Budget Highlights 2010-11

The FM has presented Annual Budget for the year 2010-11. The snapshots and impact follow:

• The market moved skywards on the FM's announcement of new tax slabs
• Income upto Rs. 1.6 lacs exempt from tax
• 10% tax on income between Rs 1.6 lacs to 5 lacs
• 20% tax on income between Rs 5 lacs to 8 lacs
• 30% tax on income above Rs 8 lacs
• Section 80c investment limit hiked by Rs 20000 (the investment has to be made in long term infrastructure bonds)
• IT exemption limit enhanced, surcharge withdrawn
• IT returns forms for individual tax payers to be further simplified (2 page Saral 2 form would be notified by IT deptt)
• Expenditure in 2010-11 estimated at 11,l8,749 crore
• Fiscal deficit estimated at 5.5 percent in 2010-11, which shows an improvement of 1 percent over 2009-10
• Two more centralised tax processing centres to be set up in addition to the one at Bangalore
• National Social Security Fund created for workers in unorganised sector with allocation of Rs.1,000 crore
• Government to give Rs.1,000 for each National Pension Scheme account opened by workers in the unorganised sector
• Exclusive skill development programme for the textile sector
• Fifty percent hike in allocation for schemes for women and child development
• Rs.4,500 crore allocated for ministry of social justice and empowerment, a hike of 80 percent
• Rs.2,600 crore allocated for ministry of minorities affairs
• Rs.1,900 crore for Unique Identification Authority of India
• Rs.147,344 crore allocated for defence
• 2,000 youth to be recruited in central paramilitary forces
• Draft Food Security Bill prepared and will be put in the public domain
• Allocation on primary education raised from Rs.26,800 crore to Rs.31,300 crore
• Banking facilities to be provided to all habitations with a population of 2,000 and more
• Rs.66,100 crore allocated for rural development in 2010-11; Rs.40,100 crore for National Rural Employment Scheme; RS.48,000 crore for Bharat Nirman
• Rs.1,270 crore allocated for Rajiv Awas Yojana for slum dwellers, up from Rs.150 crore, an increase of 700 percent with the aim of creating a slum free India.
• Forty-six percent of plan allocations in 2010-11 will be for infrastructure development
• Coal Regulatory Authority to be set up to benchmark standards of performance
• Allocation for new and renewable energy sector increased 61 percent from Rs.620 crore to Rs.1,000 crore in 2010-11
• National Clean Energy Fund to be established
• Rs.200 crore allocated as special package for Goa to prevent erosion and increase green cover
• Government committed to growth of SEZs
• Four-pronged strategy for growth of agricultural sector
• 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
• In view of drought and floods, debt repayment period extended to June 2010
• Five more mega food processing projects in addition to 10 existing ones
• FDI flows in April-December 2009 $20.9 billion
• FDI policy to be made more user-friendly with one comprehensive document
• Apex level financial stability council to be set up for banking sector
• Indian Banking Association to give additional licences to private players
• Provision for further capital for regional rural banks
• Roadmap for reducing public debt in six months
• Implementation of direct tax code from April 2011
• Government actively engaged in finalising structure of general sales tax regime; hopes to implement it from April 2011
• New fertiliser policy from April 2010; will lead to improved productively and more income for farmers
• Economy stabilised in first quarter of 2009-10; strong rebound in second quarter; overall growth at 7.2 and could be higher when Q3 and Q4 are taken into account
• Export figures for January encouraging
• Hope to breach 10 percent growth mark in not too distant future
• Government set in motion steps to bring down food inflation
• Need to review stimulus package; need to make growth more broad-based
• India has weathered global economic crisis well; Indian economy in far better position than it was a year ago. In 2009 Indian economy faced grave uncertainty; delay in southwest monsoon had undermined agricultural production
• Government is currently aiming to quickly revert to 9 percent growth and then go for double digit growth; need to make recovery more broadbased
• Secondly, the govt's challenge is to make growth more inclusive, this will need food security
• Most important challange is to overcome weakness in government's public delivery mechanism. 

Now, lets have a look at the items which have become costlier / cheaper and the reason for same

•  Minimum alternate tax has gone up from 15% to 18% due to book profits
• Gold, Platinum and Silver to cost more due to increase in Customs duty - fulfilling wife's demands would be more taxing (in true sense)!!
• Service Tax rates remain unchanged
• Customs duty on gaming softwares to be rationalised
• Toys to become cheap due to exemption of excise duty
• CDs to become cheap
• CFL items (bulbs & tubes) to become cheap riding on halving of ED
• Refrigerators & Televisions to cost more
• Air Conditioners will become costlier
•  Mobile Phones set to become more affordable
• Peak customs duty remains unchanged at 10%
• Cement to become costlier
• Petrol prices to rise by Rs. 2.67 per litre and Diesel price by Rs. 2.58 per litre w.e.f. the midnight of 26th Feb 2010, Friday
• Cigarettes and tobacco products see an upward movement in prices
• ED on bigger cars, SUVs and MUVs increased, thus leading to an increase in prices

An analysis on the impact of new IT slabs would follow in the next blog.