Budget 2011-3 march

8/7/2019 Budget 2011-3 march

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Presentation by

Prabhakaran .A [2K10IB17]

Naveen BTushar Sharma

Mohammed Aamir Khan

Date: 3-March-2011

8/7/2019 Budget 2011-3 march


8/7/2019 Budget 2011-3 march


y This budget reveals a remarkably improved fiscal

position

y The budget claimed fiscal deficit was down this year to

5.1% of GDP against the target 5.5% and would

decline to 4.6% next year against 4.8% mapped out

earlier.

PRABHAKARAN.A

8/7/2019 Budget 2011-3 march


HIGH LIGHTSy INVESTORS

-People·s Ownership of Public Sector Undertakings

-Rs.40,000 crore disinvestment

- Foreign retail investors set to enter Indian equity market throughmutual funds

y CONSUMERS

-Private hospitals and diagnostics to cost 5% more

-Domestic and international air travel costlier by Rs.50 and Rs.250-Dressing-up to cost 10% more with excise on branded clothes

-Staying in hotels to get 5% costlier

PRABHAKARAN.A

8/7/2019 Budget 2011-3 march


y TAXPAYERS

-Higher Tax exemption limit of Rs.1.80 lakh for men and a newcategory of senior citizens

-Provision for tax free infrastructure bonds extended by one moreyear

-New income tax return form called Sugam to be introduced forsmall businesses

y ECONOMY

-Poor users of kerosene, cooking gas, and fertilizers to getsubsides, in cash by March 2012

-Oil duty structure to be reviewed in view of west Asia

-Petrol prices to be revised

y

BUSINESS-tax holiday for IT companies finally ends, MAT imposed onspecial economic zones

-Corporate tax surcharge reduced by 2.5% [7.5% to 5%]

-MAT raised by 0.5% [18% to 18.5%]PRABHAKARAN.A

8/7/2019 Budget 2011-3 march


y Finance Minister Pranab Mukherjee - who invoked the heavenlyintervention of Lord Indra for good rain and Goddess Lakshmi as"strategy to diversify risk" in the course of presenting his sixthGeneral Budget - attempted a balancing act between populism,

good fiscal housekeeping and a push to reforms on Mondayy Concern over the misuse of subsidies given under various

schemes, the government would provide a direct cash subsidy onkerosene and fertilizers to people below the poverty line (BPL)from March next year.

y A task force headed by Nandan Nilekani is working out themodalities for the proposed system of direct transfer of subsidy forkerosene, LPG and fertilizers.

TUSHAR SHARMA

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Impact in the Market

y A little into his presentation, the markets cheered Pranab as

he talked about stepping up the disinvestment process and

about plans to contain inflation. The Sensex rose by over 250

points and hovered about there till the end of his speech.

y After the FM announced that duties would remain

unchanged, corporate India smiled and the markets soared

higher with the Sensex going up almost 500 points at one

stage. The Sensex closed 122 points higher to end at 17,823.

The 50-stock Nifty gained 29 points to 5,333.

TUSHAR SHARMA

8/7/2019 Budget 2011-3 march


TAX REFORMSy All eyes were on what Mukherjee would roll out as taxation relief

for the aam aadmi.

y Tax exemption limit raised to Rs. 1,80,000from Rs. 1,60,000 for the general category

y Senior citizens' age qualification reduced from 65 yearsto 60 years

y Exemption for senior citizens raised to Rs. 2.5 lakh

y Higher exemption for new category of very seniorcitizens - above 80 years of age.

y Tax exemption raised to Rs. 5 lakh for these very seniorcitizens

TUSHAR SHARMA

8/7/2019 Budget 2011-3 march


y And in some good news for those among the salaried that do

not have other sources of income, the Finance Minister has

exempted them from filing tax returns.

y

Salaried taxpayers who do not have other sources of incomeand whose incomes are subject to Tax Deduction at Source

(TDS) will be excluded from filing returns with effect from

June 1, 2011.

y

Earlier, the FM announced that the Direct Tax Code Bill waslikely to be passed by Parliament in the next financial year.

TUSHAR SHARMA

8/7/2019 Budget 2011-3 march


MAT-MINIMUM ALTERNATE TAX

y The Finance Minister has also hiked the minimum alternate

tax (MAT) from 18 per cent to 18.5 per cent. Last year, MAT

was hiked from 15 per cent to 18 per cent. This is a negative

for corporates. However, the FM has also cut the surcharge

on domestic companies from 7.5 per cent to 5 per cent.

y The FM said that the central excise rate had been retained at

10 per cent. Excise duty applies to virtually all manufactured

goods. The FM has also retained services tax at 10 per cent.

Analysts had expected him to hike both.

NAVEEN B

8/7/2019 Budget 2011-3 march


SERVICE TAX IMPACT

y Service tax has been hiked on air travel - by Rs. 50 for

domestic travel and Rs. 250 for international travel in the

economy class. On higher classes, it will be 10 per cent flat.

y

Service tax has been widened to cover hotel accommodationabove Rs. 1,000 per day, air-conditioned restaurants serving

liquor and some category of hospitals and diagnostic tests.

y Mobile phones and refrigerators will be cheaper, branded

clothes and gold will cost more.

NAVEEN B

8/7/2019 Budget 2011-3 march


y The peak rate of customs duty would be maintained at 10 percent in view of the global economic situation, Mukherjeesaid. The basic customs duty on agricultural machinery hasbeen reduced to 4.5 per cent from 5 per cent.

y Importantly, Mukherjee said the Government proposed tointroduce the Constitution Amendment Bill in the currentsession to pave the way for the introduction of the long-awaited Goods and Services Tax (GST) regime. Thegovernment had originally planned to roll out GST fromApril 1 last year but a consensus could not be reached. TheBill needs a two-third majority in both the Houses of Parliament to be passed.

NAVEEN B

8/7/2019 Budget 2011-3 march


y GST would subsume most of the central and state taxes like

excise and sales tax, making rules easier for the industry and

other tax payers.

y

The net loss from direct tax proposals was estimatedat Rs. 11,500 crore, Mukherjee said.

NAVEEN B

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Economy to grow at 9%: Pranaby The Finance Minister began his Budget speech by saying that the

economy had bounced back, industry was regaining ground and heprojected a double-digit service growth in "the near future." Hesaid the economy was expected to grow at 9% in 2011-12.

y The GDP, he said, had grown at 8.6 per cent, the agriculture

sector had grown at 5.6 per cent, industries at 8.1 per cent andthe services sector at 9.6 per cent.

y On expected lines, early in his speech he identified inflation andhigh food prices and corruption as key challenges before hisgovernment. And said he saw this Budget as a transition to a more

transparent and result-oriented economic management. Hepromised that average inflation would be lower in the coming year.

AAMIR KHAN

8/7/2019 Budget 2011-3 march


y Pranab Mukherjee's sixth Budget comes in the backdrop of high

inflation, tight liquidity and rising current account deficit.

y Unsustainable subsidies and a sense of policy paralysis as far as

major reforms are concerned have been a drag on the economy.

y Mukherjee has the difficult task of putting the economy back on

track as well as keep the masses or the aam aadmi happy.

y Towards that last bit, Mukherjee has also given a bonanza to the

farming community, announcing loans at an interest rate of four

per cent, three per cent less than the market rate, for farmers whopay their dues in time. He has also proposed raising the credit

target for the farm sector by Rs. 1 lakh crore.

AAMIR KHAN

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Focus on reforms push

y With a focus on pushing reforms, Mukherjee said the governmentwould keep up the tempo of the disinvestment process. He saidthe disinvestment target was Rs. 40000 crore for the next financialyear.

Mukherjee also said discussions were on to further liberalise theForeign Direct Investment (FDI) policy. Also, portfolio investmentwould be permitted in SEBI-registered mutual funds from foreignsubscriptions, essentially allowing foreign investors in mutualfunds.

He also announced bank licenses to new private sector players andthe speeding up of various pending financial sector bills.

AAMIR KHAN

8/7/2019 Budget 2011-3 march


y Mukherjee said the credit target for the agriculture sector

had been increased by Rs. one lakh crore to Rs. 4,75,000

crore. Also, he said, banks had been asked to focus on farm

credit lending to small and marginal farmers.

y Faced with high food inflation and the country's dependence

on import of pulses and edible oil, the Finance Minister also

announced various schemes for promoting production of

vegetables, pulses, oilseeds, fodder and nutrition-rich crops

like millets and maize.

AAMIR KHAN

8/7/2019 Budget 2011-3 march


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Budget 2011-3 march