Monday, February 28, 2011
Following are the excerpts from PM’s post budget interview on Doordarshan:
Q. Prime Minister, congratulations on your government's third budget. I would like to begin by asking how this budget addresses current economic conditions specifically with regard to inflation and sustaining rapid growth?
PM: This budget meets all the challenges that our economy and our polity faces in the next fiscal year. We need to sustain a high rate of growth and therefore this budget builds upon the good performance of the current fiscal year’s 8.6 % growth rate to a projected 9% growth rate for which adequate provisions have been made particularly in the area of infrastructure and in social sector plus agricultural development. It is certainly necessary to curb inflationary expectation for which it is very essential that there should a path of fiscal consolidation. The Finance Minister has done a commendable job by planning to reduce the fiscal deficit and revenue deficit before the figures he himself had projected in the budget estimates. And therefore, what he has done by way of social sector spending, what he has done by way of encouraging investment in agriculture, the tax concession that he has given, I think this is a budget which matches the challenges that our economy faces. Sustained growth, equitable growth, inclusive growth plus a determined effort to curb inflationary expectations.
Q. The Finance Minister has not raised any additional taxes and yet tax revenue is up 25%. Is this achieved just because of rapid growth? And therefore can you continue to reduce the deficit by achieving rapid growth?
PM: Well rapid growth is certainly one factor. But I think equally important is greater tax compliance and for that moderate rate and simplified system also are very essential. And the Finance Minister has walked on both these legs.
Q. The FM has announced some adjustments in IT rates at the bottom levels and specifically for senior citizens. But there were cries in the House about women for which there was no action it was said. And also for those further up in the income ladder who also have suffered inflation and there is no action for them. How do you react to that?
PM: Well you can’t please all people. And the Finance Minster has done as good a job as was possible. The fact that he has increased the exemption limit for the people at the lowest rung of the ladder from Rupees 1,60,000 to Rupees 1,80,000 will benefit all men and women and for older citizens he has done much more.
Q. The expectation was that there would be some kind of amnesty scheme to try and bring in black money to invest in infrastructure. That has not happened. Was it at all a factor that the government considered?
PM: Well, amnesty schemes have been implemented in the past. I don’t think they have succeeded in providing a permanent cure for black money. We need to have a system's reform in a holistic manner to deal with this menace.
Q. The stock market was fairly optimistic through the last couple of hours. In fact even before the speech began and then it kept climbing. Yet there is nothing really for investors in the budget. How do you read this from the perspective of the capital market.
PM: Well, The Finance Minister has done quite a lot to encourage foreign direct investment and foreign portfolio investment. He has reduced the surcharge from 7.5% to 5%. I think, the signals are that this is a government which is reform-oriented. He has promised that he will come with legislation with regard to insurance, with regard to pension fund. In totality, if these promises are converted into solid Acts of Parliament, they will provide a boost to the capital market as well as to the corporate sentiment all around.
Q. There is some frustration that the same promises made from one year to the next. Whether it is the great tax code, the Goods and Services Tax or some of the Bills on the debt management that from year to year the same issues are still in process and they are not actually completed.
PM: As far as Direct Taxes code is concerned, that is very much on the cards. It will, I think, become a reality around 1st April 2012. Now as far as the others, I think much depends on what we can push through Parliament. There is no lack of effort on the part of the government, and I am confident that although there are some difficulties with regard to the Goods and Services Tax- some states are not on board- but I am confident that we will persevere and ultimately succeed.
Q. One area of concern has been that interest rates have been climbing. Now in this budget, if I understand the numbers correctly, the government’s borrowing programme will not increase next year in relation to this year. So if the government’s borrowing programme is static, then would you expect interest rates to moderate?
PM: That is certainly one factor. Because the government cannot be a claimant on the nation’s savings pool. So that will at the margin help. But there are many other factors, for example what happens to inflation. That also has to be taken into account.
Q. There was an expectation that the Finance Minister would raise the excise and service taxes from 10% back to 12% level that prevailed before the recession. And he has not done that. If he had done that, the deficit would have come down more. So what were the calculations that went into keeping the taxes unchanged?
PM: Moderation in taxation on balance is a good thing to play with. And if you are moving towards a GST, I think it is also necessary to have that end product in mind. And I think the Finance Minister thought it through both customs and excise duties peak rates have been kept at 10%. I think that’s the right way to go about because we cannot be too certain that everything will work, the arithmetic will work the way we want it to work. We must have ample scope to contribute to fiscal consolidation.
Q. I have just two questions. One is on the social sector spending programmes- where it seems that a lot of the money does not actually manage to get spent. So is there a spending capacity issue for the government?
PM: Well there is obviously. These programmes require a boost in terms of great delivery services. So there is a problem which has to be faced head on.
Q. And the last question- was this an easy budget. Does rapid economic growth help create easy budgeting? Because you do not have to take tough decisions and numbers start falling into place, and so that is the most important thing that India needs to achieve?
PM: If we can achieve such high rates of growth, to that extent the fiscal problem will be lot more manageable. But considering international climate, considering what was happening in the international financial system, maintaining a high growth rate is something for which the FM and the government deserve to be congratulated.
Finance Minister, it is time to take a decision to stop misuse of diesel subsidy by the rich diesel car owners. Any further delay will cost hugely to the nation and our health
Keep the taxes on big cars effectively high and not give in to industry pressure. Link up taxes with the actual fuel use of the car to prevent fuel guzzling
Centre for Science and Environment in its missive to the Finance Minister Pranab Mukherjee has demanded decision in this years’ budget to halt misuse of under-taxed diesel by rich car owners. Government cannot bear the burden of this subsidy and continue to suffer revenue losses on account of this luxury consumption
Enforce additional, substantial and effective increase in excise duty on all diesel cars and SUVs if the taxes on fuels cannot be equalized immediately. Neutralise the price advantage of cheaper diesel fuel effectively.
CSE demands restoration of 24 per cent excise and increase in special duty on all big cars. Taxes must also reflect actual fuel consumption of cars
Remove the distorted and lenient definition of small diesel cars and align with the current definition of small petrol cars
Car industry is still trying hard to seek tax concession for bigger cars that use more fuel and deflect attention from diesel cars. Bending to such demand can have disastrous impacts.
Cheaper diesel fuel will encourage more cars, bigger engines and more driving and more fuel guzzling in the rebound.
The yawning gap between petrol and diesel has continued to incite deadly trend in diesalisation of cars and shift towards bigger cars. This will increase public health risks from toxic emissions and undermine energy security.
New Delhi, February 28, 2011: India cannot afford to delay the decision to take away the current incentive for diesel cars given the public health and energy security implications -- the message that Centre for Science and Environment (CSE) has for Pranab Mukherjee, as he gets set to present this year’s Budget.
CSE has drawn the attention of the Finance Minister to the recent trends that show that the car industry is on an overdrive to introduce more new diesel car models even in the small car segments that had not seen much diesel penetration earlier. The combination of cheap diesel and lure of lesser taxes on small cars will make the diesel car numbers explode now. Already, diesel cars constitute 36 per cent of new car sales – this is expected to be half soon. Since 2008, the price gap has increased from 28 per cent to 35 per cent in Delhi. It is deplorable that cars are not being made to pay the full costs when the oil companies are losing Rs 7-9 per litre of diesel.
Says Anumita Roychoudhury, head of CSE’s air pollution team: “CSE condemns this perverse subsidy. If the use of subsidised diesel continues to increase, the government will continue to incur a huge revenue loss as it earns much less from excise on a litre of diesel used by cars, as opposed to petrol.” The Union government earns more than three times higher excise revenue from every litre of petrol used by a petrol car compared to a litre of diesel used by a diesel car. Revenue losses will compound with increased share of diesel cars and SUVs. Only in Delhi, this revenue loss amounts to close to Rs 300 crore. This can be mammoth on a nation-wide basis. “The government cannot justify this,” adds Roychoudhury.
The car industry is spawning the myth that fuel-efficient diesel cars will help save fuels and lower climate impacts. On the contrary, the market trend clearly shows that diesel is aiding a steady shift towards bigger cars that guzzle more fuel. While 85 per cent of the petrol cars sold in India have less than 1,200 cc engines, 64 per cent of diesel cars are just under 1,500 cc; the rest are all above. Despite fuel efficiency, bigger engines will always use more fuel and cheaper diesel fuel will encourage customers to opt for bigger and more powerful cars and thus undermine energy security. Higher petrol prices have effectively kept its market predominantly in small car segment.
CSE cautioned that cheaper diesel fuel will always encourage bigger cars, more driving and more fuel guzzling in the rebound. The ongoing India assessment of the International Council on Clean Transportation shows that these trends can lead to a cumulative loss of 6.5 mtoe (million tonne of oil equivalent) of energy between 2010 and 2020. This equals the fuel use of all four-wheeled passenger vehicles in 2006 -- around 6.6 mtoe. This defeats the objective of improving India’s energy security.
Auto industry’s claim of greater fuel efficiency and lesser carbon emissions from diesel cars is unacceptable as diesel fuel has higher carbon content than petrol. If more diesel is burnt encouraged by its cheaper prices, more heat-trapping CO2 will escape. Also, black carbon emissions from diesel vehicles are several times more heat-trapping than CO2 and this nullifies fuel efficiency gains.
The car industry is pitching for tax concession for bigger cars and to stop increase in taxes on diesel cars in this budget when ‘clean’ diesel (diesel with less than 15 ppm of sulphur) is not available in the country.
CSE researchers demand that “the excise on big cars and SUVs must remain at 24 per cent and the special excise duty on bigger cars, MUVs and SUVs must be fully restored and increased in the forthcoming budget. This is a critical energy security measure.”
It is ironic that tax differential is being officially justified in the name of agriculture and freight, but rich car owners benefit more. Cars have already become the second biggest user of diesel and beneficiaries of the official tax policy. Cars use up 15 per cent of the total diesel in the country – compared to 12 per cent by buses and agriculture, 10 per cent by industry, and 6 per cent by the railways.
CSE has drawn attention of the Finance Minister to the global practices in which other governments have taken fiscal measures to discourage diesel in cars. In Brazil, diesel cars are actively discouraged because of the policy to keep taxes lower on diesel. In Denmark, diesel cars are taxed higher to offset the lower prices of diesel fuel. In China, taxes do not differentiate between petrol and diesel. The European Commission has calculated the difference in lifetime pollution costs of Euro IV compliant diesel car and petrol car. The total pollution cost of a Euro IV diesel car is 1,195 Euros vis-a-vis 846 Euros for a petrol car. This nullifies the marginal greenhouse gas reduction benefit of diesel car and costs higher to the society.
The Finance Minister can not afford to ignore the economic and environmental consequences of diesel pricing. Several committees including Kirit Parikh Committee have already recommended additional excise duty to eliminate the incentives arising from the lower diesel taxes.
Tax measures are absolutely necessary to discourage diesel cars until the time India introduced clean diesel (diesel fuel with 10 ppm sulphur used along with advanced emissions control systems) nation-wide. Otherwise, health risk associated with conventional diesel emissions is very serious. Some of the deadliest air toxics, also carcinogens, are related to diesel emissions. These are even blamed for killing unborn foetuses. According to WHO and other international regulatory and scientific agencies diesel particulates are carcinogens.
What CSE demands
Additional, substantial and effective excide duty on diesel cars to prevent dieselization of car segment.
Align small diesel car definition with that of petrol. Currently small petrol car is legally defined as one with length not exceeding 4,000 mm and with an engine capacity not exceeding 1,200 cc. For diesel small car this has been relaxed to 1,500 cc for diesel cars. Make it same as small petrol car for the purpose of tax measures.
Fully restore 24 per cent excise and increase further the special duty on all big cars.
Taxes must also begin to reflect the actual fuel use in cars to prevent shift towards bigger cars that use more fuel and threaten energy security.
In his budget speech today, the Finance Minister announced the expansion of the scope of exemption from custom duty for antiquities and works of art that are brought back to the country, for exhibition or display in private museums or galleries of similar premises that are open to general public. Kumari Selja, Minister of Culture, welcomed this concession given by the Finance Minister and stated that this will encourage more and more private, corporate and philanthropic organizations and individuals, to promote and popularize Indian art. She expressed optimism that this measure will help the fields of traditional arts as well as contemporary art in their endeavours.
Kumari Selja also welcomed an International Award, with prize money of Rs. 1 crore, for promoting values of universal brotherhood that is to be instituted in memory of Gurudev Rabindra Nath Tagore, as part of National Celebrations of his 150th Anniversary. The celebrations will commence from 7 May 2011 in New Delhi and a number of important events are slated to be held in several countries in Europe, America and Asia.
Following are the excerpts of the Finance Minister’s Budget Speech relating to culture:
“103. National celebrations of 150th Birth Anniversary of Gurudev Rabindranath Tagore will commence from May 7, 2011 in New Delhi. Important events will be held in several countries in Europe, America and Asia. A series of events are also proposed to be organized under the aegis of joint India-Bangladesh Celebrations Committee. An international award with prize money of Rs.1 crore is being instituted for promoting values of Universal Brotherhood in the memory of Gurudev Rabindranath Tagore.”
“177. Works of art and antiquities are exempt from customs duties when imported for exhibition in a public museum or national institution. In recent years, many organisations have joined the cause of promoting and popularizing both traditional and contemporary art. Some of them have been active in locating heritage works of Indian art and antiquities in foreign countries and bringing them back home. To encourage such initiatives, I propose to expand the scope of this exemption for works of art and antiquities to also apply to imports for exhibition or display, in private art galleries or similar premises that are open to the general public. Department of Culture will notify details of the scheme separately.”
Merchants' Chamber of Commerce
15-B, Hemanta Basu Sarani, Kolkata - 700 001
Shri Sudesh Sonthalia, President, Merchants’ Chamber of Commerce says that the Union Budget 2011-12 seeks to ensure sustained ‘growth of the economy with social justice’, while keeping the high and persistent inflation of food items under control through higher investment in farm production, focusing on nutri-cereals output, direct credit to the small & marginal farmers, minimising huge waste of food grains & vegetables by setting up Mega Food Parks and above all a better Public Distribution System by way of issuing smart cards, coupons etc so as to reach the target sections of the population.
In the context of current political and social realities of the country, the Finance Minister seems to have chalked out broadly a balanced budget and opted for marginal reforms in tax measures and focused attention on stimulating agricultural growth, including the Food Processing Industry, delivery systems of food grains and management of huge wastage.
Shri Sonthalia has welcomed the reduction of Company Surcharge from 7.5p.c. to 5 p.c., increase in Tax Exemption for individuals from 1.6 lacs to 1.8 lacs and measures to improve farming infrastructure and storage facilities to contain the inflationary trend. However, he has carefully avoided radical steps to stimulate industrial production by allowing higher depreciation on plant and machinery and extending R&D incentives available u/s. 35(2AB) to all sections. Neither he has gone for any reduction in Corporate Tax rate, even for the SME sector from the current level, with a total abolition of Surcharge and Cess which have outlined their relevance.
Shri Sonthalia further feels that the levy of MAT on the developers of Special Economic Zones, which are considered to be growth engines for the export sector, will cause a set back and also the increase in the MAT rate to 18.5p.c. is uncalled for.
While agreeing that there is still good scope for expansion and rationalisation of Service Tax Shri Sonthalia has remarked that the Union Budget has shifted the basis for Tax Collection from ‘Cash’ to ‘Accrual’ which will create a lot of problems for the assesses and provision should be made in the Rules for neutralising the Tax on un-realised amount of the Bills.
The Indian government has lifted the export duty for iron ore fines and lumps to 20% ad valorem, while granting full exemption from export tariffs for iron ore pellets, Steel Business Briefing learns from the finance ministry’s announcement of the union budget for the April 2011-March 2012 fiscal year.
The increased tariffs come into effect from 1 March. Until now, India had levied export tariffs of 15% on lumps and pellets and 5% on fines.
Finance minister Pranab Mukherjee said that iron ore “is a natural resource which needs to be conserved.” The steel industry had lobbied hard for export restrictions. Full exemption from export duty is being provided to iron ore pellets to encourage the value-addition process for fines, Mukherjee added.
The Federation of Indian Mineral Industries (FIMI) believes that this increase in tariffs will hit not only exports but also affect domestic ore production. “Indian miners will now limit production of fines, which will also affect output of ore lumps,” FIMI secretary general R.K. Sharma tells SBB. “This will drive up the prices of lumps and so steel prices will escalate. This renders the whole process counterproductive,” he reasons.
Market sources also note that state-owned miner KIOCL Ltd (formerly Kudremukh Iron Ore Company Ltd) is presently the only Indian firm permitted to export iron ore pellets.
India is the world’s third largest iron ore exporter, shipping 115m tonnes in 2009 mostly to China.
Union Budget reaction of
Mr. Arun Kumar Jagatramka,CMD,Gujarat NRE Coke
According to Mr Arun Kumar Jagatramka, Chairman and Managing Director of Gujarat NRE Coke Limited. “A timid and directionless budget – The budget lacked any positivity and a status quo has just been maintained. No direction has been given to the big ticket reform that we all have been looking forward and it has been a big opportunity that the Finance Minister seemed missing in taking the country’s development to the next league. The Finance Minister has just done a lip service on the corruption and governance deficit front. He should have tackled governance and ethical deficit with the same vigor as that of fiscal deficit, but seemed missing on both the targets. The government should have come out with a bold message of encouraging self compliance to tackle the black money menace; instead the age old ineffective measures have once again been repeated. On FDI front, there was no announcement to enthuse the industry as well as on the tax front it lacks luster. I believe the Finance Minister has just managed to get a pass mark in maintaining a status quo.”
Ombudsman calls on Commission to make ex-gratia payments to misinformed exchange students
The European Ombudsman, P. Nikiforos Diamandouros, has asked the European Commission to make an ex-gratia payment of EUR 1 500 to each of several students from outside the European Union, who participated in the EU scholarship programme Erasmus Mundus I. This follows a complaint from a Canadian student who claimed that he and his fellow students, who followed a Master's Course in Aeronautics and Space Technology, had been misinformed about the financial aspects of their scholarship.
Canadian student complained about Erasmus Mundus scholarship
The Erasmus Mundus programme is an EU-funded exchange programme for students from outside the European Union, which aims to enhance the quality of European higher education and to promote the EU as a world centre of excellence in learning.
In April 2007, a Canadian student, who took part in a Master's Course in Aeronautics and Space Technology in
The Commission rejected the request, arguing that the student should have been aware of the high tuition fees for the EuMAS 2006-2008 course.
Following his investigation, the Ombudsman concluded that the information provided by the Commission regarding the Erasmus Mundus programme indeed led EuMAS 2006-2008 students from outside the EU to believe that their scholarship would enable them to have a decent standard of living while in
On behalf of James Abraham, MD and CEO, SunBorne Energy:
- The FM has reduced the import duty on PV cells and modules to zero. But, this ignores the needs of the solar industry more widely. In PV, there are other solar components such as inverters and cables. And the entire solar thermal components of mirrors, receivers, and solar turbines have been ignored. Also, as an industry, we will be relying on imported engineering services provided from experienced players. This too has been ignored.
- The surprising increase in the MAT to 18.5% only hurts the thin returns in the solar industry.
- I am encouraged by the infrastructure bond fund. The FM is encouraging foreign funds to invest in infrastructure by reducing the tax they would pay on their returns. In solar, funding large-scale deployment remains a hurdle and such infrastructure bond funds can help. However, I would have liked to see an solar bond fund, focused specifically on supporting large-scale deployment of solar plants.
New Series of Coins with the Rupee Symbol to be issued
Some additional measures for good governance have been proposed in the Union Budget 2011-12. While presenting the Union Budget the Finance Minister Shri Pranab Mukherjee said in Lok Sabha that Technology Advisory Group for Unique Projects (TAGUP) has submitted its report and its recommendations have been accepted in principle.
The Finance Minister Shri Mukherjee also informed the house that the government has approached Unicode Standards Authority for inclusion of the Indian Rupee Symbol in international standard. A new series of coins carrying this symbol will also be issued shortly.
The Union Budget 2011-12 seeks to improve the quality of governance through strengthening Performance Monitoring and Evaluation System (PMES). The Finance Minister Shri Pranab Mukherjee said in Lok Sabha that as per the recommendations of Second Administration Reforms Commission, the Government has set up a PMES to assess the effectiveness of Government departments in their mandated functions. It involves preparations of a Results Framework Document (RFD) by each department, highlighting its objectives and priorities for the financial year and achievements against pre-defined targets at the end of the year. This document would be available for public information on the departmental websites. In the first phase, 62 departments have been covered under PMES.
The Union Budget 2011-12 has emphasized on the need to improve governance through tackling corruption. While presenting the Budget the Finance Minister Shri Pranab Mukherjee said that a Group of Ministers has been constituted to consider measures for tackling corruption. The Group has been addressing issues relating to State funding of elections, speedier processing of corruption cases of public servants, transparency in public procurement and contracts, discretionary powers of Central ministers and competitive system for exploiting natural resources. The Group will make its recommendations in a time bound manner.
Steps initiated to Reduce tax Related Litigation
The Union Budget 2011-12 has laid a special emphasis on reducing the compliance burden of small tax payers by introducing simplified return form called ‘Sugam’. The Finance Minister Shri Pranab Mukherjee while presenting the Budget said that the small tax payers who fall within the scope of presumptive taxation can utilize the new simplified form Sugam.
To fast track the disposal of cases related to taxes by the settlement commission three more Benches of the Commission are being set up.
The Minister said that steps are being initiated to reduce litigation and focus attention on high revenue cases. He said that instructions have been issued raising limit of tax effects below which, tax disputes will not be pursued by Government in higher Courts of Appeal.
In the Budget Speech the Finance Minister Shri Pranab Mukherjee said the rollback of fiscal stimulus which was implemented over 2008-09 and 2009-10 to mitigate the impact of global financial crisis on economic slowdown in India will continue this year as well, to build economic resilience. He said a counter cyclical fiscal policy is required for insurance against external shocks and localized domestic factors. Aiming towards fiscal consolidation, the Government would introduce an amendment to the Fiscal Responsibility and Budget Management (FRBM) Act 2003 laying down the fiscal road map for the next five years.
The Finance Minister also proposed to introduce Public Debt Management Agency of India Bill in the next financial year. The States are required to amend or enact their FRBM Acts to confirm to a combined States’ debt target of 24.3 per cent of GDP to be reached latest by 2014-15.
Finance Minister Shri Pranab Mukherjee has stressed on the importance of computerization of Commercial Taxes. While presenting the Union Budget 2011-12 in Lok Sabha he said that Mission Mode Projects for computerization of Commercial Taxes in States will allow States to align with the roll out of GST. Funds have been released for 31 such projects received from the States and Union Territories (UTs). Most of the States and UTs have already enabled the facility of dealers making electronic payments. A number of States have already started accepting Electronic Tax Returns and issuing forms required for inter-state trade.
Presenting the Budget 2011-12 in the Parliament today, the Finance Minister Shri Pranab Mukherjee stressed that introduction of Direct Taxes Code (DTC) and Goods & Services Tax (GST) will result in moderation of rates, simplification of laws and better compliance. He said DTC will be finalized for enactment during next financial year. The DTC Bill that was introduced in the Parliament in August 2010 is before the Standing Committee. The DTC Code is proposed to be effective from April 1, 2012. Marking a water shed, the GST roll out will have to be taken in concert with the States as areas of divergence have been considerably narrowed in the last four years. Shri Mukherjee proposed to introduce Constitution Amendment Bill in this Session itself as a next step towards the roll out of Central & State GST.
Significant progress has been achieved in establishing GST Network, which will serve as IT infrastructure for introduction of GST. By June 2011, the National Securities Depository Limited (NSDL) will set up a Pilot Portal in collaboration with the eleven States prior to its roll out across the country.
CBDT to Set up Eight more Aaykar Seva Kendras in 2011-12
Various tax initiatives have been taken in the Union Budget 2011-12 for efficient tax administration. Presenting the Budget in the Lok Sabha, Finance Minister Pranab Mukherjee highlighted the initiatives including e-filing and e-payment of taxes, adoption of ‘Sevottam’ concept by CBEC and CBDT, web based facility for tax payers track the resolution of refunds and credit for pre-paid taxes and augmentation of processing capacity.
The on-line preparation and e-filing of income tax returns, e-payment of taxes through 32 agency banks, ECS facility for electronic clearing of refunds directly in taxpayers’ bank accounts and electronic filing of TDS returns are now available throughout the country.
The ‘Sevottam’ concept has been adopted by both Boards i.e. CBDT and CBEC. The pilot projects of Aaykar Seva Kendras (ASKs) under CBDT have come of age. CBDT will commission eight more such centres this year. In 2011-12, another fifty ASKs will be set up across the country. CBEC has also launched a similar initiative and four of their pilot projects have been commissioned.
The Centralized Processing Centre (CPC) at Bengaluru has increased its daily processing capacity from 20,000 to 1.5 lakh returns in 2010-11. Two more CPCs will become operational in Manesar and Pune by May 2011 and a fourth CPC will come up in Kolkata in 2011-12.
The electronic filing of tax deduction at source (TDS) statements has stabilized and soon there will be provision for salary tax payers to not file income tax returns as their tax liability is being discharged by their employer through TDS.
As a measure to increase the level of service CBDT will provide a web-based facility to enable tax payers to report and track the resolution of the refunds and credit for pre-paid taxes.
Presenting the General Budget 2011-12 here today, Shri Pranab Mukherjee, Finance Minister announced that:
• Full exemption from basic Customs Duty and a concessional rate of Central Excise Duty is proposed to be extended to batteries imported by manufacturers of electric vehicles.
• A concessional Excise Duty of 10% has also been proposed to vehicles based on fuel cell technology.
• The Excise Duty on kits used for conversion of fossil fuel vehicles into hybrid vehicles has also been reduced.
• The Excise Duty on LEDs is proposed to be reduced to 5% and special CVD being fully exempted.
• The basic Customs Duty on solar lantern is proposed to be reduced from 10 to 5%.
• Full exemption from basic Customs Duty has been proposed to crude palm stearin used in manufacturing of laundry soap.
• Full exemption from basic Excise Duty granted to enzyme based preparation for pre-tanning has also been proposed.
The Union Finance Minister Shri Pranab Mukherjee while presenting the Union Budget for 2011-12 has announced that the Service Tax on Health check up or treatment imposed in 2010-11 would now be replaced with a tax on all services provided by hospitals with 25 or more beds that have the facility of central air-conditioning. Emphasising that though this Service Tax is on high-end treatment, Shri Mukherjee said that there would be an abatement of 50 per cent so that the actual burden is kept at 5 per cent of the value of service.
The Finance Minister said that the levy would be extended to diagnostic tests of all kinds with the same rate of abatement. All Government Hospitals would be outside this levy, the Minister added.
Presenting the General Budget 2011-12 here today, Shri Pranab Mukherjee, Finance Minister informed that to deal with the problem of generation and circulation of black money, the government has put into operation a five-fold strategy which consists of joining the global crusade against black money; creating an appropriate legislative framework; setting up institutions for dealing with illicit funds; developing systems for implementation and imparting skills to the manpower for effective action.
The Finance Minister Shri Mukherjee further informed that while the membership of the Financial Action Task Force (FATF) was secured in June last year, the government has also joined the Task Force on Financial Integrity and Economic Development, Eurasian Group (EAG) and Global Forum on Transparency and Exchange of Information for Tax Purposes. Discussions have also been concluded for 11 Tax Information Exchange Agreements (TIEAs) and 13 new Double Taxation Avoidance Agreements (DTAAs) along with revision of provisions of 10 existing DTAAs.
Shri Mukherjee apprised that the amendment in the Money Laundering Legislation in 2009 has significantly increased its scope and application. The number of cases registered under this Law has increased to over 1200 by January this year. The strength of the Enforcement Directorate has been increased three-fold to deal effectively with the increased workload.
He informed that the Ministry of Finance has also commissioned a study on unaccounted income and wealth held within and outside the country. It would suggest methods to tax and repatriate this illicit money.
To strengthen controls over prevention of trafficking and improve the management of narcotic drugs and psychotropic substances, it has been proposed to announce a comprehensive national policy in the near future, the Finance Minister said.
Social Sector Receives 36.4 Per Cent of the Total Plan Allocation
Government is Continuing its Focus on Inclusive Development
Union Minister of Finance Shri Pranab Mukherjee while presenting the Union Budget for 2011-12 announced that the National Food Security Bill (NFSB) will be introduced in the Parliament during the course of this year. Shri Mukherjee said that the Government is close to finalization of this Bill after detailed consultations with all stake holders including State Governments.
Referring to the Government’s Schemes of Right to Work for rural people, Right to Information and Right to Education, Shri Mukherjee said that the Government has engineered a major directional change in public policy by its focus on inclusive development.
The Finance Minister said that the allocation for the Social Sector in 2011-12 is being proposed to be Rs.1,60,887 crore, which is an increase of 17 per cent over current year. He pointed out that this allocation amounts to 36.4 per cent of the total Plan allocation.
Presenting the General Budget 2011-12 here today, Shri Pranab Mukherjee, Finance Minister said that to quicken the clearance of the cargo by Customs authorities and further modernize the customs administration, it has been proposed to introduce self-assessment in Customs. Under this scheme, the importers and exporters will themselves asses their duty liabilities while filing their declarations in the EDI system. The department will verify such assessments on a selective system driven basis.
The Finance Minister Shri Mukherjee said that a new scheme has also been proposed under which SEZs will be able to obtain tax-free receipt of services wholly consumed within the zone and get their refunds in a much easier manner.
It has also been proposed to extend the mega cluster scheme for development of leather products. Seven mega leather clusters have been proposed to be set up during 2011-12. Jodhpur has been proposed to be included for the development of a Handicraft Mega Cluster.
Manufacturing Sector Share in GDP Expected to Reach 25% in Ten Years
Presenting the General Budget 2011-12 here today, Shri Pranab Mukherjee, Finance Minister informed that to provide green and clean transportation for the masses, a National Mission for Hybrid and Electric Vehicles will be launched in collaboration with all stakeholders.
Shri Mukherjee informed that a Group of Ministers (GOM) has been set up to consider all issues relating to reconciliation of environmental concerns emanating from various departmental activities including those related to infrastructure and mining. This GOM will also suggest changes in the existing statutes, rules, regulations and guidelines and make its recommendations in a time bound manner.
He also informed that the share of manufacturing in GDP is expected to rise from about 16% to 25% over a period of ten years. The government will come out with a Manufacturing Policy, which will bring down the compliance burden on the industry through self-regulation and help make Indian industry globally competitive.
The Finance Minister has also proposed to include capital investment in fertilizer production as an infrastructure sub-sector.
Allocation for Primitive Tribal Groups Increased
A New Pre-Matric Scholarship Scheme for SC/ST Students Announced
The Union Finance Minister Shri Pranab Mukherjee while presenting the Union Budget for 2011-12 has announced that specific allocations are being earmarked towards Scheduled Castes Sub-Plan and Tribal Sub-Plan for the first time in the Budget for 2011-12. These will be shown in the Budget of the relevant Ministries and Departments under separate minor heads of account.
Referring to the allocation for primitive tribal groups, the Finance Minister announced that it is being increased from Rs.185 crore in 2010-11 to Rs.244 crore in 2011-12.
Emphasising that empowerment flows from Education , the Finance Minister said that a new pre-matric Scholarship Scheme will be introduced in 2011-12 for needy students belonging to the Scheduled Castes and Scheduled Tribes studying in classes ninth and tenth. Shri Mukherjee pointed out that the new scheme would benefit about 40 lakh Scheduled Caste and Scheduled Tribe students.
Rs.30,000 Crore Tax Free Bonds to be Issued
Iifcl to Achieve Disbursement Target of Rs. 25,000 Crore by 2012
Announcing the General Budget 2011-12 here today, Shri Pranab Mukherjee, Finance Minister, proposed an allocation of Rs.2,14,000 crore for infrastructure sector, which is 23.3% higher than current year. This amounts to 48.5% of the Gross Budgetary support to plan expenditure.
The Finance Minister, stated that in order to give a boost to infrastructure development in railways, ports, housing and highways development, it has been proposed to allow tax-free bonds of Rs.30,000 crore to be issued by various government undertakings in the year 2011-12. This includes Indian Railway Finance Corporation Rs.10,000 crore; National Highway Authority of India Rs.10,000 crore; HUDCO Rs.5000 crore and Ports Rs.5000 crore.
Shri Mukherjee informed that India Infrastructure Finance Company Limited (IIFCL) is expected to achieve a cumulative disbursement of Rs.25,000 crore by March 31, 2012. Under the “take out financing scheme”, seven projects have been sanctioned with a debt of Rs.1500 crore. Another Rs.5000 crore will be sanctioned during 2011-12, he informed.
The Union Finance Minister, Shri Pranab Mukherjee, while presenting the Union Budget for 2011-12, has informed that the Government has decided to index the wage rates notified under the Mahatama Gandhi National Rural Employment Guarantee Act (MGNREGA) to the Consumer Price Index for Agricultural Labour. He said that this comes in pursuance of earlier budget announcement to provide a real wage of Rs.100 per day.
The enhanced wage rates has been notified by the Ministry of Rural Development on January, 2011. The Finance Minister pointed out that this step has resulted in significant enhancement of wages for the beneficiaries across the country.
The Union Finance Minister Shri Pranab Mukherjee while presenting the Union Budget for 2011-12 has announced that the connectivity under National Knowledge Network (NKN) to all 1,500 Institutions of Higher Learning and Research through optical fiber backbone would be provided by March, 2012.
The Finance Minister pointed out that 190 Institutes would be connected to NKN during the current year.
The NKN was approved in March, 2010.
Finance Minister, Shri Pranab Mukherjee has announced a new initiative on vegetable clusters for farmers. While presenting the Union Budget for 2011-12 in the Lok Sabha today, Shri Mukherjee stated that the growing demand for vegetables has to be met by a robust increase in the productivity and market linkage. To achieve this objective, an efficient supply chain to provide quality vegetables at competitive prices will have to be established, he added.
Shri Mukherjee proposed to provide an amount of Rs. 300 crore for implementation of vegetable initiative to set in motion a virtuous cycle of higher production and incomes for the farmers. The Finance Minister further announced that this programme would be launched near major urban centres initially.
Rs.52,057 Crores Allocated for Education
40 Per Cent higher allocation in Sarva Shiksha Abhiyan
The Union Finance Minister, Shri Pranab Mukherjee, while presenting the Union Budget for 2011-12, has proposed an allocation of Rs.52,057 crore for education, which is an increase of 24 per cent over the current year.
For the Sarva Shiksha Abhiyan Rs.21,000 crore are being allocated for the year 2011-12, which is 40% higher than Rs.15,000 crore allocated in the current year budget.
A revised Centrally Sponsored Scheme “Vocationalisation of Secondary Education” will be implemented from 2011-12 to improve the employability of our youth.
The Finance Minister, Shri Pranab Mukherjee while presenting the Union Budget for 2011-12 announced in the Lok Sabha today to further strengthen the on-going Rashtriya Krishi Vikas Yojana (RKVY) and to focus on the removal of production and distribution bottlenecks for fruit, vegetables and poultry products. The Finance Minister proposed to increase the total allocation under RKVY from Rs 6,755 crore in 2010-11 to Rs.7,860 crore in 2011-12.
Shri Mukherjee also mentioned that in the Budget for 2010-11 a four-pronged strategy covering agricultural production, reduction in wastage of produce, credit support to farmers and a thrust to food processing sector was announced. The same had started showing results, he added.
Rural Broadband Connectivity to all 2.5 Lakh Panchayats Planned in three Year
The Union Minister of Finance Shri Pranab Mukherjee, while presenting the Union Budget for 2011-12, has announced that Bharat Nirman package consisting of 6 flagship programme has been allocated Rs.58,000 crore, which represents an increase of Rs.10,000 crore from the current year. Bharat Nirman package includes Pradhan Mantri Gram Sadak Yojana (PMGSY), Accelerated Irrigation Benefit Programme, Rajiv Gandhi Grameen Vidyutikaran Yojana, Indira Awas Yojana, National Rural Drinking Water Programme and Rural telephony.
Shri Mukherjee emphasized that the Government’s flagship programmes have been the principal instrument for implementing its agenda for inclusive development.
With a view to take INTERNET at the grass root level, the Finance Minister said that a plan has been finalized to provide Rural Broadband Connectivity to all 2,50,000 Panchayats in the country in three years.
Finance Minister, Shri Pranab Mukherjee has proposed to set up 15 more Mega Food Parks in the Union Budget for 2011-12 presented in the Lok Sabha today.
An estimated 40% of the fruit and vegetable production in India goes waste due to lack of storage, cold chain and transport infrastructure. To address these issues the 11th Plan target for number of Mega Food Parks was set at 30. Shri Mukherjee further stated that 15 such Parks have already been sanctioned.
22 Lakh Persons to Benefit from the Increase
The Union Finance Minister Shri Pranab Mukherjee while presenting the Union Budget for 2011-12 has announced that the remuneration of Anganwadi workers and Anganwadi helpers who are the backbone of Integrated Child Development Services (ICDS) Scheme are being enhanced from April 1, 2011. He said that the remuneration for Anganwadi workers would be increased from Rs.1,500 per month to Rs.3,000 per month and for Angnwadi helpers from Rs.750 per month to Rs.1,500 per month.
The Finance Minister pointed out that around 22 lakh Anganwadi workers and helpers would benefit from this increase.
Finance Minister, Shri Pranab Mukherjee has proposed to raise the target of credit flow to the farmers from Rs. 3,75,000 crore this year to Rs.4,75,000 crore in 2011-12. Banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers.
Presenting the Union Budget for 2011-12 in the Lok Sabha today, Shri Mukherjee said, the existing interest subvention scheme of providing short term crop loans to farmers at 7% interest will be continued during 2011-12. He further proposed to enhance the additional subvention to 3% in 2011-12. Thus, the effective rate of interest for such farmers will be 4% per annum.
In view of the enhanced target for flow of agriculture credit, Shri Mukherjee proposed to strengthen NABARD’s capital base by infusing Rs.3000 crore, in a phased manner, as government equity. This would raise its paid-up capital to Rs.5000 crore. To enable NABARD refinance the short term crop loan of the co-operative credit institutions and Regional Rural Banks (RRBs) at concessional rates, the Finance Minister proposed a contribution of Rs.10,000 crore to NABARD’s Short –term Rural Credit Fund for 2011-12 from the shortfall in priority sector lending by scheduled commercial banks.
The Union Finance Minister, Shri Pranab Mukherjee has announced two new initiatives for livestock development with an allocation of Rs. 300 crore each. While presenting the Union Budget for 2011-12 in the Lok Sabha today, Shri Mukherjee announced to launch the National Mission for Protein Supplements. It will take up activities to promote animal based protein production though livestock development, dairy farming, piggery, goat rearing and fisheries in selected blocks.
Another Rs. 300 crores has been allocated for Accelerated Fodder Development Programme which will benefit farmers in 25000 villages to accelerate the production of fodder through intensive promotion of technologies and to ensure its availability throughout the year.
Union Finance Minister Sh. Pranab Mukherjee has proposed to free all individual and sole proprietor service tax payers with a turn over to Rs. 60 lakh from the formalities of the audit. It has been observed that the number of assesses in service tax has grown manifold and a large number of them comprise individuals or sole proprietors with small turnovers. Any audit at their premises tends to dislocate their activities for the duration of the audit. It has also been proposed to give the benefit of three percentage points in interest on delayed payment to these service tax payers.
Various steps have been taken in this year’s union budget to give a boost to housing sector finance. The existing scheme of interest subvention of 1% on housing loans has been liberalized by extending it to housing loan upto Rs. 15 lakh where the cost of the house does not exceed Rs. 25 lakh from the present limit of Rs. 10 lakh and Rs. 20 lakh respectively.
On account of increase in prices of residential properties in urban areas, it has been proposed to enhance the existing housing loan limit from Rs. 20 lakh to Rs. 25 lakh for dwelling units under priority sector lending.
To provide housing finance to targeted groups in rural areas at competitive rates, the budget proposes to enhance the provision under Rural Housing Funds to Rs. 3000 crore from the existing Rs.2000 crore.
The Union Finance Minister Sh. Pranab Mukherjee while presenting this year’s budget has also proposed the creation of a Mortgage Risk Guarantee Fund under Rajiv Awas Yojana. This would guarantee housing loans taken by Economically Weaker Sections and Low Income Group households and enhance their credit worthiness.
To prevent frauds in loan cases involving multiple lending from different banks on the same immovable property, the Government has facilitated setting up of Central Electronic registry under the SARFAESI Act, 2002. This Registry will become operational by March 31, 2011.
Union Finance Minister Sh. Pranab Mukherjee has announced various incentives for micro, small and medium enterprises while presenting this year’s union budget. The allotment to SIDBI for refinancing incremental lending by banks to these enterprises has been raised from Rs. 4000 Crore to Rs. 5000 Crore.
It has also been proposed to provide Rs. 3000 Cr. to NABARD to enable handloom weaver cooperative societies, which have become financially unviable to repay their debts. This would benefit 15000 cooperative societies and about 3 lakh handloom weavers.
Shri Pranab Mukherjee also announced that the outstanding loans to minority communities which stood at 13% of total priority sector lending at the end of last year have been increased to 13.6% in the current year. The Public Sector Banks have been directed to achieve a target of 15% as outstanding loans to minority communities under priority sector lending at the earliest.
A provision of Rs. 300 crore is being made to promote higher production of nutri-cereals like Bajra, Jowar, Ragi and other millets. This was announced by the Finance Minister, Shri Pranab Mukherjee, in the Lok Sabha today while presenting the Union Budget for 2011-12.
This initiative would provide market linked production support to 10 lakh millet farmers in the arid and semi-arid regions of the country. Shri Mukherjee said that the programme would be taken up in 1000 compact blocks covering about 25000 villages
The Union Budget proposes to increase the corpus of Rural Infrastructure Development Fund (RIDF) from Rs. 16000 Crore to Rs.18000 Crore. The additional allocation would be dedicated to creation of ware housing facilities. The RIDF is an important instrument for routine bank funds for financing rural infrastructure .
Finance Minister, Shri Pranab Mukherjee has proposed to promote 60,000 pulses villages in rainfed areas for increasing crop productivity and strengthening market linkages.
Presenting the Union Budget for 2011-12 in the Lok Sabha today, Shri Mukherjee said, government’s initiative on pulses received a positive response from the farmers. As per the second Advance Estimates, a record production of 165 lakh tones of pulses is expected this year as against 147 lakh tones last year. Shri Mukherjee proposed to provide an amount of Rs 300 crore to promote 60,000 pulses villages in rainfed areas.
Mandatory 10 Per Cent Levy Replaces Optional Levy for Readymade Garments
In the General Budget 2011-12, certain changes in the Central Excise Rate structure has been proposed to prepare the ground transition to GST. The exemption has been withdrawn on 130 items that are exempt from Central Excise Duty but chargeable to VAT. A nominal central excise duty of one per cent is being imposed on these 130 items that are mainly in the nature of consumer goods. No Cenvat credit would be available for the manufacture of these items. Presenting the Budget, the Union Finance Minister, Shri Pranab Mukherjee in the Lok Sabha today said that basic food and fuel would continue to be exempt. This levy would also not apply to precious metals and stones. In case of jewellery and articles of gold, silver and precious metals, the levy would apply only to goods sold under a brand name. The remaining 240 items would be brought into the tax net when GST is introduced.
The lower rate of Central Excise Duty has been enhanced from 4 per cent to 5 per cent, in line with the States’ increased merit rate of VAT.
For readymade garments and made-ups of textiles, the optional levy has been converted into a mandatory levy at a unified rate of 10 per cent. The levy would however, apply only to branded garments or made-ups and not to those tailored or made to order for a retail customer. Credit of tax paid on inputs, capital goods and input services would be available to manufacturers of these products. Export o these items would continued to be zero-rated.
The Union Finance Minister, Shri Pranab Mukherjee has proposed to provide an amount of Rs. 300 crore to bring 60,000 hectares under palm oil plantations, by integrating the farmers with the markets.
While presenting the Union Budget for 2011-12, in the Lok Sabha today, Shri Mukherjee said that the domestic production of edible oil meets only about 50% demand. The gap in supply is met through imports, which are often at high prices. To achieve a major breakthrough, special attention has been paid to palm oil as it is one of the most efficient oil crops, Shri Mukherjee said. The Finance Minister added that the initiative would yield about 3 lakh metric tones of palm oil annually in five years.
SPV Allowed for Foreign Funds in Infrastructure with full Tax Exemption
Tax on Dividends From Foreign Subsidiary Lowered to 15 Per Cent
In the General Budget 2011-12, the benefit of investment linked deduction has been extended to businesses engaged in the production of fertilizers. Presenting the Budget, the Union Finance Minister, Shri Pranab Mukherjee in the Lok Sabha today said that the step is aimed at giving a boost to production in the agriculture sector. Such deduction will also be available to those who develop affordable housing under a notified scheme.
The rate of tax on dividends received by an Indian company from its foreign subsidiary has been lowered to 15 per cent for improving flow of such funds into India.
Additional deduction of Rs.20,000 for investment in long term infrastructure bonds has been extended for one more year.
The weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology, for scientific research has been enhanced to 200 per cent from the earlier 175 per cent.
The Finance Minister has also announced the creation of special vehicles in the form notified infrastructure that funds to attract foreign funds for financing of infrastructure. Interest on the borrowings of these funds will be subject to a reduced to with holding tax rate of 5 per cent instead of the current 20 per cent. The income such funds will be exempt from tax.
The Union Finance Minister, Shri Pranab Mukherjee while presenting the Union Budget for 2011-12 in the Lok Sabha today said that the Eastern Region was poised for a Green Revolution. He said that to realize the potential of the Eastern Region, last year’s initiative would be continued in 2011-12 as well. He announced a further allocation of Rs.400 crore for the region.
The programme would target the improvement in the rice-based cropping system of Asam, West Bengal, Orissa, Bihar, Jharkhand, Eastern Uttar Pradesh and Chattisgarh, he added.
A special allocation of Rs. 200 crore for the clean-up of some important lakes and rivers other than the Ganga has been made in the Budget 2011-12.
Announcing this in his Budget Speech in the Lok Sabha today, the Finance Minister Shri Pranab Mukherjee said that a number of projects under the National Ganga River Basin Authority have been approved in 2010-11 and the momentum will be further stepped-up. There are many rivers and lakes of cultural and historical significance that need to be cleaned, the Minister added.
Mat Increased Marginally : SEZ Developers Brought under MAT
In the General Budget 2011-12, surcharge on domestic companies has been reduced to 5 per cent from the present 7.5 per cent, continuing with the process of phasing out the surcharge. Rate of Minimum Alternate Tax (MAT) has been increased from the current rate of 18 per cent to 18.5 per cent of book profits to keep the effective rate of the MAT at the same level.
Presenting the Budget in the Lok Sabha today, the Union Finance Minister, Shri Pranab Mukherjee said that, MAT would be levied on developers of Special Economic Zones as well as units operating in SEZs.
The Union Finance Minister Shri Pranab Mukherjee has proposed to allocate a sum of Rs. 200 crore from the National Clean Energy Fund as Centre’s contribution in 2011-12 for launching environmental pollution remediation programmes.
Presenting the Budget for 2011-12 in the Lok Sabha today, the Finance Minister said that environmental pollution has emerged as a serious public health concern across the country.
Senior Citizens above 80 Years to Get Exemption upto Rs. 5,00,000
The exemption limit for the general category of individual tax payers has been enhanced to Rs. 1,80,000 from Rs. 1,60,000 in the General Budget 2011-12, presented by the Union Finance Minister, Shri Pranab Mukherjee in the Lok Sabha today. The measure will provide a uniform tax relief of Rs. 2,000 to every tax payer of this category, besides moving closer to Direct Tax Code (DTC) rates.
Qualifying age for Senior Citizens has been reduced from 65 years to 60 years and exemption limit for Senior Citizens has been enhanced from Rs. 2,40,000 to Rs. 2,50,000. A new category of Very Senior Citizens, 80 years and above, has been created who will be eligible for a higher exemption limit of Rs. 5,00,000.
The target of providing banking facilities to all 73,000 habitations having a population of over 2,000 will be completed during the ensuing financial year i.e. 2011-12 using appropriate technologies.
Announcing this in his Budget Speech in the Lok Sabha today, the Finance Minister Shri Pranab Mukherjee said that 20,000 villages will be covered by the banks during this year i.e. 2010-11 and the remaining will be covered during 2011-12. He said that a multi-media campaign, “Swabhimaan”, has been launched to inform, educate and motivate people to open bank accounts.
The exit norms of the co-contributory pension scheme “Swavalamban” have been relaxed. Announcing this in his Budget speech in the Lok Sabha today, the Union Finance Minister, Shri Pranab Mukherjee said that a subscriber under Swavalamban Scheme will now be allowed to exit at the age of 50 years instead of 60 years, or a minimum tenure of 20 years, whichever is later.
The Finance Minister also proposed to extend the benefit of Government contribution from three to five years for all subscribers of Swavalamban who enroll during this year and in the year 2011-12. An estimated 20 lakh beneficiaries will join the scheme by March 2012, the Minister informed.
Shri Mukherjee said that this scheme has been welcomed by the workers in the unorganized sector. Over four lakh applications have already been received and the relaxation in exit norms is being made on the basis of the feedback received during the year.
Major Relief Announced for Cement Industry
Unified 20 Per Cent AD-Valorem for all Types of IRON ORE
The General Budget 2011-12 seeks to encourage domestic value addition vis-à-vis imports, to remove duty inversions and anomalies and to provide a level playing field for the domestic industry. To this end, the Union Finance Minister, Shri Pranab Mukherjee announced the following major proposals in the Budget presented in the Lok Sabha today:
• Reduction of basic customs duty on raw silk (not thrown) from 30 to 5 per cent;
• Reduction of basic customs duty from 5 per cent to 2.5 per cent on certain textile intermediates and inputs for chemicals, ferro-alloys and paper;
• Reduction of basic customs duty on certain specified inputs for manufacture of certain technical fibre and yarn from 7.5 per cent to 5 per cent;
• Full exemption for stainless steel scrap from basic customs duty;
• Reduction of import duties on specified raw material for the manufacture of syringes and needles to 5 per cent basic and 4 per cent CVD;
• Extending the concession available to parts, components and accessories for manufacture of mobile handsets till March 31, 2012 and to include few more items in its ambit;
• Expanding the raw material list for manufacture of specified electronic components that are fully exempt from basic customs duty;
• Reduction in excise duty (and hence CVD) on parts of ink-jet and laser –jet printers from 10 per cent to 5 per cent.
The Finance Minister, Shri Mukherjee announced the enhanced rate of export duty for all types of iron ore at a unified 20 per cent ad-valorem. Full exemption from export duty has been provided to iron ore pellets to encourage the value addition process for fines.
Announcing relief for the cement industry, Shri Mukherjee said that the basic customs duty on two critical raw materials for this industry viz. petcoke and gypsum has been reduced to 2.5 per cent.
Cash dispensers and their parts have been fully exempted from basic customs duty, to drive the financial inclusion agenda of the Government.
Hike in Pension for Those Who are 80 Years Old
Under the on-going Indira Gandhi National Old Age Pension Scheme for Below Poverty Line (BPL) beneficiaries, the eligibility for pension will now be reduced to 60 years from 65 years at present.
This was announced by the the Union Finance Minister Shri Pranab Mukherjee while presenting the Union Budget 2011-12 in the Lok Sabha today.
He also announced that the pension amount is being raised from Rs. 200 at present to Rs. 500 per month for those who are 80 years and above.
The Plan allocation for the year 2011-12 has been proposed to step up by 20 per cent to Rs. 26700 crore. This was announced by the Union Finance Minister Shri Pranab Mukherjee while presenting the Union Budget 2011-12 in the Lok Sabha today.
Shri Mukherjee said that the Rashtriya Swasthya Bima Yojana which has emerged as an effective instrument for providing a basic health cover to poor and marginal workers will now be extended to unorganized sector workers in hazardous mining and associated industries like slate and slate pencil, dolomite, mica and asbestos etc.
Basic Duty on Specified Agri-Machinery Reduced to 2.5 Per Cent
In the General Budget 2011-12, the scope of exemptions to improve storage and warehouse specialty for agricultural produce has been further enlarged. Presenting the Budget in the Lok Sabha today, the Union Finance Minister, Shri Pranab Mukherjee, said that full exemption from excise duty to air-conditioning equipment and refrigeration panels for cold chain infrastructure has been extended and conveyor belts have been included in the full exemption from excise duty to equipment used in cold storages, mandis and warehouses.
Basic customs duty on the specified agricultural machinery has been reduced to 2.5 per cent from 5 per cent. The concession is also being extended to parts of such machinery to encourage domestic production. Basic customs duty on micro-irrigation equipment has been lowered from 7.5 per cent to 5 per cent. De-oiled rice bran cake have been given full exemption from basic customs duty. Also an export duty of 10 per cent has been levied to discourage its export.
Union Finance Minister Shri Pranab Mukherjee has proposed in the Union Budget 2011-12 that the Rashtriya Swasthya Bima Yojana will be extended to cover unorganized sector workers in hazardous mining and associated industries like slate and slate pencil, dolomite, mica and asbestos etc.
Presenting the Union Budget 2011-12 in the Lok Sabha today, Shri Mukherjee said that the Rashtriya Swasthya Bima Yojana has emerged as an effective instrument for providing a basic health cover to poor and marginal workers. Presently, it is being extended to MGNREGA beneficiaries, beedi workers and others.
The Union Finance Minister Shri Pranab Mukherjee has announced that an international award with a prize money of Rs. One crore will be instituted for promoting values of Universal Brotherhood in the memory of Gurudev Rabindranath Tagore.
Presenting the Union Budget 2011-12 in the Lok Sabha today, Shri Mukherjee said that national celebrations of 150th Birth Anniversary of Gurudev Rabindranath Tagore would commence from 7th May this year in New Delhi and important events would be held in several countries in Europe, America and Asia. A series of events are also proposed to be organized under the aegis of joint India-Bangaldesh Celebrations Committee, the Minister informed.
The Union Finance Minister Shri Pranab Mukherjee has made a provision of an additional Rs. 500 crore to the National Skill Development Fund during the ensuing financial year.
Presenting the Union Budget 2011-12 in the Lok Sabha today, Shri Mukherjee said that the National Skill Development Council (NSDC) is well on course to achieve its mandate of creation of 15 crore skilled workforce two years ahead of 2022, the stipulated target year. The Finance Minister said that the council has already sanctioned 26 projects with a total funding of Rs. 658 crore. These projects alone are expected to create more than four crore skilled workforce over the next ten years. The Minister also informed that the skill training has so far been provided to 20,000 persons during the current year and 75 per cent of these have found placements.
The Union Finance Minister Shri Pranab Mukherjee has proposed special grants to recognize excellence in universities and academic institutions in the Union Budget 2011-12. The following institutions / universities will be given special grants during the course of 2011-12 :
i. Rs. 50 crore each to upcoming centres of Aligarh Muslim University at Murshidabad in West Bengal and Malappuram in Kerala;
ii. Rs. 100 crore as one-time grant to the Kerala Veterinary and Animal Sciences University at Pookode, Kerala;
iii. Rs. 10 crore each for setting up Kolkata and Allahabad Centres of Mahatma Gandhi Antarrashtriya Hindi Vishwavidyalaya, Wardha;
iv. Rs. 200 crore as one time grant to IIT, Kharagpur;
v. Rs. 20 crore for Rajiv Gandhi National Institute of Youth Development, Sriperumbudur, Tamil Nadu;
vi. Rs.20 crore for IIM, Kolkata, to set up its Financial Research and Trading Laboratory;
vii. Rs. 200 crore for Maulana Azad Education Foundation;
viii. Rs. 10 crore for Centre for Development Economics and Ratan Tata Library, Delhi School of Economics, Delhi; and
ix. Rs. 10 crore for Madras School of Economics.
Rs. 4000 Crore Net Revenue Gain Through Service Tax Envisaged in 2011-12
Union Budget 2011-12 estimates to make net revenue gain of Rs. 4000 crore for the year by way of new Service Tax proposals. In keeping with thrust to encourage voluntary compliance, the penal provisions of Service Tax are under the process of rationalization. This will ensure less harsh treatment to those who have maintained truthful records but fallen short of discharging their tax liability. Deliberate evaders with un-recorded business transactions will be dealt with more severely. This was stated by the Union Finance Minister, Shri Pranab Mukherjee here today in his Budget Speech in Lok Sabha today.
Shri Mukherjee underlined that the strength of good value added tax lies in the free flow of the credit of the tax paid at the previous stage. In view of the legal disputes on the availability on a number of inputs or input services due to inherent complexities in the tax structure, it has been proposed to rationalize this by laying down clear definitions of the scope of inputs and input services and those that are not. Allocation of CENVAT credit to exempt and taxable goods and services is also being streamlined.
Accommodating the view of experts to tax services based on a small negative list so as to bring in many untapped sectors in the tax net, the Finance Minister proposed to initiate a public debate on the subject to facilitate finalization of approach to GST.
Service Tax Regime on Hotel Accommodation, Restaurant Services Restructured
Hotel accommodation, in excess of declared tariff of Rs. 1000 per day and service provided by air conditioned restaurants that have license to serve liquor are the new services which have been brought under the service tax net. While proposing to levy service tax on these services, the Union Finance Minister, Shri Pranab Mukherjee has said that the hotel accommodation with declared tariff of over Rs. 1000 per day will have to pay the service tax with an abatement of 50 per cent. This will mean an effective burden of only 5 per cent of the amount charged. Air conditioned restaurants with license to serve liquor will now be paying service tax with an abatement of 70 per cent. The effective burden will be 3 per cent of the bill only in this case.
Shri Mukherjee has also proposed various measures to achieve a closure fit between the present service tax regime and its GST (service and goods tax) successor. These measures would include:
· Bringing in a few new services into the tax net to expand the tax base while ensuring that the impact is predominantly on sections of society that have the ability to pay;
· Suitably expanding or rationalizing the scope of existing service categories;
· Rationalizing certain provisions relating to import of services and valuation;
· Modifying provisions of the Cenvat Credit scheme to achieve a more realistic balance between input credits and output tax and harmonizing the provisions of the scheme across goods and services;
· Rationalizing penal provisions to reinforce the message that honest taxpayers would be facilitated and deviants would be dealt with severely; and
· Adoption of Point of Taxation rules for services which would shift the basis for tax collection from “cash” towards “accrual” basis as with Central Excise duty.
The Union Finance Minister, Shri Pranab Mukherjee announced today that the Government has set up a Financial Sector Legislative Reforms Commission under the Chairmanship of Justice B. N. Srikrishna in pursuance of the announcement made in Budget 2010-11. The Commission will rewrite and streamline the financial sector laws, rules and regulations and bring them in harmony with the requirement of a modern financial sector. It will complete its work in 24 months.
Shri Mukherjee also informed that the Companies Bill in the Parliament in 2009 has been received from the Parliamentary Standing Committee, which the Government proposes to introduce in the Lok Sabha in the current Session.
Union Budget Proposes Creation of Women’s Shg’s Development Fund and Indian Microfinance Equity Fund
Shri Pranab Mukherjee, the Union Finance Minister has said that the Regional Rural Banks will be strengthened to enable them to maintain a Capital to Risk Weighted Asset Ratio (CRAR) of at least 9 per cent as on March 31, 2012. The Government will provide Rs. 500 crore to these banks during 2011-12, which received Rs. 350 crore during the current year for this purpose.
The Government would provide a sum of Rs. 6000 crore during 2011-12 to enable public sector banks to maintain a minimum Tier I CRAR at 8 per cent. The Government has already been providing a sum of Rs. 20,157 crore for infusion in the public sector banks to maintain Tier I CRAR at 8 per cent and increase Government equity in some banks to 58 per cent.
Considering Micro Finance Institutions (MFIs) as an important means of financial inclusion, the Finance Minister has proposed to create in the course of the year, “India Microfinance Equity Fund” of Rs. 100 crore with Small Industrial Development Bank of India (SIDBI). Shri Mukherjee emphasized that the creation of a dedicated fund for providing equity to smaller MFIs would help them maintain growth and achieve scale and efficiency in operations. The Committee set up by Reserve Bank of India (RBI) to look into issues relating to micro finance sector in India has submitted its report. The Government is now considering putting in place a framework to protect the interests of small borrowers.
Union Budget 2011-12 also proposes to set up a “Women’s SHG’s Development Fund” with a corpus of Rs. 500 crore to empower women and promote their Self Help Groups (SHGs).