PRANAB PLAYS SAFE IN HIS 6TH INNINGS SPEECH
GK NEWS NETWORK/AGENCIES
New Delhi, Feb 28: It was the 80th budget speech presentation in the history of independent India, when Finance Minister Pranab Mukherjee on Monday read out his taxation and other economic policies before Parliament.
Parliament has so far hosted 79 budget speeches, including interim and special situation budgetary proposals, ever since the country's first union budget presented by then Finance Minister RK Shanmukham Chetty on November 26, 1947.
Mukherjee presented the budget for sixth time in history, thus becoming the Finance Minister to have made third highest number of budget speeches.
Mukherjee joined the league of Prime Minister Manmohan Singh and the fourth Finance Minister TT Krishnamachari, who have presented six speeches each during their tenures in the Finance Ministry.
Presenting a play-safe budget on Monday, it raised the threshold income tax exemption limit from Rs 1.60 lakh to Rs 1.80 lakh that will leave at least Rs 2000 more in the hands of tax payers across the board and made changes in the service tax that will make air travel, hotel accommodation and drinking in AC restaurants costlier.
Presenting the budget for 2011-12 that will result in a net revenue loss of Rs 200 crore, Finance Minister Pranab Mukherjee imposed an excise duty of one per cent on 130 specified items which will, however, exempt food and fuel.
He also gave some relief to corporates by reducing the current income tax surcharge of 7.5 per cent on domestic companies to five per cent but raised the Minimum Alternate Tax (MAT) from 18 to 18.5 per cent including developers of Special Economic Zones (SEZs) in it.
While leaving the rest of exemption slabs, surcharge and cess on income tax untouched, he reduced the qualifying age of senior citizens from 65 to 60 years, raised their exemption limit from Rs 2.40 lakh to Rs 2.50 lakh. No special benefit was announced for women whose basic exemption limit remains at Rs 1.90 lakh.
Mukherjee also created a new category of "Very Senior Citizens" of 80 years and above who will be eligible for a higher exemption limit of Rs five lakhs.
The budget sought to widen the ambit of the service tax net by which hotel accommodation above Rs 1,000 a day and AC restaurants that serve liquor will be included.
The scope of life insurance service is being widened to cover all services provided to any person by an insurer and legal services provided by business entity to individuals and individuals to entities but not individuals to individuals.
Opposition parties flayed the budget saying it was very "disappointing and direction less" while the industry welcomed it as "positive and growth oriented".
Hailing the "commendable job" done by his Finance Minister, Prime Minister Manmohan Singh said the signals are that this is a government which is reform oriented but admitted "you cannot please all people".
All services including diagnostic services provided by AC clinical establishments with more than 25 beds and services provided by a doctor who owns such establishments have been brought under the service tax net.
Economy class domestic travel by air will cost Rs 50 more while international travel will cost Rs 250 more. Higher class domestic travel by air attract a standard 10 per cent service tax bringing it on par with international higher class travel.
While direct tax changes are expected to result in a revenue loss of Rs 11,500 crore, the net revenue gain on account of indirect taxes is likely to be Rs 11,300 crore, including an additional Rs 4,000 crore on account of service tax changes.
Prepared food stuff like sugar confectionery, pastry and cakes, starches, paper and articles of paper, textile goods, drugs and medicinal equipments will become costlier with increase in the concessional rate of excise duty from four per cent to five per cent.
Ready made garments and branded textile made ups will also become costlier with the levy of mandatory 10 per cent excise duty. Exemptions from excise duty is being withdrawn on micro processor for computers, floppy and hard disc drive, CD-Rom drive, DVD drives and writers making it costlier but they will attract only five per cent concessional duty.
Items that will become cheaper are sanitary napkins, baby and clinical diapers and adult diapers with reduction of excise duty, factory built ambulances, precious metals including gold and silver.
However, one per cent excise duty is being imposed on branded jewellery and branded articles of precious metals.
The Budget for next year pegs the fiscal deficit at 4.6 per cent of GDP for 2011-12 which works out to Rs 4,12,817 crore.
Gross tax receipts are estimated at Rs 9,32,440 crore, an increase of 24.9 per cent over the Budget Estimates for 2010-11.
Net non-tax revenue receipts for the next financial year are estimated Rs 1,25,435 crore. The total expenditure proposed for 2011-12 is Rs 12,57,729 crore. Plan expenditure will be Rs 4,41,547 crore, an increase of 18 per cent and non-Plan expenditure will be Rs 8,16,182 crore, an increase of 10.9 per cent over Budget estimates of 2010-11.
Defence expenditure for the next year has been pegged at Rs 1,64,415, an increase of Rs 17,071 crore over the last financial year. This includes a capital expenditure of Rs 69,199 crore.
"Needless to say, any further requirement for the country's defence would be met," Mukherjee said.
The Budget has raised allocation for social sector spending by 17 per cent to Rs 1,60,887 crore and the allocation for Bharat Nirman programme by Rs 10,000 crore.
Allocation for infrastructure has been increased by over 23 per cent to Rs 2,14,000 crore and the credit to farmers hiked by Rs 1 lakh crore to Rs 4,75,000 crore.
The Budget assumes open market borrowing of Rs 3.43 lakh crore. Extension of nutrient-based subsidy to cover urea is under active consideration.
In a boost to housing sector finance, the Budget continued the scheme of interest subvention of one per cent on housing loans and liberalised it by extending it up to Rs 25 lakh from the present Rs 10 and Rs 15 respectively.
The Finance Minister also proposed various measures to achieve a closer fit between the present Service Tax regime and its successor Goods and Services Tax (GST).
The Minister announced a broad set of financial sector reforms, saying he proposed to move the legislations relating to insurance laws, LIC, revised pension fund bill, banking laws amendment bill, State Bank of India Subsidiaries Bill and a bill on Factoring and
Assignment of Receivables.
In an effort to curb diversion of subsidised items like kerosene, LPG and fertilisers, the Budget proposes to introduce from March next year a scheme that will move towards direct transfer of cash subsidy to people living below poverty line (BPL).
On the much-speculated roll-back of stimulus measures implemented three years ago in the midst of global financial crisis, Mukherjee said a counter-cyclical fiscal policy is required for insurance against external shocks and localised domestic factors.
Aiming towards fiscal consolidation, the government proposes to introduce an amendment to Fiscal Responsibility and Budget Management Act, laying down the fiscal roadmap for the next five years.
The Finance Minister also proposed to introduce the Public Debt Management Agency of India Bill in Parliament in the next year.
In a bid to make the Foreign Direct Investment policy more user-friendly, Mukherjee said discussions are underway to further liberalise the policy.
To liberalise the portfolio investment route, it has been decided to permit SEBI registered mutual funds to accept subscriptions from foreign investors for equity schemes which will enable Indian mutual funds to have direct access to foreign investors.
To enhance the flow of funds to the infrastructure sector, the FII limit for investment in corporate bonds, with residual maturity of over five years issued by companies in infrastructure is being raised by an additional limit of USD 20 billion taking the limit to USD 25 billion. This will raise the total limit for FIIs investment to corporate bonds to USD 40 billion.
* Current surcharge of 7.5 per cent on domestic companies proposed to be reduced to 5 per cent
* Higher exemption limit of Rs 5,00,000 for very senior citizens, who are 80 years or above
* Allocation to Sarva Shiksha Abhiyan increase by 40 per cent to Rs 21,000 crore
* Allocation for education increased by 24 per cent over current year
* Allocation of Rs 2,14,000 crore for infrastructure in 2011-12; an increase of 23.3 per cent over 2010-11
* Excise duty to be reduced from 10% to 5% on parts of specified machinery
* Surcharge for companies cut to 5 per cent, from 7.5 per cent
* Citizens over 80 years to have exemption limit of Rs 5 lakh
* Special incentives for hybrid vehicle makers if manufacturing done in India to be positive for auto companies
* Crude palm used in sports exempted from customs duty to be positive for palm oil companies
* Duty reduced on hybrid & electric cars along with batteries imported for such vehicles
* Senior Citizen Age Limit reduced from 65 years to 60 years for Income Tax purposes
* Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent
* Direct investment in Indian Mutual Funds by any foreigner is a big move
* MFs allowed to raise money from foreign investors is pathbreaking
* No import duty on ship parts positive for SCI
* Tax exemption limit for senior citizens raised to Rs 2.5 lakh from 2.4 lakh
* Rate of MAT proposed to be increased from 18 per cent to 18.5 per cent of book profits
* Lower rate of Central Excise Duty enhanced from 4 per cent to 5 per cent
* AC restaurants serving liquor to come under service tax net
* Health Check-Ups in Private hospitals to become expensive
* EXPENSIVE: International Air Travel
* EXPENSIVE: Domestic Air Travel
* Tax on life insurance service providers could be negative for insurance companies
* Travel, Healthcare to become expensive due to increased service tax
* Lack of FDI in retail was a disappointment
* New service tax to hurt companies in hospitality
* Hike in export duty on Iron Ore is a negative, says Motilal Oswal
* Air travel to cost more
* Branded clothes may cost more
* Rise in MAT to hurt RIL, GVK Power, telcos
To be costlier :
* Medical bills to rise by 5%
* Prices of branded apparel may go up
*Air travel to get costlier
* Eating out to become dearer
* Branded jewellery to be costlier
* Sugar confectionery,
* Pastry and cakes,
* Paper and articles of paper,
* Textile goods,
* Drugs and medicinal equipments
* Ready made garments and branded textile
*Micro processor for computers, floppy and hard disc drive, CD-Rom drive, DVD drives and writers
To be cheaper:
* Eco-friendly hybrid vehicles to be cheaper
* Home loans
* Mobile sets
* Sanitary napkins, baby and clinical diapers and adult diapers
* Factory built ambulances,
*Precious metals including gold and silver.
Lastupdate on : Mon, 28 Feb 2011 21:30:00 Makkah time
Lastupdate on : Mon, 28 Feb 2011 18:30:00 GMT
Lastupdate on : Tue, 1 Mar 2011 00:00:00 IST
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GK NEWS NETWORK/AGENCIES
New Delhi, Feb 28: It was the 80th budget speech presentation in the history of independent India, when Finance Minister Pranab Mukherjee on Monday read out his taxation and other economic policies before More