2011 Union Budget of India

The Union Budget of India for 2011-2012 was present by Pranab Mukherjee, the Finance Minister of India on 28th February, 2011.[1] This budgetary proposals would be applicable from 1st April 2011 to 31st March 2012.

Contents Highlights
Some salient features[2][3][4][5][6]

Individual income tax exempt slab increased from 1.6 lacs to 1.8 lac. Food inflation, corruption still a concern Indian economy expected to grow at 9% Direct transfer of subsidy for BPL people for kerosene and LPG Govt provides subsidy on food, electricity to provide for the common man. This to continue FDI Policy: All procedures consolidated as a single document SEBI-registered mutual funds can accept foreign investors FII investment in corporate bonds will be raised to USD 40 billion Legislative amendments in Banking Laws soon Rs 6,000 crores to Public sector banks to maintain CRAR Women SHG development fund to be set up Rural Infrastructure Development fund to be raised Rs 18,000 crores Rs 3000 crore to NABARD for textile development 15 mega food parks for vegetables Rs 900 crores towards pulses, protein production 107 cold storage project has been approved to minimize food wastage. Cold storage will be recognised as infrastructure sub-sector Tax free bonds of Rs 30,000 crores for infrastructure building in roadways, railways National Mission for Electric and Hybrid vehicle to be launched Self assessment in customs to be introduced Seven mega leather clusters will be set up, Jodhpur to have handicraft mega cluster Govt put into operation 5-point agenda with legislation to curb black money, 11 tax information exchange treaty signed A comprehensive national policy in narcotic drug trafficking in near future Rs 1,60,807 crore for food security. This forms 36 per cent of budget allocation Rs 58,000 crore for various schemes on rural development Telecom connectivity to all panchayats Anganwadi workers will get higher remuneration of Rs 3000 per month. Rs 1500 for Anganwadi helpers Rs 52,057 crores allocated for education Rs 21,000 crores for primary education to implement free and compulsory education for children National Knowledge Network will link 1500 institutes by 2012

Rs 500+ crores to various Universities across the country Rs 500 crore for National Skill Development Fund Eligibility of old age pension for BPL reduced to 60 years. Pension amount for people aged above 80 years increased to Rs 500 Rs 1000 crore for Judiciary Caste based census will be carried out as a separate exercise in June 2011 80 years above will come under very senior citizen - a new category with tax exemption up to Rs. 5,00,000 MAT increased to 18.5 % Concessional excise duty of 10% for hybrid vehicles Customs duty on solar lanterns reduced to 5 per cent Nominal one per cent central excise duty on 130 items entering the tax net Defence budget hiked to Rs 1.54 lakh crore

[edit] Taxation
Main tax-related changes:
1. 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. 2. 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. 3. 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. 4. 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 lakhs. 5. No need to file returns if the Income is less than or equal Rs. 5.00 Lakhs. 6. In the case of domestic companies the surcharge has been reduced from Rs.7.5% to 5%. 7. In the companies other than domestic companies the surcharge has been reduced from 2.5% to 2%. 8. 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 Lakhs Rs.25.00 Lakhs. 9. 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 doesnt 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. 10. The Indian company which receives foreign dividend from foreign subsidiary company such dividend is taxable at the 15% as against 30% plus applicable surcharge. 11. The rate of MAT is increased to 18.5% from the existing rate of 18% of such book profit. 12. 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. 13. The Government exempts assesses 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. 14. It is proposed to omit the requirement of quoting of Documentary Identification Number in notices / order / correspondences issued by Income tax department. 15. The SEZ developers are required to pay dividend distribution tax on dividends declared / distributed on or after 1st June, 2011. 16. The deduction u/s 80CCF to investment in notified long term infrastructure bonds extended for the A.Y. 2012-13 also. 17. 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. 18. The tax holiday for power sector has been extended for further period of one year i.e. up to 31.03.2012.

Service tax
1. The following two new services have been proposed 1. Services by air conditioned restaurants having licence to serve liquor; and 2. short term accommodation hotels / inns / clubs / guest houses etc. 2. The monetary limit for adjustment of excess service tax paid is increased from Rs. 1.00 lacs to Rs.2.00 lacs. 3. 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. 4. The maximum penalty reduced to 50% of the tax. 5. The rate of interest is reduced by 3% for assesses with turnover of up to 60 lacs. 6. The maximum penalty for delay in filing of return increased from Rs.2,000 to Rs.20,000.

Key Features of Budget 2011-2012

OPPORTUNITIES Swift and broad based growth in 2010-11 has put the economy back to its pre-crisis growth trajectory. Fiscal consolidation has been impressive. Significant progress in critical institutional reforms that would set the pace for double-digit growth in the near future. Dynamism in the rural economy due to scaled up flow of resources to the rural areas. CHALLENGES Structural concerns on inflation management to be addressed by improving supply response of agriculture to the expanding domestic demand and through stronger fiscal consolidation. Implementation gaps, leakages from public programmes and the quality of outcomes pose a serious challenge. Impression of drift in governance and gap in public accountability is misplaced. Corruption as a problem to be fought collectively. Government to improve the regulatory standards and administrative practices.

 Inputs from colleagues on both sides of House are important in the wider national interest. Budget 2011-12 to serve as a transition towards a more transparent and result oriented economic management system in India. OVERVIEW OF THE ECONOMY Gross Domestic Product (GDP) estimated to have grown at 8.6 per cent in 2010-11 in real terms. Economy has shown remarkable resilience. Continued high food prices have been principal concern this year. Consumers denied the benefit of seasonal fall in prices despite improved availability of food items, revealing shortcomings in distribution and marketing systems. Monetary policy measures taken expected to further moderate inflation in coming months. Exports have grown by 29.4 per cent, while imports have recorded a growth of 17.6 per cent during April to January 2010-11 over the corresponding period last year.
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Indian economy expected to grow at 9 per cent with an outside band of +/- 0.25 per cent in 2011-12. Average inflation expected lower next year and current account deficit smaller. SUSTAINING GROWTH Fiscal consolidation Fiscal consolidation targets at Centre and States have shown positive effect on macro economic management of the economy. Amendment to Centres FRBM Act, 2003 laying down the fiscal road map for the next five years to be introduced in the course of the year. Proposal to introduce the Public Debt Management Agency of India Bill in the next financial year. Tax Reforms Direct Taxes Code (DTC) to be finalised for enactment during 2011-12. DTC proposed to be effective from April 1, 2012. Areas of divergence with States on proposed Goods and Services Tax (GST) have been narrowed. As a step towards roll out of GST, Constitution Amendment Bill proposed to be introduced in this session of Parliament. Significant progress in establishing GST Network (GSTN), which will serve as IT infrastructure for introduction of GST. Expenditure Reforms A Committee already set up by Planning Commission to look into the extant classification of public expenditure between plan, non-plan, revenue and capital. Subsidies Nutrient Based Subsidy (NBS) has improved the availability of fertiliser; Government actively considering extension of the NBS 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. Task force set up to work out the modalities for the proposed system.

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Peoples ownership of PSUs Overwhelming response to public issues of Central Public Sector Undertakings during current year. Higher than anticipated non-tax revenue has led to reschedulement of some disinvestment issues planned for current year. ` 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 Foreign Direct Investment Discussions underway to further liberalise the FDI policy. Foreign Institutional Investors 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. Financial Sector Legislative Initiatives To take the process of financial sector reforms further, various legislations proposed in 2011-12. Amendments proposed to the Banking Regulation Act in the context of additional banking licences to private sector players. Public Sector Bank Capitalisation ` 6,000 crore to be provided during 2011-12 to enable public sector banks to maintain a minimum of Tier I CRAR of 8 per cent. Recapitalisation of Regional Rural Banks ` 500 crore to be provided to enable Regional Rural Banks to maintain a CRAR of at least 9 per cent as on March 31, 2012.
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Micro Finance Institutions India Microfinance Equity Fund of ` 100 crore to be created with SIDBI. Government considering putting in place appropriate regulatory framework to protect the interest of small borrowers. Womens SHGs Development Fund to be created with a corpus of ` 500 crore. Rural Infrastructure Development Fund Corpus of RIDF XVII to be raised from ` 16,000 crore to ` 18,000 crore. Micro Small and Medium Enterprises ` 5,000 crore to be provided to SIDBI for refinancing incremental lending by banks to these enterprises. ` 3,000 crore to 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 ` 25 lakh for dwelling units under priority sector lending. Provision under Rural Housing Fund enhanced to ` 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. Financial Sector Legislative Reforms Commission 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. AGRICULTURE Removal of production and distribution bottlenecks for items like fruits and vegetables, milk, meat, poultry and fish to be the focus of attention this year.
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Allocation under Rashtriya Krishi Vikas Yojana (RKVY) increased from ` 6,755 crore to ` 7,860 crore. Bringing Green Revolution to Eastern Region To improve rice based cropping system in this region, allocation of ` 400 crore has been made. Integrated Development of 60,000 pulses villages in rainfed areas Allocation of ` 300 crore to promote 60,000 pulses villages in rainfed areas. Promotion of Oil Palm Allocation of ` 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. Initiative on Vegetable Clusters Allocation of ` 300 crore for implementation of vegetable initiative to provide quality vegetable at competitive prices. Nutri-cereals Allocation of ` 300 crore to promote higher production of Bajra, Jowar, Ragi and other millets, which are highly nutritious and have several medicinal properties. National Mission for Protein Supplement Allocation of ` 300 crore to promote animal based protein production through livestock development, dairy farming, piggery, goat rearing and fisheries. Accelerated Fodder Development Programme Allocation of ` 300 crore for Accelerated Fodder Development Programme to benefit farmers in 25,000 villages. National Mission for Sustainable Agriculture Government to promote organic farming methods, combining modern technology with traditional farming practices. Agriculture Credit Credit flow for farmers raised from ` 3,75,000 crore to ` 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 ` 3,000 crore in phased manner.
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` 10,000 crore to be contributed to NABARDs Short-term Rural Credit fund for 2011-12. Mega Food Parks Approval being given to set up 15 more Mega Food Parks during 2011-12. Storage Capacity and Cold Chains Augmentation of storage capacity through private entrepreneurs and warehousing corporations has been fast tracked. Capital investment in creation of modern storage capacity will be eligible for viability gap funding of the Finance Ministry. Agriculture Produce Marketing Act In view of recent episode of inflation, need for State Governments to review and enforce a reformed Agriculture Produce Marketing Act. Infrastructure and Industry Allocation of ` 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 ` 20,000 crore by March 31, 2011 and ` 25,000 crore by March 31, 2012. Under take out financing scheme, seven projects sanctioned with debt of ` 1,500 crore. Another ` 5,000 crore will be sanctioned during 2011-12. To boost infrastructure development, tax free bonds of ` 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. Two Committees set up for greater transparency and accountability in procurement policy; and for allocation, pricing and utilisation of natural resources. Issues relating to reconciliation of environmental concern from various departmental activities including those related to infrastructure and mining to be considered by a Group of Ministers. National Mission for hybrid and electric vehicle to be launched.
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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

 Of 23 suggestions made by Task Force on Transaction Cost, constituted by the Department of Commerce, 21 suggestions already implemented. Action to be taken on the remaining two suggestions. Transaction Cost of ` 2,100 crore will thus be mitigated. 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. Membership of various international fora engaged in anti money laundering, Financial integrity and Economic development, Exchange of information for tax purposes and transparency, secured. Various Tax Information Exchange Agreements (TIEA) and Double Taxation Avoidance Agreements (DTAA) 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. STRENGTHENING INCLUSION National Food Security Bill (NFSB) to be introduced in the Parliament during the course of this year. Allocation for social sector in 2011-12 (` 1,60,887 crore) increased by 17 per cent over current year. It amounts to 36.4 per cent of total plan allocation.
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Bharat Nirman Allocation for Bharat Nirman programme proposed to be increased by ` 10,000 crore from the current year to ` 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 ` 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 ` 1,500 per month to ` 3,000 per month and for Anganwadi helpers from ` 750 per month

to ` 1,500 per month. Scheduled Castes and Tribal Sub-plan Specific allocation earmarked towards Schedule Castes Sub-plan and Tribal Sub-plan in the Budget. Allocation for primitive Tribal groups increased from ` 185 crore in 2010-11 to ` 244 crore in 2011-12. Education Allocation for education increased by 24 per cent over current year. Sarva Shiksha Abhiyan ` 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. National Knowledge Network Connectivity to all 1,500 institutions of Higher Learning and Research through optical fiber backbone to be provided by March, 2012. Innovations National Innovation Council set up to prepare road map for innovations in India. Special grant provided to various universities and academic institutions to recognise excellence.
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Skill Development Additional ` 500 crore proposed to be provided for National Skill Development Fund during the next year. An international award with prize money of ` 1 crore being instituted for promoting values of universal brotherhood as part of National celebrations of 150th Birth Anniversary of Gurudev Rabindranath Tagore. 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 Target of providing banking facilities to all 73,000 habitations having a population of over 2,000 to be completed during 2011-2012. Unorganised sector Exit 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 ` 500 per month instead of ` 200 at present. Environment and Climate Change Forests ` 200 crore proposed to be allocated for Green India Mission from National Clean Energy Fund. Environmental Management ` 200 crore proposed to be allocated for launching Environmental Remediation Programmes from National Clean Energy Fund.

Cleaning of Rivers and Lakes Special allocation of ` 200 crore proposed to be provided for clean-up of some more important lakes and rivers other than Ganga. Some Other Initiatives To boost development in North Eastern Region and Special Category States, allocation for Special Assistance doubled. ` 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 (` 100 crore) and Jammu region (` 150 crore).
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Allocation under Backward Regions Grant Fund increased by over 35 per cent. Funds allocated under Integrated Action Plan (IAP) for addressing problems related to Left Wing extremism affected districts. 60 selected Tribal and backward districts provided with 100 per cent block grant of ` 25 crore and ` 30 crore per district during 2010-11 and 2011-12 respectively. A lump-sum ex-gratia compensation of ` 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. Provision of ` 1,64,415 crore, including ` 69,199 crore for capital expenditure to be made for Defence Services in 2011-12. To build judicial infrastructure, plan provision for Department of Justice increased by three fold to ` 1,000 crore. Census 2011 To enumerate castes other than Schedule Castes and Schedule Tribes in Census 2011, caste to be canvassed as a separate time bound exercise. IMPROVING GOVERNANCE UID Mission From 1st October, 2011 ten lakh Aadhaar numbers will be generated per day. IT Initiatives Various IT initiatives taken for efficient tax administration. 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 ` 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. A 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. Steps initiated to reduce litigation and focus attention on high revenue cases.

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Corruption Group of Ministers constituted to consider measures for tackling corruption. Recommendations to be made in a time bound manner. Performance Monitoring and Evaluation System In pursuance of recommendations of Second Administrative Reforms Commission, 62 departments covered under Performance Monitoring and Evaluation System (PMES) to assess their effectiveness. TAGUP Recommendations of Technology Advisory Group for Unique Projects (TAGUP) submitted and accepted in principle. BUDGET ESTIMATES 2011-12 Gross Tax receipts are estimated at ` 9,32,440 crore. Non-tax revenue receipts estimated at ` 1,25,435 crore. Total expenditure proposed at ` 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. 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 ` 3.43 lakh crore. Central Government debt estimated at 44.2 per cent of GDP for 2011-12 as against 52.5 per cent recommened by the 13th Finance Commission.
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PART B TAX PROPOSALS Direct Taxes Exemption limit for the general category of individual taxpayers enhanced from ` 1,60,000 to ` 1,80,000 giving uniform tax relief of ` 2,000. Exemption limit enhanced and qualifying age reduced for senior citizens. Higher exemption limit for Very Senior Citizens, who are 80 years or above. Current surcharge of 7.5 per cent on domestic companies proposed to be reduced to 5 per cent. Rate of Minimum Alternative Tax proposed to be increased from 18 per cent to 18.5 per cent of book profits. Tax incentives extended to attract foreign funds for financing of infrastructure. Additional deduction of ` 20,000 for investment in long-term infrastructure bonds proposed to be extended for one more year.

 Lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary. Benefit of investment linked deduction extended to businesses engaged in the production of fertilisers. Investment linked deduction to businesses developing affordable housing. Weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to be enhanced to 200 per cent. System of collection of information from foreign tax jurisdictions to be strengthened. A net revenue loss of ` 11,500 crore estimated as a result of proposals. Indirect Taxes To stay on course for transition to GST. Central Excise Duty to be maintained at standard rate of 10 per cent. Reduction in number of exemptions in Central Excise rate structure. 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. Optional levy on branded garments or made up proposed to be converted into a mandatory levy at unified rate of 10 per cent. Peak rate of Custom Duty held at its current level.
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Agriculture and Related Sectors Scope of exemptions from Excise Duty enlarged to include equipments needed for storage and warehouse facilities on agricultural produce. 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. Manufacturing Sector Basic Custom Duty reduced for various items to encourage domestic value addition vis--vis imports, to remove duty inversion and anomalies and to provide a level playing field to the domestic industry. 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. Environment 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. Infrastructure 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.
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Other Proposals Scope of exemptions from basic Customs Duty for work of art and antiquities extended to apply for exhibition or display in private art galleries open to the general public. 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. Proposals relating to Customs and Central Excise estimated to result in a net revenue gain of ` 7,300 crore. 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 ` 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 ` 60 lakh freed from the formalities of audit. To encourage voluntary compliance the penal provision for Service Tax are being rationalised. Similar changes being carried out in Central Excise and Custom laws.

 Proposals relating to Service Tax estimated to result in net revenue gain of ` 4,000 crore. Proposals relating to Direct Taxes estimated to result in a revenue loss of ` 11,500 crore and those related to Indirect Taxes estimated to result in net revenue gain of ` 11,300 crore.

Here are some relevant points from the Union Budget 2011-2012 relating to Microfinance and Financial Inclusion. Micro Finance Institutions

The finance minister stated that Micro Finance Institutions (MFIs) had emerged as an important means to financial inclusion. Creation of a dedicated fund for providing equity to smaller MFIs would help them maintain growth and achieve scale and efficiency in operations. He proposed to create in the course of the year, India Microfinance Equity Fund of Rs 100 crore with SIDBI. He also said that to empower women and promote their Self Help Groups (SHGs), he intended to create a Womens SHGs Development Fund with a corpus of Rs 500 crore. The Committee set up by RBI to look into issues relating to micro finance sector in India had submitted its report. The Government was considering putting in place appropriate framework to protect the interests of small borrowers. Financial Inclusion

The minister in his last budget speech had advised banks to provide banking facilities to habitations with a population of over 2000 by March, 2012. The Banks identified about 73,000 such habitations for providing banking facilities using appropriate technologies.

A multi-media campaign, Swabhimaan, had been launched to inform, educate and motivate people to open bank accounts. During the year 2011, banks will cover 20,000 villages. Remaining will be covered during 2011-12 stated the minister. Unorganized sector

Mukherjee had announced a co-contributory pension scheme Swavalamban in the Budget of 2010-11.

The scheme had been welcomed by the workers in unorganized sector. Over 4 lakh applications had already been received and on the basis of the feedback received, he relaxed the exit norms whereby a subscriber under Swavalamban would be allowed exit at the age of 50 years instead of 60 years, or a minimum tenure of 20 years, whichever was later. He also made a proposal to extend the benefit of Government contribution from three to five years for all subscribers of Swavalamban who enroll during 2010-11 and 2011-12. An estimated 20 lakh beneficiaries will join the scheme by March 2012 said the minister. Under the on-going Indira Gandhi National Old Age Pension Scheme for BPL beneficiaries, the eligibility for pension was proposed to be reduced from 65 years at present to 60 years. Further, for those who are 80 years and above, the pension amount would be raised from Rs 200 at present to Rs 500 per month. Financial Sector legislative Initiatives

The Finance Minister said that in his last Budget speech, he had announced that Reserve Bank of India would consider giving some additional banking licenses to private sector players. Accordingly, RBI had issued a discussion paper in August, 2010, inviting feedback from the public. RBI proposed some amendments in the Banking Regulation Act. He intended to bring suitable legislative amendments in this regard in the session. RBI was planning to issue the guidelines for banking licenses before the close of the financial year of 2011. Micro, Small and Medium Enterprises Micro and Small enterprises play a crucial role in furthering the objective of equitable and inclusive growth said the minister. He explained that last year, Rs 4,000 crore was provided to SIDBI for refinancing incremental lending by banks to these enterprises and for the year 2011-12, he proposed to provide Rs 5,000 crore to SIDBI for the same purpose out of the shortfall of banks on priority sector lending targets. Handloom weavers have been facing economic stress he said. Consequently, many of them have not been able to repay debts to handloom weaver cooperative societies which have become financially unviable. He intended to make provision of Rs 3,000 crore to NABARD, in phases for the cooperative societies. The initiative would benefit 15,000 cooperative societies and about 3 lakh handloom weavers. The details of the scheme would be worked out by the Ministry of Textiles in consultation with Planning Commission Housing Sector Finance

Speaking about housing and finance sector, the minister stated provision of housing finance to targeted groups in rural areas at competitive rates and enhancing the provision under Rural Housing Fund to Rs 3,000 crore from the existing Rs 2,000 crore was required. Credit enablement of Economically Weaker Sections (EWS) and LIG households was a serious challenge he said. To address this issue, the minister made a proposal to create a Mortgage Risk Guarantee Fund under Rajiv Awas Yojana. The scheme would guarantee housing loans taken by EWS and LIG households and enhance their credit worthiness. Agriculture Credit

The Minister explained that to get the best from their land, farmers needed access to affordable credit. Banks had been consistently meeting the targets set for agriculture credit flow in the past few years. For the year 2011-12, he spoke of raising the target of credit flow to the farmers from Rs 3,75,000 crore this year to Rs 4,75,000 crore in 2011-12. Banks had been asked to step up direct lending for agriculture and credit to small and marginal farmers. In view of the enhanced target for flow of agriculture credit, the minister proposed to strengthen NABARDs capital base by infusing Rs 3000 crore, in a phased manner, as Government equity. This would raise its paid-up capital to Rs 5,000 crore. To enable NABARD refinance the short-term crop loans of the cooperative credit institutions and RRBs at concessional rates, he intended contribution of Rs 10,000 crore to NABARDs Short-term Rural Credit Fund for 2011-12 from the shortfall in priority sector lending by Scheduled Commercial Banks

Salient Features of Indian Union Budget 2011 2012

1. IncomeTax exemption limit raised to Rs. 1.80 lakh from Rs. 1.60 lakh . 2. Exemption for senior citizens raised to Rs. 2.5 lakh. 3. Tax under women slab unchanged. 4. Tax exemption raised to Rs. 5 lakh for senior citizens of 80 years. 5. To increase service tax on air travel. 6. Excise and customs duty proposals to result in the net gain of Rs. 7,300 crore. 7. Export duty rates on iron ore unified and kept at 20% ad valorem. 8. Basic customs duty on agricultural machinery reduced to 4.5% from 5%. 9. Basic customs duty on raw silk reduced from 30 to 5 per cent. 10. Excise and customs duty proposals to result in the net gain of Rs. 7,300 crore.

11. Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted. 12. Peak rate of customs duty maintained at 10% in view of the global economic situation. 13. Customs duty exemptions for hybrid auto parts. 14. Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted. 15. Standard rate of central exercise duty maintained at 10%. 16. Central government debt in proportion to GDP will be 44.2% in 2011-12. 17. 20% export duty on all grades of iron ore. 18. Basic customs duty reduced on certain textile products 19. No change in service tax rate of 10%. 20. No change in central excise duty. 21. Plan to levy 1% on 130 consumer items. 22. Revenue deficit fixed at 2.3 per cent in revised estimates of 201011 and 1.8 per cent in 201112. 23. Total plan expenditure will go up 100 per cent in nominal terms in the next year. 24. 15% tax on dividend for Indian cos from foreign unit. 25. Direct Tax proposals result in expenditure of Rs. 11,500 cr. 26. To reduce surcharge on domestic companies to 5% from 7.5% 27. MAT rate hiked to 18.5% from 18%. 28. MAT on developers in SEZs to be levied. 29. Fiscal deficit revised to 5.1% from 5.5% for FY11. 30. Total expenditure raised by 13.4% at Rs. 12.57 lakh cr over budget estimates. 31. Gross tax receipts estimated at 9.32 lakh cr for FY 2011-12. 32. Bill to amend India Stamp Act soon. 33. Budget allocation of Rs. 100 cr for Ladakh and Rs. 150 cr for Jammu for implementation of projects identified by taskforce. 34. Old age pension to persons of over the age of 80 raised from Rs. 200 to Rs. 500 35. Health allocation up by 20% to R 27,600 cr. 36. Rs. 9- lakh ex-gratia for defence personnel for 100% disability fighting Left-wing extremism. 37. To set up 15 more mega food parks. 38. Remuneration of anganwadi workers raised from Rs. 1,500 to Rs. 3,000 per month, Helpers to get Rs. 1,500 from Rs. 750. 39. Tax free bonds of Rs. 30,000 cr to be issued for infrastructure development. This will cover Warehousing Corporation, NHAI, IRFC and Hudco. 40. Allocation under Rashtriya Krishi Vikas Yojana to be raised from Rs. 6,755 crore in the current year to Rs. 7,860 crore. 41. Rs. 50 cr grant to Aligarh Muslim University centres in Murshidabad in West Bengal and Malappuram in Kerala. 42. Rs. 200 cr for environmental remediation programme. 43. Age for pension eligibility reduced from 65 years to 60 years under Indira Gandhi Yojana scheme. 44. To move insurance, pension and banking bills in Parliament. 45. Rs. 500-cr for National Development Fund.

46. Rs. 400-cr as one-time grant for IIT-Kharagpur. 47. Move to set up State Innovation Councils underway. 48. Allocation to education sector raised to Rs. 52,000 cr. 49. Scholarship scheme for SC/ST students in classes iX, X. 50. Increase in allocation to higher education. 51. Plan 17% increase in social sector spending. 52. To introduce Food Security Bill. 53. Tax free bonds of Rs. 30,000 cr to be issued for infrastructure development. This will cover Warehousing Corporation, NHAI, IRFC and Hudco. 54. Fertiliser industry to be included under infrastructure category. 55. New companies bill to be introduced. 56. GoM to be set up to deal with corruption. 57. Five-fold strategy to deal with black money. 58. Mega cluster for leather products to be introduced. 59. Existing interest subvention scheme on short term farm loans at 7 % interest to continue. 60. Self-assessment in customs to be introduced. 61. Credit flows to farmers raised from Rs. 3.75 lakh crore to Rs. 4.75 lakh crore. 62. Constitution Amendment Bill for introduction of GST in this session. 63. Goods and Services Tax Bill this year. 64. Direct Taxes Code Bill likely to be passed by Parliament next financial year after getting Standing Committee report. 65. Public Debt Management Agency Bill in the next fiscal. 66. Indian mutual funds to get direct access to foreign markets; FIIs to be allowed to invest in MFs. 67. To liberalise FDI policy further. 68. To extend infra tax breaks to fertiliser sector. 69. To set up microfinance equity fund. 70. Government to move towards direct cash transfer of cash subsidy as regards kerosene, LPG and fertilisers from March 2012 for BPL in view of large diversion. 71. 3% interest subvention to farmers who repay in time. 72. Nabard capital base to be increased by infusing Rs. 10,000 cr. 73. Rural housing fund increased to Rs. 3,000 cr. 74. Banks asked to step up lending to agriculture. 75. Allocation under Rashtriya Krishi Vikas Yojana to be raised from Rs. 6,755 crore in the current year to Rs. 7,860 crore. 76. Budget proposes to raise housing loan limit from Rs. 20 lakh to Rs. 25 lakh for priority sector lending. 77. Allocation for farm development hiked to Rs. 7,860 cr. 78. Rs. 300 cr proposed to promote production of cereals. 79. Indian micro-finance equity with SIDBI to be formed at Rs. 100 crore. 80. Rs. 6,000 cr to be given to public sector banks to maintain capital-to-risk assets ratio norms. 81. RBI to bring in new guidelines for banking licences. 82. Aiming Fiscal deficit of 3% by fiscal 2014. 83. Central electronic registry to reduce fraud cases.

84. FII investment limit for infra corporate bonds hiked to $40 billion. 85. Discussions on to further liberalise FDI policy. 86. Preparation of GST rollout in final stages. 87. Microfinance equity fund of Rs. 100 cr proposed. 88. Govt committed to hold 51% in PSUs. 89. Rs. 3,000 cr to Nabard for handloom societies. 90. Women self-help group development fund to be set up. 91. Direct transfer of subsidy for kerosene. 92. Goods and Services Tax Bill to be introduced in Parliament this year. 93. Direct Tax Code Bill likely to be passed by Parliament next financial year after getting Standing Committee report. 94. Disinvestment target at Rs. 40,000 cr. 95. Direct Tax Code from April 2012. 96. SEBI-registered MFs to be allowed direct access to foreign funds. 97. Expect RBI to moderate inflation. 98. Public Debt Management Agency Bill to be introduced next financial year. 99. Current account deficit and average inflation in 2011-12 likely to be less than current year. 100. FDI policy review done in Sept 2010. 101. Economic growth in 2011-12 likely to be 9 per cent. 102. Admits large-scale diversion of kerosene. 103. Introduction of DTC will be a watershed moment. 104. Debt managment bill to be introduced. 105. Constitutional Amendment Bill on GST to be introduced. 106. Expect agri sector to grow at 5.4% in 2011. 107. Growth in 2010-11 broad-based. 108. Economy resilient to shocks. 109. RBI measures will further moderate inflation. 110. GDP estimated growth at 8.6% in real terms. 111. New dynamism in rural economy. 112. Core inflation in check. 113. Current account deficit is at 2009-10 levels, and is a matter of concern. 114. Huge difference in wholesale and retail prices not acceptable. 115. Total food inflation down from 20.2 per cent last year to 9.3 per cent in Jan 116. Revival in private investment should be sustainable. 117. Service growing in double digits. 118. Need to reconcile legitimate environmental concerns with developmental needs. 119. Food Inflation has declined by half, but still a matter of concern.

Indian Union Budget 2011 Post Budget Analysis (Part 1)

To begin with, the Economic Survey presented on Saturday estimated our GDP growth rate to border around 9% with a probable quarter shift forwards or backwards. This leaves us with a range of 8.75-9.25% growth rate for the financial year ahead. The positivity about our economy stemmed from the rising consumer demand, shifting demographics and the ever growing services industry. Therefore the Survey signaled on to efficient means of Demand management on the Domestic front. When we talk about Domestic there are major issues related to inclusion that need to be tackled with. As per reports by The Economist, India and China are bound to be the growth drivers for the times to come. We believe, it is this very temperament that fuelled the Budget Allocation for 2011-2012. Some major indicators:

The Fiscal Deficit which has been a cause of great concern lately turned out to be a dud. The estimates are drawn at 4.6% against the projected 4.8% earlier. This improvement has primarily been due to divestments and the 3G auctions which improved liquidity in the Short Run. The Divestment Target for this year has been set up as Rs. 40,000 Crores. Another area of improvement is the Direct Cash Subsidy, wherein direct cash will be transferred to people below the Poverty Line. The government continues to Pull out the Stimulus and phase in a Tighter Monetary Policy as treading on to a higher growth rate. Thus, rise in interest rates are likely which would impact future bond prices. With the introduction of two types of Banking Licenses: Basic Banking & Universal Banking Operations, competition within private players is bound to increase. Investments in infrastructure have been revved up with increase in limit for FIIs. Internally, the Infrastructure Outlay has been increased to Rs. 2.14 lac crores. In addition creation of Tax Free Debt funds worth Rs. 30,000 crores will be issued by the Government. In all, Infrastructure has been allocated 48.5% of the total allocation.

Some of the Direct Tax changes are as follows: o IT exemption for general increased to 1.8lacs from 1.6lacs (for males alone) o IT exemption for Senior citizens (Now from Age 60-80) increased to 2.5lacs o IT deduction limit of 5lacs for Super Senior Citizens ( Age 80 and above)

o Surcharge on Tax for corporate reduced from 7.5% to 5% for domestic firms and 2.5% to 2% for international firms o MAT increased from 18% t0 18.5% which will make SEZs bleed

Some of the major Indirect Tax changes are as follows: o Excise duty for non-petroleum goods reduced to 4%-5% o Full exemption granted for Computers & Cold Storage equipment. o Ad Valorem duty rates for Cement. o Increase in export duty of Iron Ores from 15% to 20% o Service Tax increased for restaurants, hotels, Airfares, Health care, Branded Clothing and Insurance

Impacts Of Union Budget On Indian Stock Markets

The Indian stock market was clouded with Union Budget worries the whole of last month. However the budget only spelt well for the market. In the coming times economic consolidation will lead to sustainable growth which will be beneficial for India Inc. BUDGET CONCERNS prevailed in the Indian stock market during February. The market was more or less volatile. During the second half of February the market showed a little bit of consolidation. The Rail Budget was a non- event but Union budget was not. On the budget day sensex gained 175 points, the highest single day gain in February. Except the fuel price hike proposal the budget was pretty decent according to first reviews. Finance Minister later stated that the inflationary impact of budget would be 0.41 percent. The wholesale price index in India rose 8.56% in January, mainly because of higher food prices. Estimates show that the figure will go up in the coming months also. Finance Ministerss announcement regarding disinvestment and foreign investment were the major factors that influenced the Indian market on Budget day. The February closing of sensex was at 16430, up by 0.44 percent against last month closing at the rate of 16358. Compared to January, February was

a good month for Indian equities. Market expectations regarding the union budget were low but the Finance Minister surprised the street. His announcements regarding fiscal consolidation and fiscal deficit made everyone happy. Particularly when he stated that double digit growth rate was achievable. Positive impact of Budget has continued in the Indian stock market during the opening days of March also. Nifty was up by 40 points in February against its January closing. Midcap and Smallcap indices underperformed sensex and Nifty. Smallcap stocks were down by 2 percent whereas Midcap stocks recorded 1.72 percent decrease in February. Selling pressure in these stocks continued the whole month. FIIs were in favour of Indian equities; altogether they bought equities worth Rs.1216.90 Cr. But Indian Insurance and Mutual Fund companies continued selling for the second consecutive month. DIIs sold Rs.309.80 Cr worth in equities during February. Mixed response was seen in different sectors. Reality was the most beaten down sector, it recorded a decrease of 7.51 percent. Oil companies and power sector companies were not in the radar of buyers. Both down by 3.54 percent and 3.27 percent respectively. Public sector companies also felt the heat of selling pressure and were down by 2.74 percent. All other sectors barring these four were in the green territory. Consumer durable stocks were a hot favourite among traders in February. BSE CD index was up by 5.34 percent. Buying interest also seen in IT, Health Care and Auto stocks. All these sectors were up by above 3 percent. Debt worries in Eurozone countries were another major event during this period. But it failed to make a strong impact in Indian stocks. Positive trend in Asian Indices influenced Indian stocks too. Government set its disinvestment target at Rs.40,000 Cr in FY2011 and has plans to redraw the foreign investment structure. There are Budget proposals to give banking license to more public players and NBFCs. All these developments served as positive inputs to Indian stock market. Going ahead economic consolidation would lead to sustainable growth which will be beneficial for India Inc. Selective investment will be an intelligent decision now.

Union Budget 2011-2012 and Its Impact on the Health Sector

Budget and Health sector The medical fraternity is a totally disappointed lot after the deliverance of this years budget. Although the The total allocation for the health sector has been hiked to Rs 26,760 crore from Rs 23,530 crore last year there is not much for them this year in the budget. Most of the money is diverted to rural healthcare programmes of the government. Routine immunization programme gets a small boost from Rs 417 crore to Rs 511 crore while pulse polio immunisation has been reduced by half from Rs 1017 crore to Rs 663 crore. The Government's flagship National Rural Health Mission (NRHM) has seen a hike in its budget allocation from Rs 2100 crore to Rs 2356 crore. Medical bills are expected to go up by 5 -10% in drugs and medical equipments. Homeopathy medications cost too would go up. Due to the increase in service tax, there is also bound to be an increase in cost of diagnostic tests and doctors service. The medical insurance premium is also likely to increase for the common man though he did mention about the Rashtriya Swashthya Bima Yojana In his speech - "The Rashtriya Swashthya Bima Yojana has emerged as an effective instrument for providing a basic health cover to poor and marginal workers. It is now being extended to MGNREGA beneficiaries, beedi workers and others," Hospitals with more than 25 beds, or those with air conditioning, will now be charging more for their services. This not only affects those patients who are supported by by health insurances and corporate sectors but also affects individual patients. Overall there has been total disappointment from the medical fraternity.

Union Budget 2011-2012 and Its Impact on the Automobile industry

Finance Minister Pranab Mukherjee presented the Union Budget 2011 in the parliament today. As far as automobile industry is concerned the budget was breather as it proposed no excise duty hike as predicted earlier. So, there will be no car price hike for now. Many experts feel that

it is the wise decision as raw material prices are on the rise from last year which already cost many price hikes in automobile industry.

Automobile sales, which has been growing at the rate of 30%, will continue to ride high though the sector is still concerned about rising input and fuel costs. Some analysts feel that continuation of duties will give an opportunity for automobile companies to go for increase in prices which were postponed due to the assumption that price hike would lead to reduction in demand. Karl Slym, President & Managing Director, General Motors India said about the Union Budget 2011, As far as the automotive industry is concerned, the budget is on the expected lines. The Governments intention to reach consensus with state governments and introduce GST bill in the current session of the parliament, introduction of DTC by April 1, 2012, setting up of National Mission for Hybrid and Electric Vehicles are welcome decisions. Led by Bajaj Auto Chairman Rahul Bajaj , the automobile industry has praised Finance Minister Pranab Mukherjees decision not to raise excise duty on vehicles in the Union Budget today. It is a good budget I congratulate Pranab Mukherjee for not raising excise duties on vehicles, Bajaj told media.

Union Budget 2011 in India: Tax Provisions

Union Budget 2011 was being approached by much curiosity and anxiety. FM Pranab Mukherjee presented the Budget for FY 2011-12 in the Parliament earlier today. As the provisions were rolled out, the Bill turned out to be a mixed bag. The FM had a tough task of balancing the conflicting goals of lower taxation, lower inflation, growth impetus, and budget deficit. Some of the major changes were proposed in the fiscal provisions, as highlighted below.

Indirect Taxes The indirect tax proposals were designed mainly to hedge the losses arising from the altered direct tax rates. Certain provisions are likely to impact the pockets of an average Indian, nullifying some of the direct tax benefits. Some of the expected changes from the industry point of view have not been considered. - Peak Customs Duty remains unaltered at 10%. Export duty on iron ore is enhanced to 20%, while Custom levy on some agricultural equipment is lowered by 0.5% to 4.5%. - On one hand, the FM has kept the Central Excise rate at 10%, while on the other Excise exemption is rolled back from 130 items. These will be subject to 1% rate for now. - The CENVAT rates also remain unchanged. - Mukherjee has decided to continue some of the economic stimulus for the coming year. - You will still be paying service tax at 10%, but on 320 services against 117 earlier. The additional services include hotel rent above 1,000 per day, air-conditioned restrobars and large a/c hospitals. Direct Taxes Individuals and HUF Apparently, Income tax revisions are something to cheer about. The FM has set the grounds for a convergence with the proposed Direct Tax Code, to be implemented in 2012. - The exemption limit for males under 60 years has been increased from Rs. 1,60,000 to Rs. 1,80,000. - Women have to contend with the same tax slabs. - There is some good news for taxpayers above 60 as the qualifying age for Senior citizens is reduced from 65 years to 60 years of age. The tax exemption for this section has been extended to Rs. 2,50,000. - Taxpayers at 80 and above will be now called 'Very Senior Citizens' and they can avail exemption up to Rs. 5,00,000. Male taxpayers below 60 years 0 - Rs. 1,80,000 Nil 1,80,001 - 5,00,000 10% 5,00,001 - 8,00,000 20% 8,00,001 and above 30%

Female taxpayers below 60 years 0 - Rs. 1,90,000 Nil 1,90,001 - 5,00,000 10% 5,00,001 - 8,00,000 20% 8,00,001 and above 30% Senior citizens (60 years and above) 0 - Rs. 2,50,000 Nil 2,50,001 - 5,00,000 10% 5,00,001 - 8,00,000 20% 8,00,001 and above 30% - Tax Deduction of Rs. 20,000 on long-term infrastructure bonds under section 80 CCF continues. Corporate Taxpayers - Tax net of MAT (Minimum Alternate Tax) is widened to include developers of Special Economic zones. Mat rate is enhanced from 18% to 18.5%. - Tax surcharge of 7.5% on domestic entities is reduced to 5%. - Despite industry lobbying for a reduction in corporate tax to 25%, the FM has retained the rate at 30%. - The withholding tax on notified infrastructure funds is lower to 5%. - Tax deductions are extended to companies operating in economy homebuilding and fertilizers sectors. - Tax on dividend repatriated from foreign subsidiaries is reduced to 15%.

India Budget For Year 2011-12 Neutral On Pharmaceuticals Sector

India Budget For Year 2011-12 Neutral On Pharmaceuticals Sector One of the most awaited affairs of Indian parliament took place today. The Government of India presented the budget for 2011-12. Today the finance minister of India presented the budget in the Lok Sabha. There were lots of expectation

from the Pharma sectors and companies like Khatore Pharmaceuticals (www.khatorepharma.com) that are engaged in Ayurvedic (alternative) medicine business. The budget hiked the allocations for health for the next financial year of 2011-12. The government continued to provide the push for better health care for the citizens and hiked the plan outlay for health by 20 percent. Alternative medicines also got a push in the budget with the government announcing the reduction in the import duties for certain inputs for the manufacture of alternative medicine. The budget was especially good for the poor people and increased the allocations for The Rashtriya Swasthya Bima Yojana which will be now extended to MGNREGA beneficiaries, beedi workers and others. In 2011-12, the government further proposed to extend the scheme to cover unorganized sector workers in hazardous mining and associated industries like slate and slate pencil, dolomite, mica and asbestos etc. The biggest relief for the industry and companies like Khatore Pharmaceuticals (www.khatorepharma.com) is that the budget did not hike the excise duty on drugs and did not roll back the stimulus package that were extended couple of years back, though there were some apprehensions in this regard. This will boost the sales of the small pharma companies and help them in these tough economic times when the prices of most of the things have increased. India has a growing business of pharmaceuticals industry and it is one of the leaders in the generic medicines. In a nutshell we can say that the Budget is neutral for the pharmaceutical sector. The allocation to Ministry of Health & Family Welfare have been increased by 20% to 26,760 crore for FY2012 from Rs 22,300 crore. The industry was expecting an extension on the weighted deduction on the in-house R&D which stands at 200% but there was no extension provided on the weighted deduction which is available till FY2012 only. This was a disappointment for the Pharma companies actively involved in R&D activities. Even though MAT has been increased to 18.5% from 18%, it would be totally nullified by the decrease in the surcharge to 5% from 7.5%. There were also no indications on the extension of the export oriented unit benefit which is available only till FY2011, which could be a negative for the sector, especially companies that have been not or have been slow in expansion through special economic zones. This article is provided by Khatore Pharmaceuticals the makers of Ayurvedic medicines Kamalahar which is very good for Ayurvedic treatment of liver disorders such as hepatitis, Jaundice, cirrhosis, etc. Bloggers that are want to get information about the sphere of lose weight fast, then check out the link that was quoted in this line.

India Budget For Year 2011-12 Neutral On Pharmaceuticals Sector in Alternative Medicine.

Indian Tourism Sector and Union Budget 2011 - Presentation Transcript 1. Indian Tourism Sector Implication of Union Budget 2011 2. 3. International Tourism Industry International Tourist Arrivals (ITAs), 2001-10 (Figures in Million) Source: World Tourism Organization (www.unwto.org) International Tourist Arrivals was totaled 642 million between January and August 2010, expecting to increase in the range of 5%-6% over the full year. 4. International Tourist Arrivals by Country of Destination. 2008, 2009 and 2010 (Figures in Million) Top 10 Destination Country wise Out of a global total of 880 million tourists in 2009, India was ranked at 41 st place, still a long way to be among top 10 destinations in the world. Source: World Tourism Organization ( www.unwto.org ), http:// www.statistics.gov.uk/cci/nugget.asp?id=352 Figures for Italy and Germany are not updated. 2009 2008 2010 5. World Travel Market o In 2009, International tourism with tourist arrivals was down by 4% and world travel exports fell by 9% worldwide. However, Asia was least impacted o World tourism is recovering rapidly. According to WTO, the number of international tourists increased by 3-4% in 2010. Source: World Tourism Organization ( www.unwto.org ) and Indian Economic Survey 2010-11 Decline in Number of International Tourists, 2009 (Figures in %) 6. 7. Tourism Market in India o India is a land of vast attractions, ranging from diverse natural formations to historical monuments and relics going back to more than two millennia, there is vast scope for expansion of tourism in India. o In 2010 the total number of foreign tourists that arrived in India was 5.58 million and they brought in a foreign exchange earning of Rs. 648.89 billion ($14.4 billion). o It should be possible for India to get many times more inbound tourists than it currently does. Tourism is the key area which can yield large benefits for society. 8. o FTA in India jumped to 5.58 million in 2010 compared to 5.11 million in 2009. Similarly, FEE increased to $14 billion compared to $11 billion in 2009. o There is a need to offer unique experience to international tourists. International tourists are used to booking their stay online.

In India, Tourists have to depend on local travel agents to find a place to stay.

Foreign Tourist Arrivals Foreign Tourist Arrivals (FTAs), 2006-10 (Figures in Million) Source: Indian Tour Operator Promotion Council; Ministry of Tourism and Culture

Indias performance in tourism sector has been quite impressive over this decade.

Foreign Exchange Earning (FEEs), 2006-10 (Figures in $ Million) 9.

o o

The number of domestic tourist visits increased to 705 million in 2010 compared to 650 million in 2009. However, the major share of domestic tourism include religious trips, family reunion and business travel trips from one place to another. Domestic Tourists Statics Domestic Travelers, 2006-10 (Figures in Million) Source : Ministry of Tourism and Culture

Describing domestic tourism is the backbone of India Tourism Industry. 10. Tourism - Major Engines of Economic Growth o Tourism is one of the major engines of economic growth in most parts of the world including India. Since tourism does not fall under a single heading in the National Accounts Statistics, its contribution has to be estimated. o According to the UN World Tourism Organization, tourism provides 6-7% of the worlds total jobs directly and millions more indirectly through the multiplier effect in this sector.

In absolute numbers, the total number of tourism jobs in the country increased from 38.6 million in 2002-03 to 49.8 million in 2007-08. Tourisms Contribution - GDP and Total Jobs, 2007-08 (Figures in %) 11. Exports of Travel Services World exports of Travel Services was valued at $870 billion in 2009. In 2009, all commercial services sectors were affected by the global crisis but not to the same extent. Travel was the least impacted segment with a negative growth of 9% in 2009. o India is moving towards a services-dominated GDP. The share of Software and Business services are increasing. o However, the cause of concern is the decline of exports of Travel Services from 21.5% in 2000-01 to 12.4% in 2009-10. o India has not yet tapped the vast tourism potential. Source: Indian Economic Survey 2010-11 GNIE= Government not included elsewhere Miscellaneous includes Software Services, Business Services, Financial Services and

Communication Services Miscellaneous Travel Transportation GNIE Insurance Indias Export of Services, 2000-01 and 2010-11 (Figures in %) 12. National Tourism Policy 2002 o National Tourism Policy evolves around six broad areas such as Welcome (Swagat) , Information (Suchana), Facilitation (Suvidha), Safety (Suraksha), Cooperation (Sahyog) and Infrastructure Development (Samrachana). o The key aim of the Safe and Honorable Tourism is to ensure that Indian tourism follows international standards of safe tourism practices, applicable to both tourists and local residents, i.e. local people and communities who may be impacted by tourism in some way. The Code has been formed to sensitize travellers and the travel industry, close all possibilities of exploitation, specifically of women and children, and make India a safe tourism destination. To strengthen the National Tourism Policy 2002s critical pillar of Suraksha (Safety), the Government has adopted the Code of Conduct for Safe and Honorable Tourism on 1 st July 2010. 13. Mega Tourism Projects o Mega Tourism Projects are a judicious mix of cultural, heritage, spiritual, and eco tourism in order to give tourists a holistic experience. MoT is coordinating with with other Central Government ministries such as Railways, Civil Aviation, Road Transport & Highways, Food Processing and Urban Development as well as the concerned State Governments to achieve convergence and synergy so that the impact of investment in these destinations is maximized. Till date, the Government has identified 38 projects out of which 23 have been sanctioned. o In order to meet the huge skill gap in the hospitality industry, the Government has put in place a multipronged strategy which includes strengthening and expanding the institutional infrastructure for training and education. Besides, steps are being taken for skill training of youth in the hospitality sector and providing skill certification. Ministry of Tourism (MoT) is making concerted efforts for development of nationally and internationally important destinations and circuits through Mega Tourism Projects. 14. Tourist Visa on Arrival (TVoA) o In order to promote tourism, Government of India launched a scheme of Tourist Visa on Arrival (TVoA) in January 2010 on pilot basis. Citizens from 11 countries are cover under the TVOA scheme - Finland, Japan, Luxembourg, New Zealand, Singapore, Cambodia, Laos, Vietnam, Philippines, Myanmar and Indonesia. A total of 6,549 VoAs were issued in 2010, of which Singapore (1814), New Zealand (1944), Japan (1457) ,Finland (1263) and Luxembourg (71). In January 2011, a total of 790 VoAs were issued, of which New Zealand (242), Finland (156), Japan (155), Singapore (125), Philippines (98), Luxembourg (6), Cambodia (4), and Vietnam (4).

Persons holding Diplomatic/ Official passports are not eligible to avail this facility. It is single entry visa a short period with a validity of 30 days strictly for the purpose of tourism and a tourist can come to India only twice a year on this visa. The fee for the visa on arrival is $ 60 (Sixty United States Dollars) or equivalent amount in Indian Rupees per passenger (including children). 15. Inbound Tourists Vs. Outbound Tourists o India is one of the fastest-growing outbound travel markets in the world and has witnessed a growth of over 20% over the last few years. o India inbound tourism market is still in nascent stage. Indias share in international tourist arrivals is a paltry 0.60% in 2010. o Outbound Indians are more than double the inbound tourists, though foreign exchange outgo due to outbound Indians is much less than the foreign exchange inflow from inbound tourists. India sends out more outbound tourists than it gets inbound ones, which is fairly unusual for an emerging economy
o o

Source: Ministry of Tourism, Research and Markets Inbound Vs. Outbound Tourists, 2006 - 10 (Figures in million) 16. Tourism - Hotels and Restaurants o The hotels sector comprises various forms of accommodation, namely star category hotels, heritage category hotels, timeshare resorts, apartment hotels, guest houses, and bed and breakfast establishments. o Availability of good quality and affordable hotel rooms plays an important role in boosting the growth of tourism in the country. Presently there are 1593 classified hotels with a capacity of 95,087 rooms. o Several studies have identified the demand-supply gap in hotel rooms in India; some of them have estimated a gap of 150,000 hotel rooms, of which 100,000 rooms are in the budget segment. The hotels and restaurants sector is an important sub-component of the tourism sector. 2004-05 2007-08 2008-09 2009-10 Growth in Availability of Hotel Rooms (Figures in %) The CAGR in the GDP contributed by the hotels and restaurants sector was 8.5% in 200405 to 200910. Source: Economic Survey 2010-11 17. 18. Commonwealth Games 2010 (CWG) o India hosted the 19th Commonwealth Games in which 71 countries and territories participated, were organized successfully by India. The event has significantly contributed to employment generation, infrastructure development, tourism inflow, and growth in national income. o The Sports Ministry had undertaken a massive and unprecedented training programme for the top sportspersons of India, to prepare the Indian contingent for CWG 2010. A Scheme for Preparation of Indian Athletes for CWG 2010 was put in

place for providing comprehensive and intensive training and exposure to Indian sportspersons, both domestically and abroad. In this effort, 170 Indian and 30 foreign coaches and 78 supporting technical personnel were involved. This has resulted in the best-ever performance by India in any major, multidisciplinary sports event with a haul of 101 medals (38 gold, 27 silver, and 36 bronze), which is more than double the medals India won at CWG, Melbourne, 2006. This achievement placed India second in medals tally after Australia and ahead of major sporting countries such as England, Canada, and South Africa. 19. 20. Budget 2010-11 Vs. 2011-12 Tourism Sector o In order to boost investment in the tourism sector which has high employment potential, the government extended the benefit of investment linked deduction. o Benefits of 100% investment linked tax deduction on capital expenditure (excluding land, goodwill and financial instrument) for building and operating a new hotel (commissioned after 1 st April 2010) of two-star category and above, extended from select locations to across the country. Budget 2010-11 Budget 2011-12 Service tax on air conditioned restaurants possessing licenses to serve alcoholic beverages. o Service tax on hotel accommodation, in excess of declared tariff of Rs. 1,000 per day. o Revision in service tax rates on air travel Hike in domestic and international travel (economy class) by Rs. 50 and Rs. 250 respectively. Tax on domestic air travel (other than economy) at standard rate of 10% (in line with international travel). 21. Budget Impact on Hotels & Tourism o The levy of service tax on room tariffs / restaurants, the impact of which will be passed on to the end customer, is likely to have a detrimental impact on demand as it drives up the effective consumer cost. However, roll out of GST could neutralise this impact. o The incremental tax on air travel will also push up the travel bill, the quantum of the same would be low. However coupled with impact of the increased fuel surcharge, higher travel cost could have a detrimental impact on airline traveller volumes.
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Impact- Negative 22. Industry Reaction o The hospitality sector has reacted strongly against the rise in service tax on hotel rooms and restaurant bars and demanding for a rollback.

With this move, the total amount of tax on the room charges would amount to 17.5% in Kerala and Goa, compared to just 3% tax with other competing tourism destinations like Singapore, Malaysia and Indonesia, nearly six times higher. o Tour operators are also unhappy with the government for enhancing service tax on air travel. o The rise in service tax on domestic economy class airfare and international economy class airfare would negatively impact air travel. 23. Financial and Fiscal Incentives o A five-year tax holiday under the Income Tax Act for two, three, and four star category hotels located in all United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage sites (except Mumbai and Delhi) for hotels starting operations from 1 st April 2008 to 31 st March 2013. o Other incentives include: Relaxation of external commercial borrowings (ECB) to reduce the liquidity crunch being faced by the hotel industry for setting up new hotel projects Allowing FDI up to 100% under the automatic route for the hotel and tourismrelated industry Delinking credit for hotel projects from real estate by The Reserve Bank of India , thereby enabling hotel projects to avail of credit at relaxed norms and reduced interest rates. The Government has announced various financial and fiscal incentives for the hospitality sector. 24. Registration Tour Operators & Agencies o The government also has a voluntary scheme of granting approval to bonafide tour operators, travel agents, tourist transport operators, and adventure tour operators who satisfy certain criteria specified in terms of turnover, infrastructure, and manpower. 25. 26. Ministry of Tourism o The Ministry of Tourism planned to continue promotional efforts under the Incredible India campaign in overseas and domestic markets. o The Ministry also planned to lay emphasis on social awareness campaigns in the domestic market to sensitize the masses and various stakeholders to the importance of tourism. o The key challenge is to establish India, into some traditional areas such as tourism and shipping where other countries have already established themselves.
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Ministry of Tourism Outlay, 2009-11 (Figures in Rs. Million) 1002 1,056 1,170 The outlay for the Ministry of Tourism is Rs. 11.7 billion ($2.6 billion), including Rs. 1.1 billion ($24 million) for North-East Region & Sikkim. 27. Physical Target 2010-11 o Product/Infrastructure Development for Destination and Circuits o Assistance for large Revenue Generating Projects o Domestic promotion and publicity including Market Development Assistance, Assistance to Institutes of Hotel Management / Food Crafts Industry

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Capacity building for Service Providers Incentives to Accommodation Infrastructure Externally aided projects for development of Buddhist Centers/Sights at Ajanta/Ellora and Buddhist Centre in Uttar Pradesh The total outlay for the scheme is towards:

28. Physical Target 2010-11 o GOI UNDP Endangerous Tourism Project o Market Research including 20 years perspective plan o Construction of Building for Indian Institute of Skiing and Mountaineering at Gulmarg o Computerization and Information Technology o Creation of Land Bank for Hotels o 2.5% of the Annual Plan (2011-12) has been allocated for TSP (Tribal Sub Plan) under the plan scheme product/infrastructure development for Destinations and circuits 29. About The Other Home o 'The Other Home', an India-focused, specialized Vacation Rental, Homestays and Outdoor Adventure properties booking platform. o The company is promoting various non-hotel properties - vacation homes, holiday homes, service apartments, villas and homestay, through a dynamic portal. o The Other Home aims to promote Responsible and Micro-tourism in the country. The company is currently managing a portfolio of 40 properties in 12 states in India.