The Grand Presentation on BUDGET

7/29/2019 The Grand Presentation on BUDGET

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HIGHLIGHTS

Exemption limit for general tax payersraised to Rs 1,80,000

Age criterion for senior citizens to berelaxed from 65 years to 60 years.

Senior citizen=2,50,000(age 60 years)

Super senior citizen :(80years) 5,00,000


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Female : existing limit of 1,90,000 keptsame

Corporate tax surcharge reduced from7.5% to 5%.

Minimum alternate tax rate up from 18%to 18.5%.

No change in excise duty and service taxrates


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1% interest subvention on home loans up toRs 15 lacs

FII can invest directly in MF schemes

Gross Domestic Product (GDP) estimatedto have grown at 8.6 per cent in 2010-11 inreal terms.

Indian economy expected to grow at 9 percent with an outside band of +/- 0.25 percent in 2011-12.


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40,000 crore to be raised throughdisinvestment in 2011-12.

LLPs to be subject to Alternate MinimumTax

All individual and sole proprietor taxpayers with a turn over up to Rs.60 lac

freed from the formalities of audit.


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DIRECT TAX

Employers contribution to NPS will nolonger be subject to ceiling of 1 lac

Infra debt funds to be created

Tax benefit for infra bond extended

Introduction of new simplified return formSUGAM

Surcharge cut for domestic companiesfrom 7.5% to 5%


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Dividend received from overseassubsidiaries tax at 15 %on gross basis

LLP are proposed to be charged AMT of18.5%

Surcharge cut for foreign companies for2.5% to 2%


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Increase in MAT from 18% to 18.5%

SEZ developers & units would pay MAT at20.01%

SEZ developers would also pay DDT at16.22%


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Tax breaks & incentives for innovation

Money market mutual fund or liquid fundsfrom25% to 30%


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INDIRECT TAX

130 items brought under central excise

The lower rate of central excise duty hasbeen increased from 4% to 5%

Excise on ready-mades mandatory


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Peak custom duty remains 10%

Boost for cold chain equipment

Customs duty on firm machinery cut


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Customs duty on raw silk cut

20% export duty on iron ore

Relief for cement industry

10% excise on fuel cell vehicles


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Alternate Minimum Tax

LLPs to be subject to Alternate MinimumTax [New Chapter XII BA ] Clause 18

What is LLP?

A limited liability partnership (LLP) is apartnership in which some or all partners(depending on the jurisdiction) have limitedliability.

Exhibits elements of partnership and corporate.One partner is not responsible or liable for

another partner's misconduct or negligence.


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LLPs to be subject to Alternate [email protected]%, in line with companies.

The tax base in the case of LLPs would be

the adjusted total income computed underthe provisions of the Income tax Act,1961 and not book profit as in the case of

corporate.


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As per the provisions of the chapter XII-BA, where the regular income tax payableby a LLP for a particular financial year is

less than the corresponding alternateminimum tax computed at the rate of18.5% on its adjusted total income; such

alternate minimum tax shall be deemed tobe the income tax liability of such LLP.


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Adjusted total income shall be the totalincome as increased by the deductionsclaimed under any section included in

chapter VI-A ( C ) (deductions in respectof certain income) and deductions claimedunder section 10AA.


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AMT VS MAT

The concept to AMT is similar to theMinimum Alternate Tax (MAT), asapplicable to the Companies

But since there is no concept of bookprofits in case of LLP, the LLPs will beliable to pay AMT on their adjusted total

income (equivalent to adjusted taxableincome).

Similar to Company, LLP paying AMT canclaim its credit for 10 assessment years.


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But as opposed to Company, LLP will not beliable to pay AMT on those income, whichare exempt under provisions of Income

Tax like long term capital gain undersection 10 (38) and income from dividendunder section 10 (34) etc


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Services added to the service tax

Hotel Accommodation

Services provided by Hospital

Authorized Service Stations Services

Life Insurance Service

Commercial Training or Coaching Service

Club or Association Service Business Support Service

Services by legal professionals

Service Tax on air travel


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Services provided by clinicalestablishments

Promotion of Brands of Goods, Services,

Events etc. Services provided by Electricity

Exchanges.

Special services provided by ConstructionAgencies to the buyers, such as internaldevelopment of complexes, preferred

location on extra cost.


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The thing which highly affects an

individual is.PERSONAL INCOME TAX


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INCOME TAX SCENARIO

INDIVIDUALSAY 2010-2011 below 65 AY 2011-2012 below 60

Slabs Rates Liability Slabs Rates Liability

0-1,60,000 Nil Nil 0-1,80,000 Nil Nil

1,60,000-5,00,000 10.03% 35,020 1,80,000-5,00,000 10.03% 32,960

5,00,000-8,00,000 20.06% 61,800 5,00,000-8,00,000 20.06% 61,800

Above 8,00,000 30.09% 61,800 Above 8,00,000 30.09% 61,800

Savings due to budget 2011 2060*

*2060 = 35,020 - 32,960

Roundedof relief of rs 2000 annually

Per day benefit of rs.5.48


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Income tax scenario

WOMEN

AY 2010-2011 below 65 AY 2011-2012 below 60


0-1,90,000 Nil Nil 0-1,90,000 Nil Nil

1,90,000-5,00,000 10.03% 31,930 1,90,000-5,00,000 10.03% 31,930

5,00,000-8,00,000 20.06% 61,800 5,00,000-8,00,000 20.06% 61,800

Above 8,00,000 30.09% 61,800 Above 8,00,000 30.09% 61,800


*NO BENEFITS FOR FEMALE TAX PAYERS


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Income tax scenario

SENIOR CITIZENAY 2010-2011 above 65 AY 2011-2012 above 60 below 80


0-2,40,000 Nil Nil 0-2,50,000 Nil Nil

2,40,000-5,00,000 10.03% 26,780 2,50,000-5,00,000 10.03% 25,750

5,00,000-8,00,000 20.06% 61,800 5,00,000-8,00,000 20.06% 61,800

Above 8,00,000 30.09% 61,800 Above 8,00,000 30.09% 61,800


*1030 = 26,780 25,750


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INCOME TAX SCENARIO

VERY SENIOR CITIZENAY 2011-2012 ABOVE 80

Slabs Rates Liability

0-5,00,000 NIL Nil

5,00,000-8,00,000 20.06% 61,800

ABOVE 8,00,000 30.09% 61,800

Savings due to budget 2011 *26,780

BONANZA FOR SENIORCITIZENS. . .


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Lower penalty, high interest for late

payment

Penalty reduced to 1% a month or rs 100 aday- whichever is higher

Penalty reduced to 25% if tax paid within

1month interest Maximum penalty capped at 50% of the

tax amount


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In case of fraud, penalty is mandatory andequal to the tax evaded

Penalty will be increased to rs.20,000 from

rs.2,000 if the returns are not filed till 40days after the due date.

Interest on the tax payment increased to

18% from 13%


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AGRICULTURE

The total plan outlay for agriculture &allied sector is to be increased by 19.79%to Rs 147.44 bn.

The target agricultural credit is proposedto be raised to Rs 4,750 bn in FY12 fromRs 3,750 bn in FY11.

Interest subvention proposed to beenhanced from 2% to 3%.


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As an initiative on vegetable clusters, anallocation of Rs 3 bn made.

Basic customs duty reduced for specified

agricultural machinery to 2.50% from 5% . The concession is also being extended to

parts of such machinery


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POSITIVE IMPACT

The slide of measures announced for theagricultural sector highlights theGovernments thrust to facilitate storage .

Reduce the production and supply chainbottlenecks in the agricultural sector.

The Government further enhanced its

thrust to improve the storage facilities inthe agriculture sector by allocating fundsfor creation of warehousing facilities.


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FERTILISER

Capital investment in fertiliser productionproposed to be included as aninfrastructure subsector.

Government will move towards directtransfer of cash subsidy to people livingbelow poverty line.

Extension of benefit of investment linkeddeduction to businesses engaged in theproduction of fertilisers.


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POSITIVE IMPACT

The major move in the sector which willdrive investment by including capitalinvestment in fertilizer production.

Further, the proposed system of directtransfer of subsidy for fertilisers is seenas a good move


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SOCIAL SECTOR

The social sector expenditure is proposedto be increased to Rs 1,608.87 bn, anincrease of 17% over the previous year.

It amounts to 36.40% of the total planedallocation.


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Human Resource Development and SocialJustice

An allocation of Rs 103.30 bn forIntegrated Child Development Services.

To create in the course of the year IndiaMicrofinance Equity Fund with a corpus ofRs 1 bn with SIDBI.

To empower women and promote their SelfHelp Groups (SHGs) creation of aWomens SHGs Development Fund with acorpus of Rs 5 bn.


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EDUCATION

An allocation of Rs 520.57 bn in FY12 foreducation, which is an increase of 24%over FY11.

An allocation of Rs 210 bn for SarvaShiksha Abhiyan is 40% higher than Rs 150bn in FY11.

An allocation of Rs 103.80 bn for NationalProgramme of Mid Day Meals in schools.

Additional Rs 5 bn proposed to be providedfor National Skill Development Fund duringFY12.


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HEALTH & SANITATION

A plan for the Ministry of Health andFamily Welfare is proposed to beincreased to Rs 267.60 bn from Rs 223 bn.

An allocation of Rs 178.40 bn for NationalRural Health Mission.

An allocation of Rs 93.50 bn for National

Rural Drinking Water Programme.An allocation of Rs 16.50 bn for rural

sanitation


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INFRASTRUCTURE

An allocation of Rs 2,140 bn for thissector accounting for 48.50% of plannedexpenditure.

Permit to issue tax free bonds of Rs 300bn by various Government undertakings.

Including Rs 100 bn by Indian Railway

Finance Corporation (IRFC), Rs 100 bn byNational Highway Authorityof India (NHAI).


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Rs 50 bn by Housing and UrbanDevelopment Corporation Limited (HUDCO)and Rs 50 bn by Ports in FY12.

Interest payment on the borrowings ofthese funds to be subject to a withholdingtax rate of 5% instead of 20%.

The income on the fund would be exemptfrom tax.


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POSITIVE IMPACT

The plan expenditure for infrastructuresector to constitute around 48.50% ,agrowth of 23.03%.

To boost non-banking financial avenues forinfrastructure companies, Budget providesthrust through various financing schemes.


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HOSPITALITY

It is proposed that the hotelaccommodation in excess of Rs 1,000 perday .

With an abatement of 50% .So, theeffective burden is 5% of the amountcharged for Service Tax.

The services provided by air conditioned

restaurants, have license to serve liquorgiving an abatement of 70% will haveburden of 3% of the bill.


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NEGETIVE IMPACT

Increase of service tax in hospitalitysector.

An introduction of 5% and 3% effective

burden on service sector


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OVERVIEW

Gross Domestic Product (GDP) estimatedto have grown at 8.6 per cent in 2010-11 inreal terms. Economy has shown remarkable

resilience. Monetary policy measures taken expected

to further moderate inflation in coming

months.


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Exports have grown by 29.4 per cent,while imports have recorded a growth of17.6 per cent during April to January

2010-11 over the corresponding periodlast year.

Indian economy expected to grow at 9

per cent with an outside band of +/-0.25 per cent in 2011-12.


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Fiscal Consolidation

Rs. cror 2009-2010 2010-

2011(BE)

2010-

2011(RE)

2011-

2012(BE)

Revenue

Deficit

-338,998 -276,512 -269,844 -307,270

% of GDP -5.2% -3.5% -3.4% -3.4%

Fiscal

deficit

-418,482 -381,408 -400,998 -412,817

% of GDP -6.4% -4.8% -5.1% -4.6%


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INVESTMENT ENVIRONMENT

Foreign Direct InvestmentDiscussions underway to further liberalize

the FDI policy. Foreign Institutional Investors

SEBI registered mutual funds permitted toaccept subscription from foreign investors whomeet KYC requirements for equity schemes.

To enhance flow of funds to infrastructuresector, the FII limit for investment incorporate bonds issued in infrastructure sectorbeing raised.


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DIRECT TAX CODE

Proposed a new Direct Tax code for nextfinancial year.

This New Direct Tax Code will replace the

Income Tax Act of 1961.It will be implemented from financial year

2011-2012.


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NEW INCOME TAX SLABS 2011-12


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ANNOUNCEMENT 1

Increase in CRR in Banks, Higher cashinfusions in PSU Banks

Impact:

Higher liquidity in the market, Increase availability of food hence control

food price inflation


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ANNOUNCEMENT 2

Rural Infrastructure Development Fund

Impact:

Long term growth of the Rural Sector

development of Tier 2 and Tier 3 cities into Tier 1 and Tier 2 cities,


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SUMMARY

Food Price Inflation

Increasing the overall Excise Duties or

Service Tax

Support for Infrastructure

Economic Growth at 9 percent or more Focus on Rural Development


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Inflation The Burning Reality!

Income Tax Exemption Yeh Dil MaangeMore!

Fuel price Deregulation Slow and Steadywins the Race!

Social sector Spending Amount b/f from

Disinvestment A/c! Retail FDI Time to tighten Supply Chain!


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Excise and Service Tax Cut Status quoRequested!

Infrastructure Work in Progress!

Delay in GST Implementation NoConsensus Yet!

Education Learning is the way to Growth!


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The Grand Presentation on BUDGET

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