BUDGET ESTIMATE 2011 - 2012

Key Features of Budget 2011-2012

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
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.

Budget Estimates 2011-12

Gross Tax receipts are estimated at Rs 9,32,440 crore.
Non-tax revenue receipts estimated at Rs 1,25,435 crore.
Total expenditure proposed at Rs 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 Rs 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.

TAX PROPOSALS

Direct Taxes

Exemption limit for the general category of individual taxpayers enhanced from Rs 1,60,000 to Rs 1,80,000 giving uniform tax relief of Rs 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 Rs 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.

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

Source: http://indiabudget.nic.in