BUDGET SNAPSHOT 2011-12

CHALLENGES
 The first challenge is maintaining growth while
containing inflation
 Certain events in the past few months may have
created an impression of drift in governance and a
gap in public accountability ... such an impression is
misplaced.“
   Corruption is a problem, must fight it collectively 
PRANAB MUKHERJEE,
FINANCE MINISTER OF INDIA
 OVERVIEW OF ECONOMY

• "Fiscal consolidation has been impressive.  Food

inflation remains a concern 
* Current account deficit situation poses some
concern 
* Must ensure that private investment is sustained 
* "The economy has shown remarkable resilience." 
* Setting tone for newer, vibrant economy. 
* Economy back to pre-crisis trajectory. 
* Development needs to be more inclusive. 
 DIRECT TAXES
Corporate tax

• The Direct Taxes Code is likely to be effective from 1 April 2012

• The Corporate tax,Firms,Local authority, Co operative Societies rate remains
unchanged
• The basic rate of MAT increased to 18.5% from 18 %
• The surcharge for domestic companies reduced to 5% from 7.5 %
• The surcharge Non domestic companies reduced to 2 % from 2.5 %
• NEW INCOME-TAX return form called Sugam to be introduced for small business.
• Salary earners having an income of less than ` 5 lakh is exempted for filing income
tax return from this year.
• Provision for tax-free infrastructure bonds extended by 1more year
 Personal Taxation
• For MEN
Current Slabs (`) Proposed Slabs (`) Basic rate of tax
Upto160,000 Upto180,000 Nil
160,001to500,000 180,001to500,000 10%
500,001to800,000 500,001to800,000 20%
Above800,001 Above800,001 30%

For WOMEN
No change in tax Structure
Upto190,000 Upto190,000 Nil
190,001to500,000 190,001to500,000 10%
500,001to800,000 500,001to 800,000 20%
Above800,000 Above800,000 30%
 For Senior Citizen (60-80years)
Age for eligibility reduced from 65 years to 60 Years

Upto 240,000 Upto 250,000 Nil

240,001to500,000 250,001to500,000 10%
500,001to800,000 500,001to800,000 20%
Above800,001 Above 800,001 30%

For Senior Citizen (80years & above)

Hike in exemption limit to ` 5 lakh will result on big gains

Upto 240,000 Upto 500,000 Nil

240,001to500,000 - 10%
500,001to800,000 500,001to800,000 20%
Above 800,001 Above 800,001 30%
 INDIRECT TAXES
Central excise

• Central Excise Duty to be maintained as 10% only (un changed)

• Nominal Central Excise Duty of 1 % without Cenvat credit facility is being imposed
on 130 items entering in the tax net.
• Lower rate of Central Excise Duty enhanced from 4 % to 5 %
• Optional levy on branded garments or made up proposed to be converted into a
mandatory levy at unified rate of 10 per cent.
• Labelled jewellery and Precious metals attract 1% excise duty.
• Excise duty on sanitary napkin, baby & clinical diapers and adult diapers is being
reduced from 10% to 1% with no cenvat credit.
• Concessional rate of excise duty for Hydrogen / hybrid vehicle.
• Exemption withdrawn on HD drive, CD/DVD drive,& writers, Flash memory, Combo
drives meant for fit inside of CPU or Laptop will attract 5% of concessional excise
duty .

Changes come into effect immediately unless otherwise specified.

 Service tax

• Service tax rate remains unchanged at 10 percent as a pre-cursor to GST

• Legal Cases will also become a costly affair to cover all legal consultations, except
individual to individual ,under service tax net.
• Hotel accommodation in excess of ` 1,000 per day will come under the ambit of tax
,although there will be an abatement of 50%
• service provided by air conditioned restaurants that have license to serve liquor
added as new services for levying Service Tax at 3- 5%. After an abatement of 70%
• Tax on all services provided by hospitals with 25 or more beds with facility of
central air conditioning at the rate of 5%
• Service Tax on air travel raised from ` 100 to ` 150 in the case of domestic air
travel and ` 500 to ` 750 on international journeys by economy class.
• The domestic air travel on higher classes will be taxed at the standard rate of 10%
• Services provided by life insurance companies in the area of investment and some
more legal services proposed to be brought into tax net.

• Above rules are made effective from 01.04.2011

 Customs duty
• Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per
cent
• Basic customs duty on raw silk reduced from 30 to 5 per cent.
• Basic customs duty on solar lantern or lamps reduced from 10 to 5%
• CVD exempted fully on LEDs used for manf of LEDs light & fixtures.
• Fully exemption from basic custom duty is being extended battery charger, hands
free, head phones and PC connectivity cable of mobile handset including cellular
phones.
• Basic customs duty on bamboo used for manf of agarbattis is being reduced from
30% to 10%
• The government has added a fixed excise duty of ` 160 per tonne on cement and
reduced custom duty on petcoke and gypsum, key inputs for the sector.

• Changes come into effect immediately unless otherwise specified.

 Goods and service tax

• GST proposed to be rolled out from April 2012

• Several proposals under the existing tax regime should facilitate a move to wards
GST:
• Focus on building robust IT infrastructure
• Further rationalization of rates under Excise and Customs

• Central sales tax

• No Changes in CST act 1956
• TAX HOLIDAY for IT companies finally ends Levy MAT on developers of SEZ and
units operating in them.
• Levy Alternative Minimum Tax (AMT) in the case of Limited Liability partnerships
at 18.5%
• Money market and debt funds will pay a higher dividend Distribution tax (DDT) for
investment made by firms.
• DDT will rise to 30% from 25% but stay unchanged at 12% for individual investors.
• The TDS structure & rates remains unchanged

• Above rules are made effective from 01.04.2011

 SUBSIDIES
Subsidy bill in 2011-12 seen at 1.44 trillion rupees 
* Food subsidy bill in 2011-12 seen at 605.7 billion rupees 
* Revised food subsidy bill for 2010-11 at 606 billion rupees 
* Fertiliser subsidy bill in 2011-12 seen at 500 billion rupees 
* Revised fertiliser subsidy bill for 2010-11 at 550 billion rupees 
* Petroleum subsidy bill in 2011-12 seen at 236.4 billion rupees 
* Revised petroleum subsidy bill in 2010-11 at 384 billion
rupees 
* State-run oil retailers to be provided with 200 billion rupee
cash subsidy in 2011-12 
 FISCAL DEFICIT
•  Fiscal deficit seen at 5.1 percent of GDP in
2010-11 
* Fiscal deficit seen at 4.6 percent of GDP in
2011-12 
* Fiscal deficit seen at 3.5 percent of GDP in
2013-14 
 SPENDING
• Total expenditure in 2011-12 seen at 12.58
trillion rupees 
* Plan expenditure seen at 4.41 trillion rupees
in 2011-12, up 18.3 percent
 REVENUE
• Gross tax receipts seen at 9.32 trillion rupees in 2011-12 
* Non-tax revenue seen at 1.25 trillion rupees in 2011-12 
* Corporate tax receipts seen at 3.6 trillion rupees in 2011-12 
* Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8
percent in 2012-13 
* Customs revenue seen at 1.52 trillion rupees in 2011-12 
* Factory gate duties seen at 1.64 trillion rupees in 2011-12 
*Service tax receipts seen at 820 billion rupees in 2011-12 
* Revenue gain from indirect tax proposals seen at 113 billion
rupees in 2011-12 
* Service tax proposals to result in net revenue gain of 40 billion
rupees in 2011-12 
 GROWTH, INFLATION EXPECTATIONS

Economy expected to grow at 9 percent in 2012,

plus or minus 0.25 percent 
* Inflation seen lower in the financial year
2011-12 
 DISINVESTMENT
• * Disinvestment in 2011-12 seen at 400 billion
rupees 
* Government committed to retaining 51
percent stake in public sector enterprises. 
 BORROWING
• Net market borrowing for 2011-12 seen at
3.43 trillion rupees, down from 3.45 trillion
rupees in 2010-11 
* Gross market borrowing for 2011-12 seen at
4.17 trillion rupees 
* Revised gross market borrowing for 2010-11
at 4.47 trillion rupees
 POLICY REFORMS
•  To create infrastructure debt funds 
* FDI policy being liberalised. 
* To boost infrastructure development with tax-free bonds of 300 billion
rupees 
* Food security bill to be introduced this year 
* To permit SEBI registered mutual funds to access subscriptions from foreign
investments 
* Raised foreign institutional investor limit in 5-year corporate bonds for
investment in infrastructure by $20 billion 
* Setting up independent debt management office; Public debt bill to be
introduced in parliament soon 
* Bills on insurance, pension funds, banking to be introduced. 
*Constitution Amendment Bill for introduction of GST regime in this session. 
*New Companies Bill to be introduced in current session 
 SECTOR SPENDING
• To allocate more than 1.64 trillion rupees to defence sector in 2011-12
* Corpus of rural infrastructure development fund raised to 180 billion rupees in
2011-12 
* To provide 201.5 billion rupees capital infusion in state-run banks in 2011-12 
* To allocate 520.5 billion rupees for the education sector. Rs.21,000 crore for
Sarva Shiksha Abhiyan 
* To raise health sector allocation to 267.6 billion rupees
* Rs.500 crore more for national skill development fund. 
* Rs.54 crore each for AMU (Aligarh Muslim University) centres at Murshidabad
and Mallapuram. 
* Rs.58,000 crore for Bharat Nirman; increase of Rs.10,000 crore. 
* Mahatma Gandhi National Rural Employment Guarantee Scheme wage rates
linked to consumer price index; will rise from existing Rs.100 per day. 
* Infrastructure critical for development; 23 percent higher allocation in 2011-12.
 AGRICULTURE
• Removal of supply bottlenecks in the food sector will be in focus in 2011-12 
* Agriculture growth key to development: Green Revolution waiting to happen in
eastern region. 
* To raise target of credit flow to agriculture sector to 4.75 trillion rupees 
* Gives 3 percent interest subsidy to farmers in 2011-12 
* Cold storage chains to be given infrastructure status 
* Capitalisation of National Bank for Agriculture and Rural Development (NABARD) of 30
billion rupees in a phased manner 
* To provide 3 billion rupees for 60,000 hectares under palm oil plantation 
* Actively considering new fertiliser policy for urea 
* Food storage capacity to be augmented - 15 more mega food parks to be set up in
2011-12; of 30 sanctioned in previous fiscal, 15 set up. 
* Comprehensive policy on further developing PPP (public-private-partnership) model. 
* Farmers need access to affordable credit. 
* Moving to improve nutritional security. 
* Necessary to accelerate production of fodder. 
 MORE
• Govt to move towards direct transfer of cash subsidy for kerosene, LPG
and fertilisers. 
*Financial Sector Legislative Reforms Commission, to be headed by
former Supreme Court judge B Srikrishna, to complete its work in 24
months; to overhaul financial regulations. 
* Five-fold strategy against black money; 13 new double taxation
avoidance agreements; foreign tax division of CTBT strengthened;
strength of Enforcement Directorate increased three-fold. 
* Bill to be introduced to review Indian Stamp Act. 
* New coins carrying new rupee symbol to be issued. 
* Anganwadi workers salary raised from Rs.1,500 to Rs.3,000. 
* Mortgage risk guarantee fund to be created for economically weaker
sections. 
* Housing loan limit for priority sector lending raised to Rs.25 lakh. 
- -Printers
-Paper
-Soap
Dearer -Steel
-Diapers &
Sanitary napkins
-Legal Services -Homoeopathic
Medicines
-Healthcare in -Yarn/raw silk
top – end Pvt. -Mobile Phones
hospitals. -Agarbatti
-Solar Lantern, LED
-Branded Cloths Lights
-Battery Driven-
-Gold Vehicles
-Agriculture
-A/c restaurants machinery
serving Liquor
Cheaper
-Hotel Services