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Wednesday, May 25, 2011

Union Budget 2011

Union Budget 2011: Income tax exemption limit raised to Rs 1.8 lakh

NEW DELHI: Income Tax exemption limit for individuals has been raised from Rs 1।6 lakh to Rs 1.8 lakh, giving a relief of Rs 2000 to every tax payer, in the Budget for 2011-12 which widened the Service Tax net to cover more services that will raise the cost of air travel, hotel accommodation and those who drink in AC restaurants.

Presenting his third Budget in the Lok Sabha, Finance Minister Pranab Mukherjee preferred not to roll back central excise duty levels to November 2008 and kept it at 10 per cent while he levied a nominal one per cent central excise duty on 130 items that will enter the tax net.

Basic food and fuel items will continue to be exempted while the new levy will not apply to precious metals and stones. Jewellery made of gold, silver and precious metals sold under brand name would be covered by the new levy.

Minimum Alternate Tax on book profits of companies has been raised from 18 to 18.5 per cent and the lower rate of Excise Duty raised from 4 to 5 per cent.

Mukherjee's income tax sops included reducing eligibility age of senior citizens from 65 to 60 and enhancing the exemption limit for them from Rs 2.40 lakh to Rs 2.50 lakh. He 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 5 lakh.

The Minister estimated a net revenue loss of Rs 200 crore in the Budget. The proposal related to indirect taxes are estimated to result in a net revenue gain of Rs 11,300 crore, including Rs 4000 crore on Service Tax expansion, while the proposals on direct taxes are expected in a revenue loss of Rs 11,500 crore.

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 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.

Here are some major tax announcements:

*Tax exemption limit raised to Rs 1.8 lakh, from Rs 1.60 lakh for individual tax papers.

*For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh.

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