Escolar Documentos
Profissional Documentos
Cultura Documentos
2011
mgb&co
Chartered Accountants
www.mgbco.com
This document has been prepared as a service to clients. We recommend you seek professional advice
before taking action on specific issues.
The Finance Bill as introduced in the Parliament may undergo changes before its enactment.
India Budget Statement 2011
Contents
Foreword…………………………………………………………………….………………….3
Budget proposals
Direct Tax
Income Tax…………………………………………………………………………….4
Indirect Tax
Excise Duty…………………………………………………………………………..11
Customs Duty……......………………………………………………………………17
Service Tax…………………………………………………………………………. 24
Budget Announcements…….………………………….……………………………………30
Page 2 of 39 mgb&co
India Budget Statement 2011
Foreword
After the severe backlash over the months from the press and opposition on corruption
and inflation, everyone expected the Finance Minister to present a populist budget and
to use it as a tool to win some good for the Government. However, it was a ‘mature’
budget from a seasoned Finance Minister.
A lower than expected fiscal deficit target of 4.6% for FY12 (5.1% for the current
fiscal), a targeted decrease in subsidies and lower market borrowing by the
government, show his intentions to clean up, but there are doubts if he will be able to
stick to his targets on fiscal deficit and subsidies.
The opening up of equity mutual funds schemes to direct foreign investors may lead to
greater inflows in the stock markets. The Infrastructure Debt Fund is touted to be an
amnesty scheme for bringing back the monies stashed outside India, where the source
of income will not be looked into, and has been structured as such to avoid litigation,
the last amnesty scheme in 1997 had been through. If true, let’s wait for the fine print.
The Finance Minister remarked in his speech “Well, the number 3 happens to be my
lucky number”. However, there is no clarity on the 3 big reforms viz Direct Tax Code,
IFRS and Goods Services Tax. No clear timelines are available for IFRS after the
formal announcement of its deferment, though Direct Tax Code (replacing the existing
Income Tax Act, 1961) looks all set to meet its new date of implementation of April 1,
2012 revised last year. On GST, if he could not get a consensus on states done over
the last 12 months, can he get it done in the next 12? GST may not happen even in
2012, though the Finance Minister has taken a number of steps towards its
implementation and would not like to be so pessimistic about it. The new Companies
Bill is also announced to be introduced in the current session of the Parliament.
The AMT on LLPs has taken the charm out of LLPs wherein many promoter
companies were reorganised into LLPs to save on MAT. The introduction of MAT and
DDT on SEZ units, looks to be a step towards the rollout of DTC. The biggest change
in Service Tax has been to link the payment of tax to provision of service, raising of the
invoice or payment for service provided or to be provided, whichever is the earliest. It
is necessary to align the service tax regime with the GST regime so that transition to
GST will be smooth.
"The Indian economy is expected to grow at 9 per cent with outside band of (+/-) 0.25
per cent in 2011-12", the Finance Minister said while unveiling the Budget proposals.
Let’s hope the Indian Cricket Team and the Finance Minister meet their aspirations.
Page 3 of 39 mgb&co
India Budget Statement 2011
Budget Proposals
DIRECT TAXES
Income Tax
Tax Rates
Page 4 of 39 mgb&co
India Budget Statement 2011
Definition
The weighted deduction allowed for any sum paid to a National Laboratory or a
university or an Indian Institute of Technology (lIT) or a specified person for the
purpose of an approved scientific research programme is proposed to be
increased from 175 per cent to 200 per cent of the amount contributed.
[Section 35(2AA) w.e.f. AY 2012-2013]
Under section 73A, any loss of a "specified business" is allowed set-off against
profit and gains of any other "specified business". It is proposed to remove the
word "new" from the definition of "specified business" in the case of hotels and
hospitals, leading to that, an assessee who currently operates a hospital or a
hotel would be able to set off the profits of such business against the losses, if
any, of a new hospital or new hotel which begins to operate after 1st April,
2010 and which is eligible for deduction under this Section.
[Section 35AD retrospectively w.e.f. AY 2011-12]
A sum of Rs. 20,000 (over and above the existing limit of Rs. 1 lakh available
under section 80CCE for tax savings) is allowed as deduction in computing the
total income of an individual or a HUF if invested in notified long-term
infrastructure bonds. It is proposed to extend this deduction for AY 2012-13.
[Section 80CCF w.e.f. AY 2012-13]
Transfer Pricing
The second proviso to Section 92C(2) provides that if the variation between the
actual price of the transaction and the Arms Length Price (ALP), as determined
above, does not exceed 5% of the actual price, then, no adjustment will be
made and the actual price shall be treated as the ALP. It is proposed to provide
that instead of a variation of 5% across all segments of business activity and
range of international transactions, the allowable variation will be such
percentage as may be notified by Central Government in this behalf.
[Section 92C(2) w.e.f. AY 2012-13]
Currently, the Transfer Pricing Officer (TPO) can determine the ALP in relation
to an international transaction, which has been referred to the TPO by the
Assessing Officer. It is proposed to extend the jurisdiction of the TPO in respect
of other international transactions, which are noticed by him subsequently, in
the course of proceedings before him, in addition to the international
transactions referred to the TPO by the Assessing Officer.
[Section 92C(2) w.e.f. AY 2012-13]
It is proposed to extend the due date for filing of return of income by corporate
assessees who are required to file a Transfer Pricing Report in Form 3CEB to
30th November (from the current 30th September).
[Section 139 w.e.f. April 1, 2011]
• power to notify any country or territory outside India, having regard to the
lack of effective exchange of information by it with India, as a notified
jurisdictional area;
• that transfer pricing regulations shall apply to any transaction where one of
the parties to the transaction is a person located in a notified jurisdictional
area;
• that deduction in respect of any payment made to any financial institution
shall be allowed only if the assessee authorizes the income-tax authority to
seek relevant information from the said financial institution;
• that deduction in respect of any other expenditure or allowance (including
depreciation) arising from a transaction with a person located in a notified
jurisdictional area shall be allowed only if he maintains documents and
information as may be prescribed;
Page 7 of 39 mgb&co
India Budget Statement 2011
• that the onus is on the assessee to satisfactorily explain the source of any
sum received from a person located in the notified jurisdictional area and in
case of his failure to do so, the amount shall be deemed to be the income
of the assessee;
• that any payment made to a person located in the notified jurisdictional
area shall be liable to deduction of tax at the higher of the rates specified in
the relevant provision of the Act or rate or rates in force or a rate of 30%.
It is proposed that where the regular income-tax payable by a LLP is less than
18.5% on adjusted total income, the adjusted total income shall be deemed to
be the total income of such LLP and it shall be liable to pay income-tax 18.5%
on adjusted total income.
The credit for tax paid by a LLP (to the extent of the excess of the alternate
minimum tax paid over the regular income-tax) shall be allowed to be carried
forward up to the tenth assessment year immediately succeeding the
assessment year, for which such credit becomes allowable.
[Section 115JC to 115JF (Chapter XII-BA) w.e.f. AY 2012-13]
It is proposed to provide that the Mutual Fund shall be liable to pay additional
income-tax on such distributed income at the rate of -
Page 8 of 39 mgb&co
India Budget Statement 2011
Settlement Commission
Others
Under the existing provisions, the Central Government may notify before March
31, 2011 that any of the provisions of the Income-tax Act relating to processing
of returns shall not apply or shall apply with such exceptions, modifications and
adaptations as may be specified in that notification. It is proposed to extend the
existing time limit for issue of notification to 31st March, 2012.
[Section 143(1B) retrospectively w.e.f. April 1, 2011]
Under the existing provisions, every income-tax authority shall, on or after the
1st day of July, 2011, allot a computer-generated Document Identification
Number in respect of every notice, order, letter or any correspondence issued
Page 9 of 39 mgb&co
India Budget Statement 2011
by him to any other income-tax authority or assessee or any other person and
such number shall be quoted thereon. It is proposed to omit the aforesaid
section.
[Section 282B retrospectively w.e.f April 1, 2011]
Page 10 of 39 mgb&co
India Budget Statement 2011
INDIRECT TAXES
Excise Duty
Effective Date: Changes come into effect immediately unless otherwise specified.
Duty of 1% without Cenvat credit facility imposed on about 130 specified items,
which were hitherto either fully exempt from duty or chargeable to nil rate of
duty. General SSI exemption would be available to all products covered under
this new levy.
Exemption from duty available to clearances upto 3500 metric tonne of paper
manufactured from non-conventional material is withdrawn.
Conveyor belt systems for use in cold storage for the preservation, storage,
transport or processing of agricultural, horticultural, dairy, poultry, apiaries,
aquatic and marine produce and in mandis and warehouses for storage of food
grains and sugar.
Health
Duty on sanitary napkins, baby & clinical diapers and adult diapers and similar
articles of textile wadding is reduced from 10% to 1%, with no Cenvat credit.
Page 11 of 39 mgb&co
India Budget Statement 2011
Capital Goods
Particulars Change
Goods required for expansion of existing Full exemption from duty
mega/ultra mega power project under specified
conditions at par with exemption from CVD on
imports of goods for such projects
Specified textile machinery Duty reduced from 10%
to 5%
Specified part of sewing machines Full exemption from duty
Particulars Change
Hydrogen vehicles based on fuel cell technology Concessional rate of
10%
Hybrid kits for conversion of fossil fuel vehicles to Duty reduced from 10%
hybrid vehicles. to 5%
Cement
Present Proposed
Particulars
Rate Rate
Mini Cement plant
1) Cleared in packaged form
(i) of retail sale price not exceeding Rs. 190
per 50 kg bag or of per ton equivalent retail Rs. 185 per 10% ad
sale price not exceeding Rs. 3800 ton valorem
(ii) of retail sale price exceeding Rs. 190 per 10% ad
50 kg bag or of per ton equivalent retail sale Rs.315 per valorem + Rs.
price exceeding Rs. 3800 ton 30 per ton
Rs. 215 per 10% ad
2) Cleared other than in packaged form
ton valorem
Page 12 of 39 mgb&co
India Budget Statement 2011
Textiles
Tariff rate of duty of 10% is prescribed for jute yarn while it is simultaneously
exempted from excise duty.
Water Supply
Full exemption from duty currently available to pipes required for delivery of
drinking water from its source to the plant and from there to the first storage
point is extended to pipe fittings such as joints, elbows, couplings etc.
Automobile Sector
Full exemption from duty is extended to parts of power tillers when cleared to
another factory of the same manufacturer for manufacturing power tillers.
Particulars Change
Cotton Stalk Particle Boards Fully exempt from duty
Corrugated boxes whether or not pasted Concessional rate of duty of 5%
with Duplex sheet on their outer surface.
Greaseproof paper and glassine paper Duty reduced from 10% to 5%
Precious Metals
Particulars Change
Serially numbered gold bars, other than Duty reduced from 'Rs.280 per
tola bars, made starting from the 10 grams' to 'Rs.200 per 10
ore/concentrate stage in the same factory grams'
Serially numbered gold bars manufactured Concessional duty rate of Rs.
by refining of gold dore bar 200 per 10 grams
Serially numbered gold bars, other than Duty of 'Rs.300 per 10 gram'
tola bars, manufactured during the process imposed
of copper smelting
Silver manufactured during gold refining Duty of 'Rs.1500 per Kg.'
starting from ore/concentrate stage or from imposed
gold dore bar or during the process of
Page 13 of 39 mgb&co
India Budget Statement 2011
copper smelting
Branded jewellery / branded articles of Duty of 1% imposed
precious metals
Miscellaneous
Particulars Change
Enzymatic preparations used in Fully exempt
leather industry
Colour, unexposed Fully exempt (including CVD on imports)
cinematographic film in jumbo
rolls of 400 feet and 1000 feet.
Legislative Changes
Page 14 of 39 mgb&co
India Budget Statement 2011
Tariff rate of excise duty is increased from Nil to 10% on silver powder, silver
unwrought and semi-manufactured silver in specified forms.
Rule 3 and 4 are amended to disallow utilization of credit for paying duty on
concessional goods (in respect of which an exemption, other than full
exemption, is availed subject to the condition that no Cenvat credit of inputs
and input services is taken).
Rule 4 (7) is amended to provide for reversal of Cenvat credit in case any
payment made towards an invoice of input service is received back.
Page 15 of 39 mgb&co
India Budget Statement 2011
- provide an option to maintain separate accounts for inputs alone and reverse
the amount of input services credit as per the allocation formula in rule 6 (3A).
- provide that payment made under this rule shall be treated as credit not
availed for the purpose of an applicable exemption;
- clarify the value of services in cases where the same is not clearly defined
and tax is collected on a compounding or specific principle;
Rule 6(3B) is introduced to provide that only 50% of the Cenvat credit availed
will be available for utilization towards payment of service tax under 'Banking
and other financial services' by a banking company and financial institution.
Rule 6(3C) is introduced to provide that only 80% of the Cenvat credit availed
will be available for utilization towards payment of service tax by the providers
of life insurance service and management of investment under ULIP.
A new rule 6(6A) is inserted to provide that the provisions of sub-rule (1), (2),
(3) and (4) of the said Rule shall not apply to taxable services provided to SEZ
Unit or Developer without payment of service tax.
Sugar and textile items are omitted from the schedule of the Additional Duties
of Excise (Goods of Special Importance) Act, 1957.
Page 16 of 39 mgb&co
India Budget Statement 2011
Customs Duty
Effective Date: Changes come into effect immediately unless otherwise specified.
Standard Rate: Basic customs duty rates of 2%, 2.5% and 3% are unified at the
median rate of 2.5%.
Particulars Change
Specified agriculture machinery viz paddy Reduced from 5% to 2.5%
transplanter, laser land leveler, cotton picker,
reaper-cum-binder, straw or fodder balers,
sugarcane harvesters and track used for
manufacture of track-type combine harvester
Parts and components required for the Reduced from 7.5% to 2.5%
manufacture of equipment mentioned above
Micro-irrigation equipment Reduced from 7.5% to 5%
Raw Pistachios Reduced from 30% to 10%
Sun-dried dark seedless raisins Reduced from 100% to 30%
Cranberry products Reduced from 30% to 10%
De – oiled rice bran oil cake Full Exemption
Exports of De – oiled rice bran oil cake Export duty of 10%
Automobiles
Full exemption from basic customs duty and SAD and concessional CVD @5%
extended to specified parts of hybrid vehicles, namely, battery pack, battery
chargers, ACIDC electric motors and motor controllers. Concession is subject
to actual user condition and will be available till 31.03.2013.
Customs duty dispensation and concessional CVD @5% at (1) above is also
made available to import of spare battery packs for the electric vehicles by
importers which are registered with the agencies notified for Central Financial
Assistance (CFA) scheme of the Ministry of Non-conventional & Renewable
Energy (MNRE).
Definition for "Completely Knocked Down (CKD) unit" of a vehicle including two
wheelers, eligible for concessional import duty, is inserted to exclude from its
purview such units containing a pre-assembled engine or gearbox or
transmission mechanism or a chassis where any of such parts or sub-
assemblies is installed.
All clearances from SEZ into DTA are exempted from SAD provided they are
not exempt from the levy of VAT/Sales Tax.
Page 17 of 39 mgb&co
India Budget Statement 2011
Ship Repairs
Textiles
Particulars Change
Raw silk (not thrown) of all grades Reduced from 30% to 5%
Cotton Waste Fully exempt
Poly Tetra Methylene Ether Glycol Reduced from 7.5% to 5% subject to
(PTMEG) and Diphenylmethane 4, 4- actual user condition
diisocyanate (MDl)
Acrylonitrile, Rayon grade wood pulp Reduced from 5% to 2.5%
Sodium Polyacrylate Reduced from 7.5% to 5%
Caprolactum, Nylon chips, fibre and yarn Reduced from 10% to 7.5%
Full customs duty exemption to water supply projects for agricultural / industrial
use is expanded to water pumping station and water reservoir of such projects.
Full exemption from basic customs duty and CVD currently available to 'Tunnel
Boring machine' and parts thereof for hydro-electric power projects is extended
to such machines for highway development projects also.
Basic customs duty reduced from 7.5% to 5% for specified gems and jewellery
machinery.
Concessional import duty of 5% basic customs duty, 5% CVD & Nil SAD
currently applicable to high-speed printing machinery extended to mailroom
equipment compatible with such printing machinery imported by registered
newspaper establishments.
Concessional rate of 5% basic customs duty, 5% CVD & Nil SAD extended to
parts and components for manufacture of 23 specified high voltage
transmission equipments.
Page 18 of 39 mgb&co
India Budget Statement 2011
Full exemption from basic customs duty extended on bio-based asphalt sealer
and preservation agent, millings remover and crack filler, asphalt remover and
corrosion protectant and sprayer system for bio-based asphalt applications.
Concessional CVD @5% and full exemption from SAD is provided to LEOs
used for manufacture of LED lights and light fixtures.
Full exemption from duty extended to toughened glass and silver paste
imported for manufacture of solar cells or solar modules on actual user basis.
Health Sector
Endovascular stents are fully exempted from basic customs duty of 5%.
Concessional import duty regime of 5% Basic customs duty, 5% CVD & Nil
SAD is prescribed on specified raw material for the manufacture of syringes,
needles, catheters, cannulae on actual user basis.
Customs duty on four specified life saving drugs and their bulk drugs is
reduced from 10% to 5% with Nil CVD.
Electronic Hardware:
Full exemption from duty extended to additional specified capital goods and
raw materials for the manufacture of electronic hardware.
Page 19 of 39 mgb&co
India Budget Statement 2011
Aircrafts
Particulars Change
Imports of aircrafts for non-scheduled Basic duty of 2.5% is imposed
operations
Exemption from education cess and Withdrawn
secondary and higher education cess
available to aircrafts
Paper
Metals
Particulars Change
Stainless steel scrap Fully exempt
Ferro-nickel Reduced from 5% to 2.5%
Statutory rate of export duty on iron ores Increased from 20% to 30%
Effective rate of export duty on iron ore 20%
fines and lumps
Iron Ore pellets Fully exempt from export duty
Copper dross, copper residues, copper Exempt from levy of SAD
oxide mill scale, brass dross and zinc ash
Vanadium pentoxide and Vanadium Reduced from 7.5% to 2.5%
sludge
Value of gold and silver contained in the Exempt from basic customs duty
copper concentrate
Precious Metals
Import duty of Nil basic customs duty, CVD of RS.140 per 10 gram and Nil SAD
is prescribed for gold dore bars of upto 80% gold purity imported for refining
and manufacturing serially numbered gold bars in India.
Export Promotion
List of specified goods, allowed to be imported duty free for use in the
manufacture of leather goods, for export is expanded.
List of specified goods, allowed to be imported duty free for use in the
manufacture of textile and leather garments, is expanded by including anti-theft
devices like labels, tags and sensors therein.
Description of some items is changed in the list of items that are allowed to be
imported duty free for manufacture of textile or leather garments and other
leather goods for export.
Page 20 of 39 mgb&co
India Budget Statement 2011
Specified tools used in the handicrafts sector are included in the list of specified
goods, allowed to be imported duty free to Handicrafts exporters.
Full exemption from basic customs duty is extended to fin fish feed.
Miscellaneous
Basic customs duty is reduced from 5% to 2.5% on carbon black feed stock,
petroleum coke, mineral gypsum.
Crude palm stearin is fully exempted from basic customs duty for use in the
manufacture of laundry soap on actual user basis.
works of art created by an Indian artist abroad, irrespective of the fact whether
such works are imported along with the artist or the sculptor on their return to
India.
Page 21 of 39 mgb&co
India Budget Statement 2011
Section 28AA and 28AB are substituted with a revised section 28AA so as to
make the provisions relating to interest more coherent and clear.
Section 124 amended to provide for issuance of a show cause notice with prior
approval of an officer not below the rank of an Asst Commissioner of Customs.
Page 22 of 39 mgb&co
India Budget Statement 2011
New section 142A inserted to create first charge on the property of the
defaulter for recovery of the customs dues from such defaulter subject to
provisions of section 529A of the Companies Act, the Recovery of Debt due to
Bank and Financial Institution Act, 1993 and Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002.
Section 9AA amended to enable the Central Government to reduce the anti-
dumping duty imposed under the provisions of sub-section (1) of section 9A on
an article or an importer where such importer proves to the satisfaction of the
Central Government that he has paid anti-dumping duty in excess of his actual
margin of dumping.
Page 23 of 39 mgb&co
India Budget Statement 2011
Service Tax
Effective Dates
o cover all motor vehicles other than those meant for goods carriage and
three-wheeler scooter auto-rickshaws; and
Page 24 of 39 mgb&co
India Budget Statement 2011
Exemptions
An abatement of 25% from the taxable value is provided for the purpose of levy
of service tax under 'Transport of goods through coastal and inland shipping'.
Value of air freight included in the assessable value of goods for charging
customs duties is excluded from taxable value for the purpose of levy of service
tax under the 'Transport of goods by air' service.
Page 25 of 39 mgb&co
India Budget Statement 2011
Services related to transportation of goods by road, rail or air when both the
origin and the destination are located outside India is exempted.
Rates of service tax on travel by air are revised (w.e.f. 01.04.2011) as follows:
Particulars Changes
Domestic Travel (economy class) from Rs. 100 to Rs. 150
International travel (economy class) from Rs. 500 to Rs. 750
Domestic travel (other than economy 10% (standard rate)
class)
Exemption from service tax on the membership fees under 'Club or association
service' is given to the associations or chambers representing industry or
commerce for the period from 16.06.2005 to 31.03.2008. w.e.f. the date of
enactment of the Bill
Monetary limit of Rs. 1,00,000/- for adjustment under Rule 6(4B)(iii) of the
Service Tax Rules, 1994 is raised to Rs. 2,00,000/- w.e.f. 01.04.2011.
Rule 6(7A) of the Service Tax Rules, 1994 is amended (w.e.f. a date to be
notified, after the enactment of Finance Bill, 2011) to provide that that an
insurer carrying on life insurance business shall have the option to pay tax,-
towards the discharge of his service tax liability instead of paying service tax at
the rate specified in section 66 of Finance Act, 1994.
Such option shall not be available in cases where the entire premium paid by
the policy holder is only towards risk cover in life insurance.
Page 26 of 39 mgb&co
India Budget Statement 2011
Clause (B) of Rule 6(7) of the Service Tax Rules, 1994 pertaining to sale and
purchase of foreign exchange is amended to reduce the composition rate from
0.25% to 0.1 % of the gross amount of currency exchanged towards discharge
of service tax liability. (w.e.f. 01.04.2011)
Rule 6(6A) is inserted in Service Tax Rules, 1994, to provide that if any amount
of service tax has been self-assessed and not paid, the same shall be
recoverable with interest under section 87 of the Act. Thus, there shall be no
need to resort to provisions of section 73. (w.e.f. 01.04.2011)
It is defined in Service Tax (Determination of Value) Rules, 2006 that the value
of the money changing service: (w.e.f. 01.04.2011)
o for a currency where the RBI reference rate is not available, shall be 1 % of
the gross amount of Indian Rupees provided or received, by the person
changing the money;
Amendments in Act
Page 27 of 39 mgb&co
India Budget Statement 2011
etc. under proviso to section 73 (1A) shall not be available. Further, a new
sub-section 4A is inserted in section 73 to provide for reduced penalty in
cases where during the course of audit, verification or investigation it is
found that the transactions not reported to the department are available in
the records or invoices. Moreover, penalty is reduced to 1 % per month of
the tax amount upto a maximum of 25%.
Increase the maximum penalty under section 77 from Rs. 5,000 to Rs.
10,000.
Increase the maximum penalty for delay in filing of return under section 70
from Rs. 2000 to Rs. 20,000. However, the existing rate of penalty for the
first 15 days and for the subsequent 15 days as well as the daily penalty of
RS.1 00 per day thereafter under rule 7C of the Service Tax Rules, 1994
are retained without any change.
Amend the power to waive penalty under section 80. While penalties under
section 76 and 77 are retained, penalty under section 78 is waived only in
cases where the transactions are captured in the specified records.
Give power to issue search warrant under section 82 at the level of Joint
Commissioner and the execution of such warrant at the level of
Superintendent.
Make section 9A, 9AA, 9B, 9E, 34A and new section 35R of the Central
Excise Act, 1944 applicable to service tax under Section 83.
Page 28 of 39 mgb&co
India Budget Statement 2011
o The sanction for the prosecution will be granted at the level of Chief
Commissioner.
Point of Taxation Rules, 2011 have been framed and made effective from
01.04.2011. These rules determine the point in time when the services shall
be deemed to be provided. The general rule will be that the time of
provision of service will be the earliest of the following dates:
i. Date on which service is provided or to be provided
ii. Date of invoice
iii. Date of payment
Consequential changes have also been made in the Service Tax Rules,
1994 to alter the payment of service tax from receipt of payment to
‘provision of service’ and also to permit adjustment of tax when service is
not finally provided.
Page 29 of 39 mgb&co
India Budget Statement 2011
Budget Announcements
OVERVIEW OF THE ECONOMY
Growth rate of GDP increased from 7.2% during 2009-10 to 8.6% in 2010-11.
Exports have grown by 29.4%, while imports have recorded growth of 17.6%
during April – January 2010-11 over the corresponding period last year.
SUSTAINING GROWTH
Fiscal consolidation
Fiscal consolidation targets at Centre and States have shown positive effect on
macro economic management of the economy.
Amendment to Centre’s 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.
Expenditure Reforms
Subsidies
Page 30 of 39 mgb&co
India Budget Statement 2011
INVESTMENT ENVIRONMENT
To enhance flow of funds to infrastructure sector, the FII limit for investment in
corporate bonds issued in infrastructure sector being raised.
Page 31 of 39 mgb&co
India Budget Statement 2011
Existing housing loan limit enhanced to Rs 25 lakh for dwelling units under
priority sector lending.
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.
Page 32 of 39 mgb&co
India Budget Statement 2011
Allocation of Rs 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.
Nutri-cereals
Agriculture Credit
Credit flow for farmers raised from Rs 3,75,000 crore to Rs 4,75,000 crore in
2011-12.
Page 33 of 39 mgb&co
India Budget Statement 2011
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.
Approval being given to set up 15 more Mega Food Parks during 2011-12.
Under take out financing scheme, seven projects sanctioned with debt of Rs
1,500 crore. Another Rs 5,000 crore will be sanctioned during 2011-12.
Page 34 of 39 mgb&co
India Budget Statement 2011
Exports
Proposal to introduce scheme for refund of taxes paid on services used for
export of goods.
BLACK MONEY
Fivefold strategy to be put into operation to deal with the problem of generation
and circulation of black money.
Page 35 of 39 mgb&co
India Budget Statement 2011
STRENGTHENING INCLUSION
Allocation for social sector in 2011-12 (Rs 1,60,887 crore) increased by 17 per
cent over current year. It amounts to 36.4 per cent of total plan allocation.
Bharat Nirman
MGNREGA
Allocation for primitive Tribal groups increased from Rs 185 crore in 2010-11 to
Rs 244 crore in 2011-12.
EDUCATION
Page 36 of 39 mgb&co
India Budget Statement 2011
Rs 21,000 crore allocated, which is 40 per cent higher than Budget for 2010-
11.
Innovations
National Innovation Council set up to prepare road map for innovations in India.
Skill Development
HEALTH
UNORGANISED SECTOR
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 Rs 500 per month instead of Rs 200 at
present.
Forests
Rs 200 crore proposed to be allocated for Green India Mission from National
Clean Energy Fund.
Page 37 of 39 mgb&co
India Budget Statement 2011
Environmental Management
Rs 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 (Rs
100 crore) and Jammu region (Rs 150 crore).
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 Rs 25 crore and Rs
30 crore per district during 2010-11 and 2011-12 respectively.
Census 2011
IMPROVING GOVERNANCE
UID Mission
From 1st October, 2011 ten lakh Aadhaar numbers will be generated per day.
IT Initiatives
Page 38 of 39 mgb&co
India Budget Statement 2011
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.
Steps initiated to reduce litigation and focus attention on high revenue cases.
Corruption
TAGUP
Page 39 of 39 mgb&co