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What is a Budget ?
It is an estimate of future revenues and
expenditure over specific period. Budget
are usually prepared on annual basis for
governments – Both Centre and State and
annual and monthly basis for business
enterprises
India Budget, 2010-11 on 26th
February, 2010
Dear Friends,
The Major salient features of the said bill are summarised in this
presentation.
INDIA BUDGET 2010-11
Union Budget,
Which is a yearly affair, is a comprehensive display of the
Government’s finances. It is the most significant economic and financial
event in India
CHALLENGES
The first challenge is to maintain the GDP growth rate to over 9% p.a
then find the means to cross the double digit growth barrier
Rs. 1.37 lakh crore for Infrastructure Development (The higher allocation for
road infrastructure and railways will be beneficial for IVRCL, Punj Lloyd, L&T, HCC
etc.)
Farmers, who repay loan on time, will get a waiver of 2% , farm loan
repayment by 6 months & Farmers to get Loans at 5%
Education sector :
The Finance Minister in his Union budget 2010 speech suggested the restoration
of Right of Children to Free and Compulsory Education Act, 2009 which
formulates a legal agenda for privileges of children falling under the age group of
6 to 14 years. He also notified the achievements of Sarva Shiksha Abhiyan (SSA)
launched by the government, in the field of education and improving
infrastructure for basic educationtion sector in 2010-2011.
monetary hike for elementary education to Rs.31, 036 crore in the current fiscal
year against the previous Rs.26, 800 crore, in addition all states access to basic
education with a grant of Rs.3, 675 crore for 2010-11.
IT Sector:
Unique identification (UID) projects a major step towards corporate governance.
All BPL families to be brought under biometric smart cards. UID project to set up
online database of Indian residents. UID project allocated Rs. 1900 crores as
against Rs. 120 crores. Tech Advisory Group to set up under Nandan Nilekani
(Positive for Bartronics, CMC, TCS, Vakranjee Software )
INDIA BUDGET 2010-11
Banking & Finance :
To allocate Rs.16,500 crore provided to ensure that the Public SectorBanks are
able to attain a minimum 8%Tier-I capital by March 31, 2011(Positive as it will
allow public banks to improve its business - Dena Bank, UCO Bank, Syndicate
Bank, Central Bank of India, OBC)
Repayment under Farm Debt Waiver - Scheme has been extended till June
2010 (Negative Bank of Baroda, Punjab National Bank)
Exports:
Extension of existing interest subvention of 2% for one more year
forexports covering handicrafts, carpets, handlooms and small and
mediumenterprises.
(Companies impacted: JBF Industries, Alps Industries, Alok Industries,
BombayRayon, SPL Industries, SEL Manufacturing Company, Nitin
Spinners, VardhmanTextile, Gokaldas Exports, Rajesh exports and
Gitanjali)
Fertilisers:
A Nutrient Based Subsidy policy for the fertilizer sector has been
approvedby the Government and will become effective from April 1,
2010. To provide subsidy in cash instead of Bonds.
(Companies impacted: Chambal Fertilizers, GSFC, RCF, Nagarjuna
Fertilizers &Chemicals & Tata Chemicals )
INDIA BUDGET 2010-11
Energy sector:
The Finance Minister in his speech declared a hike in the monetary incentives for
energy sector up to Rs.5,130 crore in current fiscal year against the previous
Rs.2,230 crore. The government also intends to initiate guidelines to establish "Coal
Regulatory Authority" which would assist issues such as monetary costing of coal
and setting a performance benchmark.
He has also allocated an incentive hike of 61% for the Ministry of New and
Renewable Energy from the previous Rs.620 crore to Rs.1, 000 crore in the current
FY. In addition, to deal with the problem of energy shortage in the Ladakh district of
Jammu and Kashmir, the minister has suggested establishing of solar plants and
other micro power plants at a price of Rs.500 crore.
Other benefits for energy sector
4% of reduction in central excise tariff on LED lights, energy-proficient supply of
street, homes and offices lighting.
Full central excise tax exemption on electric cars and automobiles that propose to
be an eco-friendly substitute to petrol or diesel automobiles.
4% of tariff on such vehicles have been imposed in order to neutralize the tariff
paid by the manufacturers of such components.
4% concessional excise tariff on battery-run rickshaws
INDIA BUDGET 2010-11
Rates of tax
The Finance Minister has not proposed any change in the rates of taxes
applicable to all the classes of the assessees. However, the rate of surcharge has
been reduced for corporate assessee from existing 10% to 7.5%. The rate of
surcharge in respect of Foreign companies has not been changed. This
amendment will benefit all the corporate assessee whose income chargeable to
tax is in excess of Rs. 1 crore.
There is no amendment in respect of levy of Education Cess and Secondary &
Higher Education Cess. The said levies will remain in aggregate at 3%.
The maximum marginal tax rate in the case of all the assessees, except corporate
assessees, will be @ 30.90% and for corporate assessee @ 33.22%. The said
amendment is applicable for A.Y. 2011-12.
"Aggressive increase in slab for Personal Income tax will improve the
purchasing power of individuals and will help bring black money back
into the system. Increased purchasing power will act positive for sectors
like Auto, Retail, Entertainment, Real Estate & FMCG companies”
INDIA BUDGET 2010-11
Direct Tax cont…
Additional Deduction in respect of subscription to Long Term
Infrastructure Bonds
In the Bill it is proposed to insert the new Section 80CCF to provide that
during the Financial Year 2010-11 subscription made to Long Term
Infrastructure Bonds (as may be notified) to the extent of Rs.20,000/- shall
be allowed as deduction while computing the total income of Individual or
Hindu Undivided Family (HUF). This deduction will be over & above the
existing overall limit of tax deductible savings upto Rs.1,00,000/- u/s 80C,
80CCC and 80CCD.
The above amendment will be applicable from A.Y. 2011-2012.
Deduction in respect of contribution to Central Government Health
Scheme
As per the existing provisions of Section 80D deduction is allowed to the
extent of Rs.15,000/- for premium paid for mediclaim policy. The said
deduction will also be available, if any, contribution made to the Central
Government Health Insurance Scheme (CGHS).
The above amendment will be applicable from A.Y. 2011-2012.
INDIA BUDGET 2010-11
Direct Tax cont…
Corporate Taxation - No change in tax rates.
Tax deducted at Source [ TDS ]may be paid before the due date of filing
the return. Interest charged on late payment of TDS to attract 18% in place
of 12% pa.
Central Excise duty on Petrol & Diesel increased by Rs 1 per liter (Companies
impacted:IOC,BPCL,HPCL )
Ad Valorem Duty on large Cars, Multi Utility Vehicle increased by 20% to 22%
(Companies impacted: Maruti Suzuki,M&M,Tata Motors,Hero Honda,Bajaj Auto )
Restore the basis duty of 5 % on crude petroleum : 7.5% on Diesel & Petrol and
10% on other refined products. (Custom duty on crude is –ve for all refiners
particularly RIL)
INDIA BUDGET 2010-11
Indirect Taxes & Service Taxes cont….
Service Tax - Service Tax rate continues to be 10%.
Transport of Goods by Railway will also be liable to service tax wef 1.4.10 other
than exempted goods @3.09% (10.3% less 70% abatement)
The service tax rate will be retained at the current 10% levels. Plans to bring
many more services under service tax net
Central Sales Tax - Central sales tax rate against prescribed declaration form
continues to be 2%.
INDIA BUDGET 2010-11
Indirect Taxes & Service Taxes cont….
Reduction in central excise duty on corrugated boxes and cartons from 8 per
cent to 4 per cent;
Reduction in central excise duty on latex rubber thread from 8 per cent to 4 per
cent; and
Reduction in excise duty on goods covered under the Medicinal and Toilet
Preparations Act from 16 per cent to 10 per cent.
Proposals relating to customs and central excise are estimated to result in a net
revenue gain of Rs. 43,500 crore for the year
Proposals relating to service tax are estimated to result in a net revenue gain of
Rs 3000 crore per year.
Others :
Service Tax on Construction and Sale of Residential Property (Service Tax is a
tax levied on service providers in India. The objective behind levying service tax
is to reduce the degree of intensity of taxation on manufacturing and trade
without forcing the government to compromise on the revenue needs. As per
the budget proposal, the finance ministry has suggested 10 per cent service tax
on construction and sale of property.) Service Tax is levied only on 33 per cent of
the value
“The Finance Bill, 2010 was earlier passed by the Lok Sabha
followed by its passage by the Rajya Sabha. The Finance Bill,
2010 has been assented to by the Hon’ble President on 8-5-
2010 as Act No. 14 of 2010. With this, the Budgetary exercise
is over for the F.Y. 2010-2011.”
Presentation by
Vipul , Adip
Trupti , Parshuram & Deep
Thanks