Highlights of Union Budget 2010-11

The Union Budget 2010-11 brought some cheers to the Indian markets that, over the past few days, were shrouded with concerns regarding the government's stimulus withdrawal. The Finance Minister has changed the direct tax slabs for men, women and senior citizens. The highest tax slab has now been raised from Rs 5,00,000 to Rs 8,00,000. Increase in personal tax threshold will mean that people will have more disposable income, which could fuel demand. The limit of deduction available under section 80C has also been raised. An additional investment of Rs 20,000 for infrastructure bonds has been allowed, taking the total of the limit under section 80C from the current Rs 1,00,000 to Rs 1,20,000. Income tax slabs for individual taxpayers will be : Income upto Rs 1,60,000 Nil Income from Rs 1,60,001 to Rs. 5,00,000 10% Income from Rs. 5,00,000 to Rs. 8,00,000 20% Income above Rs. 8,00,000 30% Surcharge on domestic corporates have been lowered by 2.5% from 10%. Rate of Minimum Alternate Tax (MAT) increased from the current rate of 15% to 18% of book profits. Limits for turnover over which accounts need to be audited enhanced to Rs. 60,00,000 for businesses and to Rs. 15,00,000 for professions. Rate reduction in Central Excise duties will be partially rolled back. Excise duty on non-oil products hiked to 10% from 8% across all sectors. Restore the basic duty of 5% on crude petroleum; 7.5% on diesel and petrol and 10% on other refined products. Central Excise duty on petrol and diesel enhanced by Re.1/ltr each, following which duty on branded petrol will now be Rs 15.5/ltr and that of branded diesel will be 5.75/ltr. Non-branded petrol will attract duty of 14.35/ltr and that of diesel will be 4.60/ltr. Rate of tax on services retained at 10 % to pave the way forward for GST. GST and implementation of Direct Tax Code from April 1, 2011. Car, fuel, AC, TV, gold and silver jewellery, cigarettes and other tobacco products will cost more in the new fiscal. Jewellery will also see hike in prices with higher customs duty proposed on imported gold, silver and platinum. Excise rates have been revised upwards up to Rs 2363/1000 (barring cigarettes of less than 60 mm). Also, chewing-tobacco products will attract excise duty of 60% as against the earlier 50%. A 2% hike in excise tax on prices of large cars, and sports and multi-utility vehicles has been announced. However, small cars will continue to get excise duty relief of 4%, which was offered on all car segments by the government as stimulus package to the auto industry in 2008 when auto sales had dropped. Analysts see this as a good sign for the auto industry and it this year may see a boost in sales. Prices of consumer durables and electronic items are set to go up, although mobile handsets made in India and accessories will see price cuts with the government providing exemption in customs duty on import of key components. Housing prices are also likely to go up as one of the key construction materials, cement will attract higher excise duty. Electricity bills could also go up as the minister proposed bringing service provided by electricity exchanges under the ambit of service tax. For the salaried, health check-up undertaken by hospitals for the employees of business establishments will be expensive as the service will now be covered under service tax. Health services provided under health insurance schemes by insurance companies will also be covered under service tax. Four-pronged strategy for growth of agricultural sector will be adopted, including Rs.200 crore to be provided in 2010-11 for climate-resilient agricultural initiative, involvement of private sector in grain storage to continue for another two years, debt repayment period extended to June 2010 in view of drought and floods, 5 more mega food processing projects, new fertiliser policy from April 2010; will lead to improved productively and more income for farmers. Due to the increasing reports of the use of fake currency notes in various parts of the country it has been decided that the Indian currency notes will have a distinct identity to distinguish it from other similar looking currencies. The government is set to announce a hike in the prices of auto fuels like petrol prices by Rs 2.71 per litre and diesel prices by Rs 2.55 per litre with effect from tonight after the Finance Minister announced an increase in excise and customs duty on petroleum products.