IT sops in budget; air travel, health check-up to be costlier

IT sops in budget; air travel, health check-up to be costlier
New Delhi, Feb 28 (PTI) A play-safe budget on Monday
raised the income tax exemption limit from Rs 1.60 lakh to Rs
1.80 lakh leaving at least an extra Rs 2,000 in the hands of
tax paying men across the board and made air travel, hotel
accommodation and drinking in AC restaurants costlier.
Indian Finance Minister Pranab Mukherjee presented the
2011-12 budget, which shows a net revenue loss of Rs 200
crore, imposed an excise duty of one per cent on 130 specified
items which will, however, exempt food and fuel.
The third budget by Mukherjee charted a road map for
financial sector reforms by vowing to bring in various
legislations, raised social sector spending by 17 per cent to
Rs 1,60,887 crore, infrastructure spending by Rs 2,14,000
crore, up by over 23 per cent, and the credit target for
farmers by Rs one lakh crore from Rs 3.75 lakh crore to Rs
4.75 lakh crore.
He also gave some relief to corporates by reducing the
current income tax surcharge of 7.5 per cent on domestic
companies to five per cent but raised the Minimum Alternate
Tax (MAT) from 18 to 18.5 per cent including developers of
Special Economic Zones (SEZs) in it.
While leaving the rest of exemption slabs, surcharge and
cess on income tax untouched, he reduced the qualifying age of
senior citizens from 65 to 60 years, raised their exemption
limit from Rs 2.40 lakh to Rs 2.50 lakh. No special benefit
was announced for women below 60 years whose basic exemption
limit remains at Rs 1.90 lakh.
Mukherjee also created a new category of "Very Senior
Citizens" of 80 years and above who will be eligible for a
higher exemption limit of Rs five lakhs. The raising of
exemption limit for those above 60 but below 65 will benefit
men up to to Rs 9,270 and women up to Rs 6,180.
Between 65 and 80 the benefit will be Rs 1,030 and beyond
80 years both men and women will get up to Rs 26,780.
The budget sought to widen the ambit of the service tax
net by which hotel accommodation above Rs 1,000 a day and AC
restaurants that serve liquor will be included.
The scope of life insurance service is being widened to
cover all services provided to any person by an insurer and
legal services provided by business entity to individuals and
individuals to entities but not individuals to individuals.
Opposition parties flayed the budget saying it was very
"disappointing and direction less" while the industry welcomed
it as "positive and growth oriented".
Hailing the "commendable job" done by his Finance
Minister, Prime Minister Manmohan Singh said the signals are
that this is a government which is reform oriented but
admitted "you cannot please all people".
All services including diagnostic services provided by AC
clinical establishments with more than 25 beds and services
provided by a doctor who owns such establishments have been
brought under the service tax net.
Economy class domestic travel by air will cost Rs 50 more
while international travel will cost Rs 250 more. Higher class
domestic travel by air attract a standard 10 per cent service
tax bringing it on par with international higher class travel.
While direct tax changes are expected to result in a
revenue loss of Rs 11,500 crore, the net revenue gain on
account of indirect taxes is likely to be Rs 11,300 crore,
including an additional Rs 4,000 crore on account of service
tax changes.
Prepared food stuff like sugar confectionery, pastry and
cakes, starches, paper and articles of paper, textile goods,
drugs and medicinal equipments will become costlier with
increase in the concessional rate of excise duty from four per
cent to five per cent.
Ready made garments and branded textile made ups will
also become costlier with the levy of mandatory 10 per cent
excise duty. Exemptions from excise duty is being withdrawn on
micro processor for computers, floppy and hard disc drive,
CD-Rom drive, DVD drives and writers making it costlier but
they will attract only five per cent concessional duty.
Items that will become cheaper are sanitary napkins, baby
and clinical diapers and adult diapers with reduction of
excise duty, factory built ambulances, precious metals
including gold and silver. However, one per cent excise duty
is being imposed on branded jewellery and branded articles of
precious metals.
The Budget for next year pegs the fiscal deficit at 4.6
per cent of GDP for 2011-12 which works out to Rs 4,12,817
crore. Gross tax receipts are estimated at Rs 9,32,440 crore,
an increase of 24.9 per cent over the Budget Estimates for
2010-11.
Net non-tax revenue receipts for the next financial year
are estimated Rs 1,25,435 crore. The total expenditure
proposed for 2011-12 is Rs 12,57,729 crore. Plan expenditure
will be Rs 4,41,547 crore, an increase of 18 per cent and
non-Plan expenditure will be Rs 8,16,182 crore, an increase of
10.9 per cent over Budget estimates of 2010-11.
Defence expenditure for the next year has been pegged at
Rs 1,64,415, an increase of Rs 17,071 crore over the last
financial year. This includes a capital expenditure of Rs
69,199 crore.
"Needless to say, any further requirement for the
country's defence would be met," Mukherjee said.
The Budget has raised allocation for social sector
spending by 17 per cent to Rs 1,60,887 crore and the
allocation for Bharat Nirman programme by Rs 10,000 crore.
Allocation for infrastructure has been increased by over
23 per cent to Rs 2,14,000 crore and the credit to farmers
hiked by Rs 1 lakh crore to Rs 4,75,000 crore.
The Budget assumes open market borrowing of Rs 3.43 lakh
crore. Extension of nutrient-based subsidy to cover urea is
under active consideration.
In a boost to housing sector finance, the Budget
continued the scheme of interest subvention of one per cent on
housing loans and liberalised it by extending it up to Rs 25
lakh from the present Rs 10 and Rs 15 respectively.
The Finance Minister also proposed various measures to
achieve a closer fit between the present Service Tax regime
and its successor Goods and Services Tax (GST).
The Minister announced a broad set of financial sector
reforms, saying he proposed to move the legislations relating
to insurance laws, LIC, revised pension fund bill, banking
laws amendment bill, State Bank of India Subsidiaries Bill and
a bill on Factoring and Assignment of Receivables. PTI SKB