The minister announced that government is committed to bring transparency in functioning of

public authorities. He announced the formation of Finance Sectors Legislations Reform

Commission. The Minister emphasizes need to more use of technology in financial sector and
announced Technology Advisory group under the chairmanship of Nandan Nilkeni.
Direct Taxes:
On the Direct Tax side, goods concessions were announced for Individuals- the new rate of taxes
shall be exempted till income of 1.6 lakhs, 10% upto 5 lakhs, 20% from 5 to 8 lakhs and 30%
above 8 lakhs. Further additional tax deduction of 20K was announced on investment in long term
infrastructure bonds. For corporates the surcharge was reduced from 10 to 7.5%. Minimum
Alternate Tax (MAT) has been increased from 15 to 18%. Weighted reduction on inhouse
research expenditure has been increased from 150% to 200%. Investment linked deduction
extended to hotels sector. To reduce compliance cost on small tax payers, the limit if tax audit for
small businesses has been increased from 40 to 60 lakhs and professionals from 10 to 15 lakhs.
Provisions of TDS has been simplified.
Central Excise
On indirect tax side, benchmark rate for Central Excise duty has been increased from 8% to 10%.
Further taxes has been increased on petroleum products, automobiles, cigarettes and tobacco
products, cement etc. Compounded levy scheme is being extended to chewing tobacco. A clean
energy cess of Rs. 50 per ton has been imposed on coal. Some duty concession has been
extended to energy efficient products like CFL, LED, rotors for wind power generation, solar
energy generation equipments, supary, some planataion equipments, specified storage and
preservation equipments, security ink, corrugated boxed, latex threads etc. Mosquito nets
impregnated with insecticide, AV Gas, Computer parts (other than mother board) shall attract
duty of 4% from present nil. Sunglasses, baby diapers and napkins will also attract central excise
duty of 10%. Refined gold bar will attract specific central excise duty of Rs. 280 per 10 grams.
Procedural simplification has been done for small scale sector like quarterly payment of duty,
100% capital goods credit in the first year. Scope of settlement commission has been expanded.
It has been clarified that no penalty will be imposed if duty is paid under Section 11A(2B) of the
Central Excise Act.
Customs:
Basic custom duty has been imposed on crude and petroleum products. The rate of custom duty
on precious metals, like gold, silver etc. has been increased. Outright exemption from SAD has
been extended to products imported for sale in India. Definition of project import has been
expanded.
Service Tax:
Rate of service tax has remained unchanged.
Service Tax has been imposed on
1. services of promoting, marketing and organisising of games of chance, including lottery;
2. specified health services when payment is made by business entity or insurance company;
3. Maintenance of medical record.
4. Services related to promotion of brand.
5. Commercial use of any event.
6. Electricity exchange
7. Copyright related to cinematographic film and sound recording.
8. Special services provided by builders.
The scope of following services has been expanded:
1. Sponsorship services, which will now include sports events.
2. Air passenger Transport Service, to include domestic journey and international journey of any
class.
3. Information Technology services, even when provided to individuals.
4. Commercial Coaching & Training services, to include any consideration even when there is no
profit motive.
5. Construction of complex service.
6. Renting has been defined a service.
7. Value of management of investment under ULIP services has been increased.
The changes in service tax far more exhaustive.
On the whole a good balanced buget, leading to fiscal prudence

Read more: http://www.articlesbase.com/national-state-local-articles/union-budget-201011-

2011793.html#ixzz15XaYkUHU
Under Creative Commons License: Attribution (Author - Rajesh kumar)

Union Budget 2010 Highlights: Aam-aadmi Oriented & yet Financially Inclusive

Important Announcements of Union Budget 2010:

1) Aam Aadmi is Top Priority

Contrary to expectations, the FM has announced a major relief in tax slabs for the Indian middle
class public at large as follows:

o No tax limit up to income of Rs.1.6 lakh.

o For income between 1.6 lakh to 5 lakh, the tax liability will be 10%.
o For income between 5 lakh to 8 lakh, the tax liability will be 20%.
o Individuals with income of above 8 lakh will have tax liability of 30%.

The government would allow of up to Rs. 20000 for investments in long-term infrastructure bonds
in addition to exemption under Section 80C of IT Act. This measure of tweaking direct taxes in
favor of tax-payers will ensure increased funds in the hands of public consequently leading to
increased spending towards various goods and services.
2) Further Disinvesting stake in PSU

The government has managed to accumulate a whooping Rs.35000 crore by the way of
disinvestments in public sector companies in the current fiscal. Further, the government aims to
accumulate another Rs.25000 crore in the upcoming financial year. Slowly but steadily the
government is moving forwards towards its plans of disinvestment and unlocking value in favor of
the country’s economy in meeting its various social-sector demands.
3) No Oil Deregulation Yet: Excise Duty on Fuels

The FM has levied an excise duty of Re.1 per litre on petrol and diesel both and partial roll-back
of excise duty on fuels to 10%. There was no policy announcement as to government’s stance of
deregulation of crude oil prices as discussed in Kirit Parikh report. However, FM said that a
decision would be arrived on the same in due course.
Breaking News:

Petrol prices to go up by Rs.2.71 per litre from tonight and Diesel prices to go up by Rs.2.55 per
litre !

Interestingly, the news of fuel hike comes just within few hours of budget announcement by
Finance minister Pranab Mukherjee. Was FM not willing to disclose all oil-related sensitive issues
in front of the Parliament?

Why this Cat and Mouse Game??

4) Delay in Implementation of GST

The Government has promised the implementation of GST and Direct Tax code by April 2011.
The earlier scheduled date of GST implementation was April 2010 which hints at a substantial
delay for a major goods and service related reform which in turn would phase-out other major
taxes like excise duty, VAT, service tax, etc.
5) Rise in Excise Duty

While FM retained the service tax at 10%, he raised the excise duty by 2% to 10% on all non-oil
products as a part of the effort to withdraw stimulus and create sources of funds to bring down the
extent of fiscal deficit situation. Consumers will have to spend more on products like fuels, cars,
televisions, cigarettes, and tobacco on account of increased excise duty. Even precious metals
like Gold and Silver were not spared by the proposal to hike import duty.
6) Banking Licensing for NBFC

RBI will issue more banking licenses for setting up banks in the country to Non-Banking Financial
Companies which fulfill the eligibility criteria. Non-banking companies like Reliance Capital, IDFC,
Indiabulls Finance, and IFCI are some of the non-banking companies which are likely to benefit
by this big reformist initiative by the RBI and the government of India.
7) Nominal Hike in Defense Budget

The government hiked the allocation for defense budget from Rs.141703 crore to Rs.147344
crore. This nominal hike may not be enough with rising chances of terrorist threats over the
country and infiltration from neighboring countries. Last year the government had allocated over
35% increase in funds allocation to defense industry.
8) Timely Aid to Exporters

The FM has proposed to extend the interest subvention of 2% for one more year for exports
covering handicrafts, carpets and leather, handicrafts, hand-looms and SMEs. With the global
economy witnessing a sharp recession recently and a subsequent stabilization signs, it may not
be as bad an idea to give extended support to export oriented units for some more time to come.
9) Rise in MAT

While exporters benefited from interest subventions scheme announced by the FM, the IT
industry remains negatively impacted export-oriented outsourcing firms as the much anticipated
extension of STPI benefits did not come through. That apart, the rise in MAT from 15% to 18%
will more so impact the small and mid-size IT companies.
10) Beyond the Realty

FM announced concessions to developers for seeking tax concessions on existing projects and
relaxed norms for built-up area. I feel rather than allowing real estate players in sustaining the
high property prices by allowing concessions, the government should ask them to bring down
property prices and increase their sales in the bid to clear-up over-supply in real estate market.
11) Healthy Allocation

The government allocated Rs.22, 300 crore for the health sector for the upcoming financial year
2010-11, a 13.5% hike since last year’s allocation to the growing needs of fast emerging health
sector. The FM said that the country was set to conduct a national health survey next fiscal.
12) Rise in Education Funding

Pranab Mukherjee announced a rise of about 15% in allocation to the expenses related to
Education at Rs.31, 036 crore as against Rs.26, 800 crore previous year. However, the minister
confirmed that a major part of this funding would go in to implementation of the Right to Education
Act.
13) Allocation towards Developmental Plans

Centre has allocated Rs.40, 100 crore towards spending on National Rural Employment
Guarantee Scheme which finds only a nominal rise from allocation in the previous year. Allocation
for urban development has been upped 75% from Rs.3062 crore to Rs.5400 crore. Allocation for
Bharat Nirman is announced at Rs.48000 crore.

Thus, a subdued effort by the government in upping the incremental spending in social sector
programs (except urban development and power utility) shows FM’s concern towards high fiscal
deficit which needs to be tamed at the cost of social sector schemes.
14) Service Tax Exemption for News Agencies

Finance minister announced the exemption of service tax for the specific news agencies like for
instance the accredited news agencies which provides news feed online thus providing yeoman
services of disseminating news. This will give a boost in the arm for genuine news agencies
involved in loyal news distribution.
Other Important Highlights of Union Budget 2010

1. UID authority given Rs.1900 crore.

2. Funds for power allocation raised from Rs.2232 crore to Rs.5132 crore
3. Government to facilitate 20000 MMW of solar power by 2022
4. Government to provide Rs.300 crore for agriculture impetus.
5. Nutrient based fertilizer subsidy scheme to come into force from April 1.
6. Five mega food parks to be set up.
7. Rs.500 crore for Clean Ganga mission.

What got Expensive & what’s Cheaper Now?

Imposition & Roll-back of Excise duty has made certain products expensive while leaving others
products cheaper than before. Let’s have a glance at the products which have been hit and
benefited by measures announced by FM:
Cheaper than Before:

1. Mobile Phones
2. Agricultural Equipments
3. Set Top boxes
4. Toys
5. Books
6. Medical Equipment
7. CFL Bulbs
8. Compact Disc (CD)

Dearer than Before:

1. Consumer products like TV and AC.

2. Large Cars, SUVs and MUVs.
3. Petrol and Diesel
4. Cigarettes and Non-smoking Tobacco
5. Gold and Silver
6. Flying by Air

Union Budget and Stock Markets

The FM has managed to allay fears of the stock markets & Foreign Institutional Investors on
account of rising fiscal deficit at 6.8% of GDP (add off-budget subsidies) by announcing that the
deficit would be brought down to 5.5% next fiscal and further lower to 4.8% and 4.1% in couple of
years following there after.

The equity markets gave a standing ovation to the government in seeking to address the long
term concerns of the economy with transparent targets and measures needed for next few years.
The BSE Sensex recorded a smart 175 points rally on the bourses today, to close at 16430, up
1.08% as compared to yesterday’s price.

* Reliance Capital, IFCI (Up 8%) – NBFC looking for banking license
* Moser Baer (Up 7%) – Compact Discs getting less expensive
* Hanung Toys (Up 3.5%) – Toys getting cheaper
* Bata India (Up 13%) – Leather products to get cheaper
* REC (Up 5%) – Doubled power sector allocation with rural bias.
* LIC Housing Finance (Up 4%)- Governmental thrust on housing finance.
* GMR Infra, L&T (Up 2-3%) – Governmental thrust on Infra Spending.
* Suzlon Energy, Websol Energy (Up 5-7%) –Budget’s thrust on renewable energy.
* All 2 and 4 Wheelers (Up 4-6%) – Increased spending capacity in hands of consumers
( Author: Viral Dholakia)