BIG CHALLENGES: Pranab Mukherjee is facing the
challenge of controlling price rise and stimulate economic
growth.
Thanks FM! tax burden down up to Rs 50,000
Agencies
New Delhi: Finance Minister Pranab Mukherjee on Friday brought
cheers to lakhs of tax income payers by increasing the tax limits which he
claimed will help nearly 60 per cent of the tax payers while presenting the
Budget for 2010-11.
Making the announcement about increasing the tax limits Mukherjee said
that those earning up to Rs 1.60 lakh per annum will now have to pay no
tax while those earning between Rs 1.60 lakh to Rs 5 lakh per annum will
from now on pay tax at the rate of 10 per cent.
Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will
be 20 per cent while those earning more than Rs 8 lakh per annum will
pay tax at the rate of be 30 per cent.
New income tax rates
No income tax for those earning upto Rs 1.60 lakh per annum
For people earning between Rs 1.60 lakh per annum to Rs 5 lakh per annum the tax rate will be 10 per cent
Tax on income between Rs 5 lakh per annum to Rs 8 lakh per annum will be 20 per cent
Income tax on income of Rs 8 lakh and above will be 30 per cent
New tax rates would offer relief to 60 per cent of tax-payers
Additional deduction of Rs 20,000 allowed on long term infrastructure bonds for income tax payers; this is above Rs
one lakh on saving instruments allowed already
Income Tax department ready with two-page Saral-2 return forms for individual salaried assesses.
Investment linked tax deductions to be allowed to two-star hotels anywhere in the country.
Mukherjee began his budget speech by recalling the hard days of past two years, but with an assurance that
the worst was over for the economy and the days ahead were promising though not without challenges.
"Today, as I stand before you, I can say with some confidence that we have weathered this crisis well,"
Mukherjee told the Lok Sabha.
"That is not to say that the challenges today are any less than they were nine months ago, when the UPA was
voted back to power under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh," he added.
He said three challenges he had listed last year remained relevant today -- those of quickly reverting to a high
growth path of 9 percent and cross over to double-digit expansion; making growth more inclusive and
developing infrastructure in rural areas; and strengthening food security.
He said in 2009, when he presented the interim budget in February and the full budget in July, the Indian
economy was facing grave uncertainty, the economy slowed down and business sentiment was low.
But this year, the budget has came against the backdrop of the Economic Survey for 2009-10, saying India's
growth can go up to double digit levels in four years, with the country emerging as the fastest growing economy
in the world.
The initial market reaction, as the finance minister began his budget speech was guarded, with the sensitive
index (Sensex) of the Bombay Stock Exchange (BSE) ruling at 16,347.72 points, against the previous day's
close at 16,254.2 points, with a gain of 93.52 points, or 0.58 percent.
Those in the packed house presided over by Speaker Meira Kumar, included Prime Minister Manmohan Singh,
United Progressive Alliance (UPA) chairperson Sonia Gandhi and Leader of Opposition Sushma Swaraj.
Although the Budget speech also contained some policy pronouncements and other steps directed at reforms,
it is basically an annual statement of accounts for the upcoming fiscal in terms of receipts and expenditure,
along with direct and indirect tax proposals.
The Budget was presented after a quick meeting of the Union Cabinet inside Parliament presided over by the
Prime Minister for a customary approval for the proposals.
Budget highlights:
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
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production.
First challenge now is to quickly revert to 9 percent growth and then aim for double digit growth; need to
make recovery more broadbased.
Second challenge is to make growth more inclusive; have to strengthen food security.
Third challenge is to overcome weakness in government's public delivery mechanism; a long way to go in
this.
Impressive recovery in the past few months. Can witness faster recovery in the coming months, says
Mukherjee.
Focus shifted to non-governmental actors and an enabling government. Government will concentrate on
supporting and delivering services to the economically backward sections.
Fiscal year 2009-10 was challenging for Indian economy
Economy stablished in Q1 of 2009 itself
Manufacturing growth at 18.5 per cent in December was highest in two decade
Export in January encouraging
Figures for merchandise exports for January encouraging after turnaround in November and December last.
Double digit food inflation last year due to bad monsoon and drought-like conditions
Erratic monsoon and drought-like conditions forced supply side bottleneck that fuelled inflation
Government conscious of the situation of price rise and taking steps to tackle it
Need to review stimulus imparted to econony
Need to ensure that the demand-supply imbalance is managed
Stress on the need to make growth more broad-based
Need to review the public spending and mobilise resources
Status paper on public debt within six months
Finance Minister says Government hopes to implement direct tax code from April 2011.
Earnest endeavour to implement General Sales Tax in April 2011.
Government will raise Rs 25,000 crore from disinvestment of its stake in state-owned firms
Kirit Parekh report on fuel price deregulation will be taken up by Oil Minister Murli Deora in due course
Nutrient based fertiliser subsidy scheme to come into force from April 1, 2010
Market capitalisation of five PSUs listed since October increased by 3.5 times
FDI inflows steady during the year. Government has taken series of steps to simplify FDI regime
Government has decided to set up apex-level Financial Stability and Development Council
RBI considering some additional banking licenses to private companies, NBFC will also be considered if
they meet criteria
Government intends to make FDI policy user friendly by compling all guidelines into one document
Government to continue interest subvention of 2 per cent for one more year for exports covering handicrafts,
carpets, handlooms and small and medium enterprises
Government to provide Rs 300 crore to organise 60,000 pulse and oilseed villages and provide integrated
intervention of watershed and related programme
Government to provide Rs 16,500 crore to public sector banks to maintain tier-I capital
Rs 200 crore provided for climate resilient agriculture initiative
Government committed to ensure continued growth of Special Economic Zones.
Need to take firm view on opening up of the retail sector
Repayment of loan by farmers extended by six months to June 30, 2010 in view of drought and floods in
some part of the country
Interest subvention for timely repayment of crop loans raised from one per cent to two per cent, bringing the
effective rate of interest to five per cent.
Propose to maintain thrust of upgrading infrastructure in rural and urban areas. IIFCL authorised to refinance
infrastructure projects.
Rs 1,73,552 crore provided for infrastructure development
Allocation for Railways fixed at Rs 16,752 crore, an increase of Rs 950 crore over last financial year
Government proposes to set Coal Development Regulatory Authority
Mega power plant policy modified to lower cost of generation; allocation to power sector more than doubled
to Rs 5,130 crore in 2010-11
Government for competitive bidding for coal blocks for captive power plants
Rs 500 crore allocated for solar and hydro projects for Ladakh region
Clean Energy Fund to be created for research in new energy sources
Allocation for new and renewable energy ministry increased by 61 per cent to Rs 1,000 crore
One-time grant of Rs 200 crore provided to Tirupur textile cluster in Tamil Nadu
Allocation for National Ganga River Basin Authority doubled to Rs 500 crore
Alternative port to be developed at Sagar Island in West Bengal
Draft of Food Security Bill ready, to be placed in public domain soon
Deficit in foodgrains storage capacity to be met by private sector participation
Outlay for social sectors pegged at Rs 1,37,674 crore, accounting for 37 per cent of the total plan allocation
Plan allocation for school education raised from Rs 26,800 crore to Rs 31,036 crore in 2010-11
Plan allocation for health and family welfare increased to Rs 22,300 crore from Rs 19,534 crore
For rural development, Rs 66,100 crore have been allocated
Allocation for NREGA stepped up to Rs 40,100 crore in 2010-11
Indira Awas Yojana scheme's unit cost raised to Rs 45,000 in plain area and Rs 48,500 in hilly areas
Allocation for urban development increased by 75 per cent to Rs 5,400 crore in 2010-11
Road transport allocation raised by 13 per cent to Rs 19,894 crore
25 per cent of plan outlay earmarked for rural infrastructure development
One per cent interest subvention loan for houses costing up to Rs 20 lakh extended to March 31, 2011; Rs
700 crore provided
Allocation for development of micro and small scale sector raised from Rs 1,794 crore to Rs 2,400 crore
Rs 1,270 crore provided for slum development programme, marking an increase of 700 per cent
Government decides to set up National Social Security Fund with initial allocation of Rs 1000 crore to
provide social security to workers in unorganised sector.
Road transport allocation raised by 13 per cent to Rs 19,894 crore
Exclusive skill development programme to be launched for textile and garment sector employees.
Allocation for women and child development hiked by 80 per cent.
Rs 1,900 crore allocated for Unique Identification Authority of India.
Government to contribute Rs 1,000 per year to each account holder under the new pension scheme.
Plan outlay for Ministry of Social Justice raised by 80 per cent to Rs 4,500 crore.
Plan allocation for Ministry of Minority Affairs raised from Rs 1,740 crore to Rs 2,600 crore.
Financial Sector Legislative Reforms Committee to be set up.
Unique identity symbol to be provided to the Indian Rupee in line with US Dollar, British Pound Sterling,
Euro and Japanese Yen.
Defence allocation pegged at Rs 1,47,344 crore in 2010-11 against Rs 1,41,703 crore in the previous year.
Of this, capital expenditure would account for Rs 60,000 crore.
Planning Commission to prepare integrated action plan for Naxal-affected areas.
FM appeals to "misguided elements" (left wing extremists) to eschew violence and join the mainstream.
Gross tax receipts pegged at Rs 7,46,656 crore for 2010-11, non-tax revenues at Rs 1,48,118 crore.
Total expenditure pegged at Rs 11.8 lakh crore, an increase of 8.6 per cent.
Fiscal deficit at 5.5 per cent, says FM
Fiscal deficit seen at 4.8 per cent and 4.1 per cent in 2011-12 and 2012-13 respectively
Non-plan expenditure pegged at Rs 37,392 crore and Plan expenditure at Rs 7,35,657 crore in budget
estimates. 15 per cent increase in plan expenditure and six per cent in non-plan expenditure.
The 74-year-old Lok Sabha MP is presenting his fifth Budget while grappling with the problems of rising prices
and an economy that is still feeling the effect of the global slowdown of the last two years.
The Economic Survey 2009-10 presented on Thursday favoured the gradual rollback of stimulus measures that
were introduced following the global economic meltdown in late 2008.
