DEAR MEMBERS
Forwarding herewith BUDGET ANALYSIS by various persons:
various Budget 2011: Synposis by Anand Wadadekar
GENERAL:
Economy to grow at 9%, plus or minus 0.25% in 2012
Agriculture growth at 5.4%, industry at 8.1% in 2010-11
Agricultural credit limit raised to Rs 4,75,000 crore
Food inflation declined to less than half to 9.30%
Food inflation is a big concern
Economy has regained pre-crisis growth momentum
States to cut down fiscal deficit to 3% of Gross State GDP by 2014
Growth rate of services sector expected at 9.3%
Exports up 9.4% in 2010-11
FY2012 Divestment Target at Rs 40,000 crore
Removal of supply bottlenecks in food sector in focus in 2011/12
Food Security Bill to be introduced in this year
FY 2012 defence capital expenditure seen at Rs 69,199 crore
Allocation to Department of Justice increased 3 fold to Rs 3000 cr
Plan expenditure at Rs 4.14 lakh crore
To distribute 1 million Unique Identification (UID) cards per day shortly
Fiscal deficit down at 5.1% from 5.4%
Fiscal deficit seen at 4.1% in FY 13, 3.5% in FY 14
Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per cent
FINANCE:
FIIs allowed to invest in Mutual Funds and in 5-year unlisted bonds with minimum lock in period of 3 yrs
Plan to allow FII limit in infrastructure bonds to $25billion
FII limit in corporate bonds raised to $ 40billion
Plan to introduce Companies Bill in current session
Priority home loan limit raised to Rs 25 lakh from Rs 20 lakh
Tax-free bonds worth Rs 30,000 cr proposed to boost infrastructure
To introduce self assessment in customs to facilitate fast clearance
General Sales Tax (GST) Bill to be introduced in the current session
To introduce Public Debt Management Bill in 2012; To set up independent debt management office
To provide Rs 200 cr grant to IIT Kharagpur, Rs 20 crore to IIM Calcutta
Banks to cover 20,00 villages for opening accounts in FY12
Have set up dedicated cell on transfer pricing monitoring
To amend Indian Stamp Act shortly
Gross Tax Receipts at Rs 9.32 lakh crore, up 25%
Tax sops of Rs 20,000 on Infra Bonds extended for one year
Revenue deficit for FY11 seen at 3.4%
DIRECT TAX:
Direct tax code will be effective from April 1, 2012; DTC after getting Standing Committee Report; Direct Tax Code likely to be passed by parliament next fiscal year
No Tax Return to be filed if TDS deducted by employer
Age for being classified as Senior Citizen cut to 60 years from 65 years
Corporate Tax reduced to 5%
Minimum Alternate Tax (MAT) raised to 18.5% of book profits
Surcharge on domestic companies cut to 5% from 7.5%
Foreign unit dividend tax rate cut to 15 percent for Indian companies
Special Economic Zones to come under MAT
Personal Taxation:
Individuals:
Income up to Rs 1.80 lakh: NIL tax
Income between Rs 1.80-5 lakh: Tax at 10%
Income between 5-8 lakh: Tax at 20%
Income above Rs 8 lakh: Tax at 30%
Senior Citizen: Minimum Tax Exemption limit raised to Rs. 2,50,000 from Rs. 2,40,000
women Citizens: Remains unchanged; i.e. at Rs. 1,90,000
New category of very senior citizens introduced under which Senior Citizens above the age of 80 years to get Rs. 5,00,000 as minimum tax exemption
Rs 20,000 deduction made available for investment in Infrastructure Bonds extended for one year. This is above Rs. 1,00,000 80C exemption
INDIRECT TAX:
Service Tax rates unchanged at 10%;
Service tax to cover more areas:
Service tax net extended to include health check-ups
Domestic travel to pay Rs 50 service tax, Rs 250 on international travel
Service tax on hotel accomodation above Rs 1500 per day
Legal representation for businesses under service tax
To tax life insurance service providers
Peak excise duty unchanged at 10%; To withdraw 130 items from exemption under Central Excise; Base rate on excise duty raised to 5% from 4%
No change in peak customs duty rate i.e. customs duty remains unchanged at 10%
No change in CENVAT rates
CA. V.M.V.SUBBA RAO : Highlights of Union Budget 2011-12
- The basic exemption limit in the case of individuals increased from Rs.1.60 lacs to Rs.1.80 lacs. However, there is no increase in basic exemption limit in the case of Resident Women who is below 60 years at any time during the previous year.
- The qualifying age limit for senior citizens has been lowered from 65 years to 60 years and increased the current exemption limit under two categories
- Category -1 - Age of Individual – 60 years or more but less than 80 years at any time during the previous year. The basic exemption limit is increased from Rs.2.40 lacs to Rs.2.50 lacs
- Category – 2 - Age of Individual beyond 80 years or more at any time during the previous year. The basic exemption limit is Rs.5.00 lacs.
- In the case of domestic companies the surcharge has been reduced from Rs.7.5% to 5%
- In the companies other than domestic companies the surcharge has been reduced from 2.5% to 2%
- The definition of charitable purpose u/s 2 (15) includes "the advancement of any other object of general public utility". The monetary limit in respect of such activities has been enhanced from Rs.10.00 lacs Rs.25.00 lacs.
- The amount paid by an assessee as an employer by way of contribution towards pension scheme, as referred to in sec 80CCD(2) on account of an employee to the extent it doesn't exceed 10% of the salary of employee in the previous year, shall be allowed as a deduction u/s 36 in computing the income under the head profit and gains of business or profession.
- The Indian company which receives foreign dividend from foreign subsidiary company such dividend is taxable at the 15% as against 30% plus applicable surcharge.
- The rate of MAT is increased to 18.5% from the existing rate of 18% of such book profit.
- Minimum Alternative Tax has been introduced for Limited Liability Partnership (LLP) in line with MAT on companies with effect from the Assessment Year 2012 – 2013.
- The Government exempts assessees having no other income other than salary from furnishing the return of income by notification. The proposed amendment shall be effective from 1st June, 2011.
- It is proposed to omit the requirement of quoting of Documentary Identification Number in notices / order / correspondences issued by Income tax department.
- The SEZ developers are required to pay dividend distribution tax on dividends declared / distributed on or after 1st June, 2011.
- The deduction u/s 80CCF to investment in notified long term infrastructure bonds extended for the A.Y. 2012-13 also.
- Liaison offices of a company will be required to file Annual Information in the prescribed form with in the 60 days from the end of the financial year.
- The tax holiday for power sector has been extended for further period of one year i.e. upto 31.03.2012.
SERVICE TAX
- The following two new services have been proposed
- Services by air conditioned restaurants having licence to serve liquor; and
- short term accommodation hotels / inns / clubs / guest houses etc.
- The monetary limit for adjustment of excess service tax paid is increased from Rs. 1.00 lacs to Rs.2.00 lacs.
- The penalty for delayed payment of service tax u/s 76 has been reduced from 2% to 1% per month or Rs.100 per day whichever is higher.
- The maximum penalty reduced to 50% of the tax.
- The rate of interest is reduced by 3% for assesses with turnover of upto 60 lacs.
- The maximum penalty for delay in filing of return increased from Rs.2,000 to Rs.20,000
Budget 2011: CA Anshuma Rustagi
CA Anshuma Rustagi
1. GST in 2012 - IT infrastructure to be laid down by NSDL - Pilot Project in 2011 – 13 states to adopt GST.
2. Service tax refunds for exporters to be made easier. Tax Free receipts of services by exporters to be put into place.
3. New Companies Bill to be introduced in this session of the Parliament.
4. Income Tax exemption limit increased from 1,60,000 to 1,80,000 – individual tax payers
5. Income Tax exemption limit increased from 2,40,000 to 2,50,000 – for senior citizen above 65 years of age
6. Income Tax exemption limit increased to Rs 5,00,000 – for individual tax payers above 80 years of age
7. Surcharge payable by companies reduced to 5% from 7.5%
8. MAT increased to 18.5% from 18%
9. Additional Rs. 20,000 investment in long term infrastructure bonds sop to continue
10. 15% tax on dividend recd by Indian company earned from foreign subsidiary
11. Scientific Research Expenditure – contribution to National Laboratory etc – weighted deduction increased from 175% to 200%
12. Central Excise Duty to remain at 10%
13. SEZ companies to come under MAT
14. Service Tax to remain at 10%
15. New services to be taxed
a. AC Restaurants serving liquor – with 75% abatement
b. Hospitals with more than 25 beds having AC – with 50% abatement
c. Diagnostic Test Centres – with 50% abatement
d. Government Hospitals not to be subject to service tax
e. Air Travels to be subject to service tax
f. Life insurance companies to pay service tax on investment activities
g. Legal services subject to service tax
16. Input and Input services to be defined more clearly
17. Allocation of CENVAT credit between exempt and taxable services to be rationalized
CLICK HERE FOR KEY FEATURES OF BUDGET 2011-12
CLICK HERE FOR BUDGET HIGHLIGHTS 2011-12
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CA.C.V.PAWAR
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