up to Rs 15 lakh. Mortgage risk guarantee corporation to insure loans to the poor
- Public sector disinvestment target for 2011-12 is raised to Rs 40,000 crore
- Centre's net borrowing figure for 2011-12 fixed at Rs 3,43,000 crore; fiscal deficit figure at Rs 4,12,000 crore
- Cement excise duties will be shifted to valorem basis from specific duty now
- Loss on direct tax reliefs at Rs 11,500 crore; gain on indirect tax changes at Rs 11,300 crore
- FM says no need to remove stimulus package at this stage, but will withdraw excise exemptions
28 February 2011
TAX IMPACTS & KEY ISSUES: BUDGET 2011
Personal Tax exemption limit raised by Rs 20,000
 |
New tax slabs:
Slabs (Rs) | Rate |
Old tax slabs:
Slabs (Rs) | Rate |
0 - 160000 | 0 |
160001 - 500000 | 10 |
500001 - 800000 | 20 |
800001 and above | 30 |
Female individual taxpayer
New tax slabs:
Slabs (Rs) | Rate |
Old tax slabs:
Slabs (Rs) | Rate |
0 - 190000 | 0 |
190001 - 500000 | 10 |
500001 - 800000 | 20 |
800001 and above | 30 |
Senior Citizens
New tax slabs:
Slabs (Rs) | Rate |
Old tax slabs:
Slabs (Rs) | Rate |
0 - 240000 | 0 |
240001 - 500000 | 10 |
500001 - 800000 | 20 |
800001 and above | 30 |
Latest Updates of Union Budget 2011-12
Here are the latest updates:
* MF can accept subscription foreign investors who meet KYC norms
* Discussions underway to relax FDI policy
* To introduce Public Debt AMC of India Bill in FY12
* Divestment in FY12 seen at Rs 40000cr
* Preparations for GST rollout in final stages
* Will introduce GST Bill in current session
* Govt will move to direct transfer of fertiliser subsidy to cos
* Extension of NBS to cover urea under review
* Significant progress on the GST network
* Direct Tax Code will be effective April 1, 2012
* New Public debt mgmt bill to be introduced in Parliament soon
* DTC will be finalised in 2011
* Govt in the process of setting up independent debt managing committee within finance ministry
* Average inflation and current account deficit to be lower and better managed next yr
* Expect inflation and CAD to be lower in 2011-2012
* Current account deficit poses concerns due to its composition
* Exports grown by 29.4%; imports grown by 17.6%
* Current account deficit at 2009-10 levels
* Impact of monetary tightening to show up with a lag
* Huge differences between wholesale and retail prices not acceptable
* Expect RBI to moderate inflation in coming months
* Shortfalls in distribution and marketing systems in food
* Economy has shown resilience to external and internal shocks
* Consumers have been denied a seasonal fall in food prices
* Discussions underway to relax FDI policy
* To introduce Public Debt AMC of India Bill in FY12
* Divestment in FY12 seen at Rs 40000cr
* Preparations for GST rollout in final stages
* Will introduce GST Bill in current session
* Govt will move to direct transfer of fertiliser subsidy to cos
* Extension of NBS to cover urea under review
* Significant progress on the GST network
* Direct Tax Code will be effective April 1, 2012
* New Public debt mgmt bill to be introduced in Parliament soon
* DTC will be finalised in 2011
* Govt in the process of setting up independent debt managing committee within finance ministry
* Average inflation and current account deficit to be lower and better managed next yr
* Expect inflation and CAD to be lower in 2011-2012
* Current account deficit poses concerns due to its composition
* Exports grown by 29.4%; imports grown by 17.6%
* Current account deficit at 2009-10 levels
* Impact of monetary tightening to show up with a lag
* Huge differences between wholesale and retail prices not acceptable
* Expect RBI to moderate inflation in coming months
* Shortfalls in distribution and marketing systems in food
* Economy has shown resilience to external and internal shocks
* Consumers have been denied a seasonal fall in food prices
Sensex 100 points up ahead of Budget
The Sensex added 100 points ahead of Union Budget 2011-12 today, supported by financial, oil & gas, infrastructure, technology and metal companies' shares. However, auto and cement companies' shares were seeing selling pressure.
The 30-share BSE Sensex was trading at 17,807, up 107 points and the 50-share NSE Nifty gained 36 points at 5,339.
The breadth was positive - about 820 shares advanced while 272 shares declined on National Stock Exchange.
Experts were expecting some news on banking license, FDI in retail and fertiliser subsidy.
National Fertilisers, IVRCL Infra, IDFC, Pantaloon Retail and LIC Housing Finance were on buyers' radar.
The 30-share BSE Sensex was trading at 17,807, up 107 points and the 50-share NSE Nifty gained 36 points at 5,339.
The breadth was positive - about 820 shares advanced while 272 shares declined on National Stock Exchange.
Experts were expecting some news on banking license, FDI in retail and fertiliser subsidy.
National Fertilisers, IVRCL Infra, IDFC, Pantaloon Retail and LIC Housing Finance were on buyers' radar.
Budget 2011: Focus areas
The Finance Minister Pranab Mukherjee will present the Union Budget 2011 today. He has a tough role to play as the country is reeling under inflation and high crude price has been a dampener. The major focus areas of the budget are likely to be:
* Fiscal Deficit: The market is talking about FY12 deficit of 5-5.5% but watch out for absolute figure as gross domestic product (GDP) has been revised from Rs 60 lakh crore to Rs 90 lakh crore. Hence, fiscal deficit absolute number can come at Rs 4.5 lakh crore instead of Rs 3 lakh crore even if the fiscal deficit is at 5%.
* Market Borrowing: The government could announce market borrowings of around Rs3.8 trillion (USD80 bn) - 4.5% of GDP, compared to a projected Rs 3.45 trillion (USD76 billion) in FY11, as the one-off telecom receipts are not available in FY12. Revenue growth to slow on lower tax buoyancy and no asset sale windfall is expected.
* Clarity on GST and DTC
* On taxation side: Some broad basing of the service tax, higher income tax exemptions, and a possible increase in excise duties on autos is expected.
* Sectors: The metals and capital goods industry is looking for an increase in import duties to protect domestic manufacturers. IT has asked for continuation of the STPI benefits, while oil companies have asked for a reduction in excise and customs duties. Real-estate companies have asked for tax sops for low-cost housing. Except for the sop to low-cost housing, other measures seem unlikely. In an attempt to boost tax revenues the government may focus on:
1) Increasing taxes on its favourite targets - cigarettes, alcohol, high-end consumer durables
2) Widening the services tax net
3) Rationalising excise duties by reducing exemptions or carve-outs (eg, small cars)
4) Introduction of cess to fund social sector schemes can not be ruled out
* Market Borrowing: The government could announce market borrowings of around Rs3.8 trillion (USD80 bn) - 4.5% of GDP, compared to a projected Rs 3.45 trillion (USD76 billion) in FY11, as the one-off telecom receipts are not available in FY12. Revenue growth to slow on lower tax buoyancy and no asset sale windfall is expected.
* Clarity on GST and DTC
* On taxation side: Some broad basing of the service tax, higher income tax exemptions, and a possible increase in excise duties on autos is expected.
* Sectors: The metals and capital goods industry is looking for an increase in import duties to protect domestic manufacturers. IT has asked for continuation of the STPI benefits, while oil companies have asked for a reduction in excise and customs duties. Real-estate companies have asked for tax sops for low-cost housing. Except for the sop to low-cost housing, other measures seem unlikely. In an attempt to boost tax revenues the government may focus on:
1) Increasing taxes on its favourite targets - cigarettes, alcohol, high-end consumer durables
2) Widening the services tax net
3) Rationalising excise duties by reducing exemptions or carve-outs (eg, small cars)
4) Introduction of cess to fund social sector schemes can not be ruled out
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