RITESH P.

SHIRSAT
Roll no. -102
Subject: TAX

ANALYSIS ON UNION BUDGET 2011-12 RELATED TO TAX

Tax Rate

Corporate tax rates remain unchanged for both domestic as well as foreign companies, except for an
increase in the effective rate of Minimum Alternative Tax (MAT) from 18% to 18.5%.

It is proposed to reduce the surcharge on income-tax from 7.5% to 5%.
It is proposed to reduce the surcharge on income-tax from 2.5% to 2%.
SEZ units were exempt from the payment of Minimum Alternate Tax.
Individual Assessee (other than women & senior-citizen) (Assuming Income of
8,00,000/-)
D

Women Assessee below the age of sixty years (Assuming Income of ` 8,00,000/-)

Senior Citizen between the age of sixty years to eighty years (Assuming Income
of ` 8,00,000/-)
 Senior
Citizen above the age of eighty years (Assuming Income of ` 8,00,000/-)

Tax benefit for New Pension System: Aggregate amount of deductions under section 80C
Under the existing provisions of Section 80CCF, subscription made by an individual or a Hindu Undivided
family in notified long term infrastructure bonds during the financial year 2010-11 is allowed as a
eduction up to a sum of ` 20,000/-.

Other Major Amendments

Under the existing provisions, dividend received by a resident from an Indian Company is exempt
Dividends received by a resident from a Foreign Company are taxable at the applicable marginal
rate of tax.
It is proposed to provide that where total income of an Indian Company includes any income by
way of dividends from a foreign subsidiary company, then such dividends shall be taxable at the
rate of fifteen percent plus applicable surcharge and cess.

Alternate Minimum Tax for Limited Liability Partnership (LLP)

No Dividend Distribution Tax
No Minimum Alternate Tax
No Surcharge on income-tax.
On this adjusted total income, alternate minimum tax would be computed at the rate of 18.5%
Tax credit shall be the excess of MAT over the regular income tax payable for that year.
No interest would be available on this credit balance being carried forward.
The credit of MAT shall be available for a consecutive period of 10 succeeding year.

Expert view

Investment in fertiliser plants and machinery to be treated as infrastructure investment

Govt to allow issue of Rs. 30,000 crore worth of tax-free bonds by infrastructure companies in
2011-12

Tax deduction for investment in infrastructure bonds of Rs. 20,000 extended for one more year

Loss on direct tax reliefs at Rs. 11,500 crore; gain on indirect tax changes at Rs. 11,300 crore
 Interest subvention on home loans up to Rs. 15 lakh. Mortgage risk guarantee corporation to
insure loans to the poor

Cement excise duties will be shifted to valorem basis from specific duty now

Foreign individual investors allowed to invest directly in mutual funds subject to KYC
requirements.

Government considering extension of nutrient-based subsidy for urea, the largest chunk of
fertilisers used in agriculture.

Public sector disinvestment target for 2011-12 is raised to Rs. 40,000 crore

Corporate tax surcharge reduced from 7.5% to 5%. Minimum alternate tax rate up from 18% to
18.5%.

Fiscal deficit for 2010-11 seen at 5.1% against 5.5% budgeted; deficit for 2011-12 projected at
4.6% of GDP.

FM says no need to remove stimulus package at this stage, but will withdraw excise exemptions

Senior citizens to get higher IT deduction limit of Rs. 2.5 lakh. Entitlement age reduced to 60
from current 65.

Priority sector home loans limit rose to Rs. 25 lakh from Rs. 20 lakh.

Centres net borrowing figure for 2011-12 fixed at Rs. 3, 43,000 crore; fiscal deficit figure at Rs.
4, 12,000 crore.

Government to introduce direct cash payments for those entitled to subsidies in kerosene,
cooking gas and fertilizer by March, 2012.

Service tax levels and excise stay at 10%; Peak rate of customs duty remains unchanged

Excise exemptions withdrawn on 130 items; to pay minimum excise of 1% from next year

THE END