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Union Budget 2011-12 – Synopsis

• Income Tax
1. Income Tax exemption limit increased from 1,60,000 to 1,80,000 for individual tax
payers.
2. Income Tax exemption limit increased from 2,40,000 to 2,50,000 – for senior citizen
3. Age for being classified as Senior Citizen cut to 60 years from 65 years Income Tax
4. Exemption limit of Rs 5,00,000 for individual tax payers above 80 years of age.
5. Women Citizens: Remains unchanged; i.e. at Rs. 1,90,000
6. Extension of investment on long-term infrastructure bonds by one more year.
7. Surcharge on domestic companies cut to 5% from 7.5%
8. Minimum Alternate Tax (MAT) raised to 18.5% of book profits
9. Foreign unit dividend tax rate cut to 15 percent for Indian companies
10. Special Economic Zones to come under MAT.
11. Weighted average deduction for donation to national laboratories etc for scientific
research to be enhanced to 200%.
12. Salaried taxpayers with entire tax liability discharged through TDS not required filing
tax returns.
13. LOs will be required to file Annual Information in prescribed Form
• Indirect Tax
A. Service Tax
1. Service Tax rates unchanged at 10%;
2. Service tax net extended to include health check-ups
3. Domestic air travel to pay Rs 50 more and Rs 250 on international air travel.
4. Travel in higher classes on domestic journeys would be taxed at the rate of 10%.
5. Service tax on hotel accommodation above Rs 1000 per day
6. Legal representation for businesses under service tax
7. To tax life insurance service providers
8. AC Restaurants serving liquor to be taxed with 75% abatement
9. Hospitals with more than 25 beds having AC to be taxed with 50% abatement
10. Diagnostic Test Centers to be taxed with 50% abatement

B. Excise & Custom


General
1. Peak excise duty unchanged at 10%.
2. To withdraw 130 items from exemption under Central Excise.
3. Base rate on excise duty raised to 5% from 4% on items attracting VAT of 5 %.
4. Peak Customs duty remains unchanged at 10%.
5. No change in CENVAT rates.
6. Iron ore export duty raised to 20 % / 25%
7. Optional levy on branded garments or made up proposed to be converted into a
mandatory levy at unified rate of 10 per cent.
8. Nominal one per cent central excise duty on 130 items entering the tax net.
9. Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent.
10. Self-assessment system announced for Customs duty
11. Jumbo rolls import granted exemption.
12.
Sector specific
Agriculture and Related Sectors
1. Scope of exemptions from Excise Duty enlarged to include equipments needed for
storage and warehouse facilities on agricultural produce.
2. Basic Custom Duty reduced for specified agricultural machinery from 5 per cent to
2.5 per cent.
3. Basic Custom Duty reduced on micro-irrigation equipment from 7.5 per cent to 5 per
cent.
4. De-oiled rice bran cake to be fully exempted from basic Custom Duty. Export
5. Duty of 10 per cent to be levied on its export.
Manufacturing Sector
1. Basic Custom Duty reduced for various items to encourage domestic value addition
vis-à-vis imports, to remove duty inversion and anomalies and to provide a level
playing field to the domestic industry.
2. 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.
3. 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.
4. Cash dispensers fully exempt from basic Customs Duty.

Environment
1. Full exemption from basic Customs Duty and a concessional rate of Central
2. Excise Duty extended to batteries imported by manufacturers of electrical vehicles.
3. Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology.
4. Exemption granted from basic custom duty and special CVD to critical
parts/assemblies needed for Hybrid vehicles.
5. Reduction in Excise Duty on kits used for conversion of fossil fuel vehicles into
Hybrid vehicles.
6. Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted.
7. Basic Customs Duty on solar lantern reduced from 10 to 5 per cent.
8. Full exemption from basic Customs Duty to Crude Palm Stearin used in manufacture
of laundry soap.
9. Full exemption from basic Excise Duty granted to enzyme based preparation for pretanning.
Infrastructure
1. Parallel Excise Duty exemption for domestic suppliers producing capital goods
needed for expansion of existing mega or ultra mega power projects.
2. Full exemption from basic Customs Duty to bio-asphalt and specified machinery for
application in the construction of national highways.
• Others
1. Gives 3 percent interest subsidy to farmers in 2011-12.
2. Cold storage chains to be given sub sector of infrastructure status.
3. Fiscal deficit seen at 5.1 percent of GDP in 2010-11.
4. Disinvestment in 2011-12 seen at 400 billion rupees.
5. A new revised income tax return form 'Sugam' to be introduced for small tax papers.
6. Old age pension to persons of over the age of 80 raised from Rs. 200 to Rs. 500