FM bats for senior citizens, plays safe on reforms
Significant benefits for senior citizens, higher tax exemption limit for individuals, retention of service tax at 10% and withdrawal of some duty exemptions were some of the major tax-related highlights of the Budget 2011-12 presented by Finance Minister Pranab Mukherjee Monday.
RELIEF FOR TAXPAYERS
Individual taxpayers get a higher basic deduction of Rs 1.8 lakh from the existing 1.6 lakh; every taxpayers get minor relief of Rs 2,000. No special benefit for women below 60 years whose basic exemption limit remains at Rs 1.90 lakh.
NO FILING OF RETURNS FOR SOME
Salary earners having an income of less than Rs 5 lakh will not have to file tax returns from this year. In case such a salary earner has income from other sources like dividend, interest, etc and does not want to file returns, he will have to disclose such income to his employer for tax deduction. The Form 16 issued to salaried employees will be treated as Income Tax Return. The announcement will come into effect from June 1, 2011.
BONANZA FOR SENIOR CITIZENS
Apart from an increase in the exemption limit to Rs 2.5 lakh, the entitlement age for senior citizens is now 60, not 65. A new class of Very Senior Citizens aged above 80 gets an even higher I-T exemption limit of Rs 5 lakh.
CORPORATES BREATHE EASY
Corporates get some relief as the current income tax surcharge of 7.5 per cent on domestic companies is reduced to five per cent but the Minimum Alternate Tax (MAT) is hiked from 18 to 18.5 per cent including developers of Special Economic Zones (SEZs) in it.
FARMER-FRIENDLY
In a relief to the farming community, loans will be available at interest rate of 4 per cent – three per cent less than market rate – for farmers who pay their dues in time.
ANGANWADI WORKERS
Remuneration of anganwadi workers raised from Rs 1,500 to Rs 3,000 a month. Helpers to get Rs 1,500 from that of Rs 750.
FOR THE AAM AADMI
In an effort to curb diversion of subsidised items like kerosene, LPG and fertilisers, the Budget proposes to introduce from March next year a scheme that will move towards direct transfer of cash subsidy to people living below poverty line.
MUTUAL FUNDS
OPEN TO FIIs
Foreign institutional and non-institutional investors get more options for investment. While the total ceiling on debt is raised to US$40 billion, individual investors who are KYC (know-your-customer) complaint can now invest in Indian mutual funds.
SERVICE TAX NET WIDENED
Hotels, five-star restaurants and airlines will scream
Service tax stays at the same level as before at 10 per cent, but several new services have been brought within its ambit. Among them: hotels with tariffs above Rs 1,000 (5 per cent service tax), restaurants with bar and A/C (3 per cent), hospitals with more than 25 beds and with A/C (5 per cent), and air travel (Rs 50 more for domestic, Rs 250 for international). Business class air travel will attract a full 10 per cent service tax.
IRON ORE EXPORTS HIT
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.
Goa’s mining industry upset
Goa’s mining industry is upset over the Union budget hiking export duty on iron ore by five per cent when the industry had pleaded to scale it down. (Report on page 3)
SOPS FOR HOUSING LOANS
Small sops have been offered to housing, especially low-cost housing. The 1 per cent interest rebate will be applicable for loans upto Rs 15 lakh on houses costing upto Rs 25 lakh. Loans upto Rs 25 lakh will qualify as priority sector loans (against Rs 20 lakh now).
EXCISE DUTY ON MORE items
An excise duty of one per cent is imposed on 130 specified items which will, however, exempt food and fuel.
Petrol prices may go up
State-run oil firms may raise petrol prices by up to Rs 4 a litre this week to offset rising crude oil costs as the Budget has ignored their demand to cut duties.
Food bill on the cards
The government will introduce the proposed National Food Security Bill, that seeks to provide a legal guarantee for cheaper foodgrains to the poor, in Parliament this year. The Centre is close to finalisation of the Bill after detailed consultations with all stakeholders, including states.
TAX-FREE BONDS TO STAY
Many sops for infrastructure have been announced. While Rs 30,000 crore worth of tax-free bonds will be on offer next year, the Rs 20,000 additional tax deduction available for investing in infra bonds will be retained for another year.
THE FINE PRINT
While direct tax changes are expected to result in a revenue loss of Rs 11,500 crore, the net revenue gain on account of indirect taxes is likely to be Rs 11,300 crore, including an additional Rs 4,000 crore on account of service tax changes.
