India Budget 2010/11 What matters most!

Whatever the FM says
More spending = More deficit = More inflation

I expect there to be inclusive growth with excessive inflation.
If the govt has to spend on grandiose plans such as NREGA etc without the necessary accountability, then there will be higher deficits and there are no alternatives to inflate money supply, and we are bound to have Inflation, especially when interest rates are forced down and kept artificially low internationally.If the rains are good and la ninia hits things may be better on the supply side, but with the govt following the policy of spend and play to the vote banks the inflation situation wont change.

See Price Rise especially in urban areas, due to the cascading effects of hikes in taxes on oil, excise duties and service taxes.

DIRECT TAXES

2 page Saral 2 form for individuals – Will it be that saral ? and will it also include items like share dividends ?
TAX SLABS
upto 1.6 lakhs Nil
1.6 lakhs to 5 lakhs 10%
5 lakhs to 8 lakhs 20%
above 8 lakhs 30%

Start at 190,000 for women and 240000 for Senior Citizens.

Sec 80C Benefit Continues at 1 lakh + Sec 80cc 20000
Additional Rs 20,000 deduction available for investment in infrastructure bonds.

CGHS contribution comes under sec 80D.

Interest on late payment of tax UP to 18%.

Government to contribute Rs 1,000 per year to each account holder under the new pension scheme.

Surcharge for companies reduced to 7.5%.
Extended scope of presumptive taxes up to Rs 40 lakh.
Minimum Alternate Tax up from 15% to 18% on book profits
Businesses up to Rs 60 lakh and professionals up to Rs 15 lakh to be exempted from auditing obligations of their accounts.

The tax proposals are on expected lines but the slab tinkering can be considered as a precurser to the Direct Tax Code.
There is no real relief for the lower middle classes that have an income below 1.5 to 2 lakhs, or to senior citizens in that catagory. These are the people that are being burnt by the 18% inflation.

Indirect Taxes

What he giveth with one hand he taketh with the other. Partial rollback of stimulus. Peak excise duty hiked from 8% to 10%.

No change in service tax of 10%. More services included under service tax net.

Customs duty UP on crude oil 5 %, on diesel and petrol to 7.5 % and on refined other products to 10 %. Customs duty on Automobiles brought back up to 22%
Excise duty on large cars, SUVs, multi utility vehicles hiked

Structural changes in excise duties of tobacco, propose to extend excise duty.Duties on smoking and non-smoking tobacco products up.

Some of the Proposals

Fiscal deficit at 5.5 %<

FY11 fiscal deficit revised to 6.9%. FY13 fiscal deficit seen at 4.1%. Fiscal deficit seen at 4.8% in FY12.

Draft Food Security Bill will be in public domain soon, says FM.

Goods and Services Tax (GST) and Direct Taxes Code (DTC) from April one, 2011.

Rs 66,1000 crore allocated for rural development in FY11.

NREGS gets Rs 40,100 crore in FY11.

Rs 100 cr for financial inclusion fund.

Rs 48,000 cr for Bharat Nirman plan.

Indira Awas Yojana scheme’s unit cost raised to Rs 45,000 in plain area and Rs 48,500 in hilly areas.

School education outlay for FY11 at Rs 31,000 crore

15% increase in plan expenditure and 6% in non-plan expenditure

The government will raise Rs 25,000 crore from disinvestment of its stake in state-owned firms

Rs 4,500 crore for programme of social justice, senior citizens, backward classes, handicapped.

Rs 66,1000 crore allocated for rural development in FY11.

Real estate sector now gets 5 years for completion instead of 4 years earlier to avail tax break. .

Excise slashed for electric cars.