Subsidies
Government actively considering extension of the Nutrient Based
Subsidy regime to cover urea. Government to move towards direct
transfer of cash subsidy to people living below poverty line in a
phased manner for better delivery of kerosene, LPG and fertilisers.
PSU’s
Rs. 40,000 crore to be raised through disinvestment in 2011-12.
Government committed to retain at least 51 per cent ownership and
management control of the Central Public Sector Undertakings.
Investment Environment
Government to further liberalise the FDI policy. SEBI registered
mutual funds permitted to accept subscription from foreign investors
who meet KYC requirements for equity schemes. To enhance flow of funds
to infrastructure sector, the FII limit for investment in corporate
bonds issued in infrastructure sector being raised.
Banking and Micro Finance
Additional banking licences will be issued to private sector
players. Rs. 6,000 crore will be provided to public sector banks for
maintaining minimum of Tier I CRAR of 8 per cent. Rs. 500 crore will
be provided to Regional Rural Banks for maintaining CRAR of at least 9
per cent as on March 31, 2012. India Microfinance Equity Fund of Rs.
100 crore to be created with SIDBI. New authority will vouch interest
of small borrowers. Women’s SHG’s Development Fund to be created with
a corpus of Rs. 500 crore. Target of providing banking facilities to
all 73,000 habitations having a population of over 2,000 to be
completed during 2011-2012.
Micro Small and Medium Enterprises
Rs. 5,000 crore will be provided to SIDBI for refinancing incremental
lending by banks to these enterprises. Rs. 3,000 crore will be
provided to NABARD to provide support to handloom weaver co-operative
societies which have become financially unviable due to non-repayment
of debt by handloom weavers facing economic stress. Public sector
banks to achieve a target of 15 per cent as outstanding loans to
minority communities under priority sector lending at the earliest.
Housing Sector Finance
Existing scheme of interest subvention of 1 per cent on housing
loan further liberalised. Existing housing loan limit enhanced to Rs.
25 lakh for dwelling units under priority sector lending. Provision
under Rural Housing Fund enhanced to Rs. 3,000 crore. To enhance
credit worthiness of economically weaker sections and LIG households,
a Mortgage Risk Guarantee Fund to be created under Rajiv Awas Yojana.
Central Electronic Registry to prevent frauds involving multiple
lending on the same immovable property to become operational by March
31, 2011.
Legislative Reforms
Financial Sector Legislative Reforms Commission set up to rewrite
and streamline the financial sector laws, rules and regulations.
Companies Bill to be introduced in the Lok Sabha during current
session.
Food & Agriculture
Allocation under Rashtriya Krishi Vikas Yojana increased from Rs.
6,755 crore to Rs. 7,860 crore. To improve rice based cropping system
in eastern region, allocation of Rs. 400 crore has been made.
Allocation of Rs. 300 crore to promote production of 60,000 tons of
pulses in rainfed areas. Allocation of Rs. 300 crore to bring 60,000
hectares under oil palm plantations. Initiative to yield about 3 lakh
Metric tonnes of palm oil annually in five years. Allocation of Rs.
300 crore for implementation of vegetable initiative to provide
quality vegetable. Allocation of Rs. 300 crore to promote higher
production of Bajra, Jowar, Ragi and other millets, which are highly
nutritious and have several medicinal properties. Allocation of Rs.
300 crore to promote animal based protein production through livestock
development, dairy farming, piggery, goat rearing and fisheries.
Allocation of Rs. 300 crore for Accelerated Fodder Development
Programme to benefit farmers in 25,000 villages.
Agriculture Credit
Credit flow for farmers raised from Rs. 3,75,000 crore to Rs.
4,75,000 crore in 2011-12. Interest subvention proposed to be enhanced
from 2 per cent to 3 per cent for providing short-term crop loans to
farmers who repay their crop loan on time. In view of enhanced target
for flow of agriculture credit, capital base of NABARD to be
strengthened by Rs. 3,000 crore in phased manner. Rs. 10,000 crore to
be contributed to NABARD’s Short-term Rural Credit fund for 2011-12.
Approval being given to set up 15 more Mega Food Parks during 2011-12.
Infrastructure and Industry
Allocation of Rs. 2,14,000 crore for infrastructure in 2011-12.
This is an increase of 23.3 per cent over 2010-11. This also amounts
to 48.5 per cent of total plan allocation. Government to come up with
a comprehensive policy for further developing PPP projects. IIFCL to
achieve cummulative disbursement target of Rs. 20,000 crore by March
31, 2011 and Rs. 25,000 crore by March 31, 2012. Under take out
financing scheme, seven projects sanctioned with debt of Rs. 1,500
crore. Another Rs. 5,000 crore will be sanctioned during 2011-12. To
boost infrastructure development, tax free bonds of Rs. 30,000 crore
proposed to be issued by Government undertakings during 2011-12.
National Manufacturing Policy
Share of manufacturing in GDP expected to grow from about 16 per
cent to 25 per cent over a period of 10 years. Government will come
out with a manufacturing Policy. National Mission for hybrid and
electric vehicle to be launched. Financial Assistance to be made
available for metro projects in Delhi, Mumbai, Bengaluru, Kolkata and
Chennai. Capital investment in fertiliser production proposed to be
included as an infrastructure sub-sector.
Exports
Self assessment to be introduced in Customs to modernize the
Customs administration. Proposal to introduce scheme for refund of
taxes paid on services used for export of goods. Mega Cluster Scheme
to be extended for leather products. Seven mega leather clusters to be
set up during 2011-12. Jodhpur to be included for the development of a
handicraft mega cluster.
Black Money
Five fold strategy to be put into operation to deal with the
problem of generation and circulation of black money. Government
joining various international forums which are engaged in anti money
laundering, Economic development, Exchange of information for tax
purposes. Various Tax Information Exchange Agreements and Double
Taxation Avoidance Agreements being concluded. Foreign Tax Division of
CBDT has been strengthened to effectively handle increase in tax
information exchange and transfer pricing issues. Enforcement
Directorate strengthened three fold to handle increased number of
cases registered under amended Money Laundering Legislation. Finance
Ministry has commissioned study on unaccounted income and wealth held
within and outside the country. Comprehensive national policy to be
announced in near future to strengthen controls over prevention of
trafficking on narcotic drugs.
Bharat Nirman
Allocation for Bharat Nirman programme proposed to be increased by
Rs. 10,000 crore from the current year to Rs. 58,000 crore in 2011-12.
Plan to provide Rural Broadband Connectivity to all 2,50,000
Panchayats in the country in three years.
Mgnrega
In pursuance of last years budget announcement to provide a real
wage of Rs. 100 per day, the Government has decided to index the wage
rates notified under the MGNREGA to the Consumer Price Index for
Agricultural Labour. The enhanced wage rates have been notified by the
Ministry of Rural Development on January 14, 2011. From 1st April,
2011, remuneration of Anganwadi workers increased from Rs. 1,500 per
month to Rs. 3,000 per month and for Anganwadi helpers from Rs. 750
per month to Rs. 1,500 per month.
Education
Allocation for education increased by 24 per cent over current
year. Rs. 21,000 crore allocated, which is 40 per cent higher than
Budget for 2010-11. Pre-matric scholarship scheme to be introduced for
needy SC/ST students studying in classes IX and X. Connectivity to all
1,500 institutions of Higher Learning and Research through optical
fiber backbone to be provided by March, 2012. Additional Rs. 500 crore
proposed to be provided for National Skill Development Fund during the
next year.
Health
Plan allocations for health stepped-up by 20 per cent. Scope of
Rashtriya Swasthya Bima Yojana to be expanded to widen the coverage.
Financial Inclusion
Exiting norms under co-contributory pension scheme “Swavalamban”
to be relaxed. Benefit of Government contribution to be extended from
three to five years for all subscribers who enroll during 2010-11 and
2011-12. Eligibility for pension under Indira Gandhi National Old Age
Pension Scheme for BPL beneficiaries reduced from 65 years of age to
60 years. Those above 80 years of age will get pension of Rs. 500 per
month instead of Rs. 200 at present.
Environment and Climate Change
Rs. 200 crore proposed to be allocated for Green India Mission from
National Clean Energy Fund. Rs. 200 crore proposed to be allocated for
launching Environmental Remediation Programmes from National Clean
Energy Fund. Special allocation of Rs. 200 crore proposed to be
provided for clean-up of some more important lakes and rivers other
than Ganga.
Other Provisions and Defence Expenses
To boost development in North Eastern Region and Special Category
States, allocation for Special Assistance doubled. Rs. 8,000 crore
provided in current year for development needs of Jammu and Kashmir.
Allocation made in 2011-12 to meet the infrastructure needs for Ladakh
Rs. 100 crore and Jammu region Rs. 150 crore). Allocation under
Backward Regions Grant Fund increased by over 35 per cent. Funds
allocated under Integrated Action Plan for addressing problems related
to Left Wing extremism affected districts. 60 selected Tribal and
backward districts provided with 100 per cent block grant of Rs. 25
crore and Rs. 30 crore per district during 2010-11 and 2011-12
respectively A lump-sum ex-gratia compensation of Rs. 9 lakh for 100
per cent disability to be granted for personnel of Defence and Para
Military forces discharged from service on medical ground on account
of disability attributable to government service. To build judicial
infrastructure, plan provision for Department of Justice increased by
three fold to Rs. 1,000 crore. Provision of Rs. 1,64,415 crore,
including Rs. 69,199 crore for capital expenditure to be made for
Defence Services in 2011-12.
Other Initiative by IT Dept.
These include e-filing and e-payment of taxes, adoption of
‘Sevottam’ concept by CBEC and CBDT, web based facility for tax payers
to track the resolution of refunds and credit for pre-paid taxes and
augmentation of processing capacity. Under Mission mode projects,
funds released to 31 projects received from States/ UTs for
computerisation of Commercial taxes. This will allow States to align
with roll out of GST. Bill to amend the Indian Stamp Act proposed to
be introduced shortly. A new scheme with an outlay of Rs. 300 crore to
be launched to provide assistance to States to modernise their stamp
and registration administration and roll out e-stamping in all the
districts in the next three years. New simplified form ‘Sugam’ to be
introduced to reduce the compliance burden of small tax payers falling
within presumptive taxation. Three more benches of Settlement
Commission to be set up to fast track the disposal of cases.
Budget Estimates 2011-12
Gross Tax receipts are estimated at Rs. 9, 32,440 crore. Non-tax
revenue receipts estimated at Rs. 1, 25,435 crore. Total expenditure
proposed at Rs. 12, 57,729 crore. Increase of 18.3 per cent in total
Plan allocation. Increase of 10.9 per cent in the Non-plan
expenditure. XI Plan expenditure more than 100 per cent in nominal
terms than envisaged for the Plan period. Increase of 23 per cent in
Plan and Non-plan transfer to States and UTs. Fiscal Deficit brought
down from 5.5 per cent in BE 2010-11 to 5.1 per cent of GDP in RE
2010-11. Fiscal Deficit kept at 4.6 per cent of GDP for 2011-12. 10.
Fiscal Deficit to be progressively reduced to 3.5 per cent by 2013-14.
“Effective Revenue Deficit” estimated at 2.3 per cent of GDP in the
Revised Estimates for 2010-11 and 1.8 per cent for 2011-12. All
subsidy related liabilities brought into fiscal accounting. Net market
borrowing of the Government through dated securities in 2011-12 would
be Rs. 3.43 lakh crore. Central Government debt estimated at 44.2 per
cent of GDP for 2011-12 as against 52.5 per cent recommended by the
13th Finance Commission.
Tax Proposals - Direct Taxes
1 Exemption limit for the individual taxpayers enhanced from Rs.
1, 60,000 to Rs. 1, 80,000 giving uniform tax relief of Rs. 2,000.
2. Exemption limit enhanced to Rs. 2, 50,000 and qualifying age
reduced for senior citizens from 65 to 60 year. Higher exemption limit
of Rs. 5, 00,000 Citizens over 80 years.
3 Surcharge of 7.5 per cent on domestic companies reduced to 5 per
cent.
4. Minimum Alternative Tax increased from 18 per cent to 18.5 per
cent.
5. Tax incentives extended to attract foreign funds for financing of
infrastructure.
6. Deduction of Rs. 20,000 for investment in long-term infrastructure
bonds extended for one more year.
7. Lower rate of 15 per cent tax on dividends received by an Indian
company from its foreign subsidiary.
8. Investment linked deduction extended to fertiliser industry and
developing affordable housing.
9. Deduction on payments made to National Laboratories, Universities
and Institutes of Technology enhanced to 200 per cent.
Tax Proposals - Indirect Taxes
1. Stay on course for transition to GST. Central Excise Duty to be
maintained at standard rate of 10 per cent. Nominal Central Excise
Duty of 1 per cent imposed on 130 items entering in the tax net. Lower
rate of Central Excise Duty enhanced from 4 per cent to 5 per cent.
2. Branded garments subject to 10 per cent excise duty.
3 Equipments needed for storage and warehouse facilities on
agricultural produce exempted from excise duty. Basic Custom Duty
reduced for specified agricultural machinery from 5 per cent to 2.5
per cent. Basic Custom Duty reduced on micro-irrigation equipment from
7.5 per cent to 5 per cent. De-oiled rice bran cake to be fully
exempted from basic Custom Duty. Export Duty of 10 per cent to be
levied on its export.
4. Rate of Export Duty for all types of iron ore enhanced and unified
at 20 per cent ad valorem. Full exemption from Export Duty to iron ore
pellets. Basic Custom Duty on two critical raw materials of cement
industry viz. petcoke and gypsum is proposed to be reduced to 2.5 per
cent. Cash dispensers fully exempt from basic Customs Duty. Full
exemption from basic Customs Duty and a concessional rate of Central
Excise Duty extended to batteries imported by manufacturers of
electrical vehicles. Concessional Excise Duty of 10 per cent to
vehicles based on Fuel cell technology. Exemption granted from basic
custom duty and special CVD to critical parts/assemblies needed for
Hybrid vehicles. Reduction in Excise Duty on kits used for conversion
of fossil fuel vehicles into Hybrid vehicles. Excise Duty on LEDs
reduced to 5 per cent and special CVD being fully exempted. Basic
Customs Duty on solar lantern reduced from 10 to 5 per cent. Full
exemption from basic Customs Duty to Crude Palm Stearin used in
manufacture of laundry soap. Full exemption from basic Excise Duty
granted to enzyme based preparation for pre-tanning.
5. Parallel Excise Duty exemption for domestic suppliers producing
capital goods needed for expansion of existing mega or ultra mega
power projects. Full exemption from basic Customs Duty to bio-asphalt
and specified machinery for application in the construction of
national highways.
6. Exemption from Import Duty for spares and capital goods required
for ship repair units extended to import by ship owners. Concessional
basic Custom Duty of 5 per cent and CVD of 5 per cent available to
newspaper establishments for high speed printing presses extended to
mailroom equipment. Jumbo rolls of cinematographic film fully exempted
from CVD by providing full exemption from Excise Duty. Out right
concession to factory-built ambulances from Excise Duty. Relief
measures proposed for raw pistachio, bamboo for agarbatti, lactose for
the manufacture of homoeopathic medicines, sanitary napkins, baby and
adult diapers.
Service Tax
Standard rate of Service Tax retained at 10 per cent, while
seeking a closer fit between present regime and its GST successor.
Hotel accommodation in excess of Rs. 1,000 per day and service
provided by air conditioned restaurants that have license to serve
liquor added as new services for levying Service Tax. Tax on all
services provided by hospitals with 25 or more beds with facility of
central air conditioning. Service Tax on air travel both domestic and
international raised. Services provided by life insurance companies in
the area of investment and some more legal services proposed to be
brought into tax net. All individual and sole proprietor tax payers
with a turn over upto Rs. 60 lakh freed from the formalities of audit.
Net Position
Proposals relating to Customs and Central Excise estimated to
result in a net revenue gain of Rs. 7,300 crore. Proposals relating to
Service Tax estimated to result in net revenue gain of Rs. 4,000 crore.
Proposals relating to Direct Taxes estimated to result in a revenue
loss of Rs. 11, 500 crore and those related to Indirect Taxes
estimated to result in net revenue gain of Rs. 11,300 crore.
Queries & Discussions Welcome
