Budget Highlights 2011

Direct Taxes

• Exemption limit for the general category of individual taxpayers enhanced from 1,60,000 to 1,80,000 giving uniform tax relief of 2,000. (No relief females as their slab not changed from existing 1,90,000)
  
• 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 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.

Agriculture and Related Sectors

• Scope of exemptions from Excise Duty enlarged to include equipments needed for storage and warehouse facilities on agricultural produce.
• Basic Custom Duty reduced for specified agricultural machinery from 5 per cent to 2.5 per cent.
• Basic Custom Duty reduced on micro-irrigation equipment from 7.5 per cent to 5 per cent.
• De-oiled rice bran cake to be fully exempted from basic Custom Duty. Export Duty of 10 per cent to be levied on its export.

Manufacturing Sector

• Basic Custom Duty reduced for various items to encourage domestic value addition vis-à-vis imports, to remove duty inversion and anomalies and to provide a level playing field to the domestic industry.
• 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.
• Basic Custom Duty on two critical raw materials of cement industry viz. petcoke and gypsum is proposed to be reduced to 2.5 per cent.
• Cash dispensers fully exempt from basic Customs Duty.

Environment

• Full exemption from basic Customs Duty and a concessional rate of Central Excise Duty extended to batteries imported by manufacturers of electrical vehicles.
• Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology.
• Exemption granted from basic custom duty and special CVD to critical parts/assemblies needed for Hybrid vehicles.
• Reduction in Excise Duty on kits used for conversion of fossil fuel vehicles into Hybrid vehicles.
• Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted.
• Basic Customs Duty on solar lantern reduced from 10 to 5 per cent.
• Full exemption from basic Customs Duty to Crude Palm Stearin used in manufacture of laundry soap.
• Full exemption from basic Excise Duty granted to enzyme based preparation for pre-tanning.

Infrastructure

• Parallel Excise Duty exemption for domestic suppliers producing capital goods needed for expansion of existing mega or ultra mega power projects.
• Full exemption from basic Customs Duty to bio-asphalt and specified machinery for application in the construction of national highways.

Other Proposals

• Scope of exemptions from basic Customs Duty for work of art and antiquities extended to apply for exhibition or display in private art galleries open to the general public.
• Exemption from Import Duty for spares and capital goods required for ship repair units extended to import by ship owners.
• Concessional basic Custom Duty of 5 per cent and CVD of 5 per cent available to newspaper establishments for high speed printing presses extended to mailroom equipment.
• Jumbo rolls of cinematographic film fully exempted from CVD by providing full exemption from Excise Duty.
• Out right concession to factory-built ambulances from Excise Duty.
• Relief measures proposed for raw pistachio, bamboo for agarbatti, lactose for the manufacture of homoeopathic medicines, sanitary napkins, baby and adult diapers.
• Proposals relating to Customs and Central Excise estimated to result in a net revenue gain of 7,300 crore.

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 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 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