India Budget 2011 doesnot offer too many tax soaps. Steps are being taken to move to GST and DTC regime, which is expected to be in force from 01-Apr-2012.
• Silence over continuation of STPI scheme. Currently the STPI is coming to an end on 31-Mar-2011. This shall hit the SME segment hard.
• MAT (minimum alternate tax) imposed on SEZ units @ 18.5%. Large companies shall be impacted severely with this move as they will have to shell out close to 20% (including surcharge and cess) as income tax on their book profits.
• Surcharge on Income tax reduced from 7.5 to 5% for Domestic companies and 2.5% to 2% for others
• Income tax on dividends received by Indian companies from its subsidiary companies reduced from 30% to 15%
• Many new services brought under service tax net. Major ones include Air travel, AC Hospitals, AC Hotels & restaurant with bar, Life Insurance companies etc.
• Service tax audit waived for Individual & proprietorship business for turnover upto Rs.60Lacs
• Central excise duty rate changes: Min rate enhanced from 4% to 5% and standard rate @ 10%
• 130 new items brought to Central excise net at nominal rate of 1%. These excludes the basic food and fuel items
• Boost to Agriculture equipment sector, fertilizer, Infrastructure and Education sector
• Proposal for liberalising FDI and also to lure FII in Infrastructure sector
•Iron or exports to attract export duty of 20%
• Income tax exemption limits enhanced. A new category called Very Senior Citizens has been introduced (80 years & more of age). Income upto Rs.5 Lacs are exempted for them. Qualifying criteria for senior citizens relaxed to 60 years & above of age from existing 65 years. Income exemption limit enhanced to Rs.2.5Lacs from Rs.2.4 Lacs
• No change in structure for Women. For other individuals the exemption limit has been enhanced to Rs.1.8Lacs from Rs.1.6Lacs. Check the new Income tax rates
• Proposals are underway to remove tax return filings for salaried class and small tax payers who have already paid their taxes through their employers. New form called SUGAM shall be introduced. eLagaan shall introduce these forms as they are notified. When you file your taxes at eLagaan, you may relax and not worry for changing formats anymore.
• Boost to low cost housing. Government shall bear 1% interest cost for loan upto 15 Lacs (house value under 25 lacs)
• Investment benefits in infrastructure extended for another year (Rs.20,000 additional benefits for investing in infra bonds)
• Air travels to cost more and so is AC hotels, restaurants and hospitals, as these services has been included in service tax net. Fuel, branded clothes to cost more.
• Environmental friendly products, batteries to cost less. Hybrid vehicles to cost less