Notes from Indian Budget 2010-11

The Union Budget was released amidst a lot of expectations from the industry.

Key highlights of Budget 2010-11

  • Rs 16,500 crore has been provided to ensure that Public Sector Banks are able to attain a minimum 8% Tier-I capital by March 31, 2011
    Rs 1,73,552 crore has been provided for infrastructure development, which accounts for over 46% of the total plan allocation. Allocation for road transport has been increased by over 13% from Rs 17,520 crore to Rs 19,894 crore
  • Plan allocation for the power sector excluding Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) doubled from Rs 2,230 crore in 2009-10 to Rs 5,130 crore in 2010-11
  • The Plan and Non-Plan expenditures in BE 2010-11 are estimated at Rs 3,73,092 crore and Rs 7,35,657 crore, respectively. While there is a 15% increase in Plan expenditure, the increase in Non-Plan expenditure is only 6% over the BE of the previous year Fiscal deficit for BE 2010-11 has been estimated at 5.5% of GDP, which works out to Rs 3,81,408 crore

Direct Taxes

  • Income tax slabs for individual taxpayers to be as follows

Income up to Rs 1.6 lakh – Nil
Income above Rs 1.6 lakh and up to Rs 5 lakh – 10%
Income above Rs 5 lakh and up to Rs 8 lakh – 20%
Income above Rs 8 lakh – 30%

  • Deduction of an additional amount of Rs 20,000 allowed, over and above the existing limit of Rs 1 lakh on tax savings, for investment in long-term infrastructure bonds as notified by the Central Government
  • Rate of minimum alternate tax (MAT) increased from the current rate of 15% to 18% of book profits

Indirect Taxes

  • Rate reduction in central excise duties to be partially rolled back and the standard rate on all non-petroleum products enhanced from 8% to 10% ad valorem
  • The specific rates of duty applicable to portland cement and cement clinker has also been adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports-utility vehicles has been increased by 2 percentage points to 22%
  • The basic duty of 5% on crude petroleum, 7.5% on diesel and petrol and 10% on other refined products has been restored. Central excise duty on petrol and diesel has been enhanced by Re 1 per liter each
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