UNION BUDGET 2011-12

Thumbs down or up?

Presented By,
Trupti Dubule
Prashant Lokhande
Pallavi Thakur
Chetana Kadale
Harshal Mhatre
Khushbu Bajaj
Saili Dalvi
Darpan Gawde
 • Taxation:
 The exemption limit for the general category of individual
taxpayers has been raised from Rs 160,000 to Rs 180,000.
 The increase in the basic exemption limit by just Rs 20,000 for
individuals -- from Rs 1.6 lakh (Rs 160,000) to Rs 1.8 lakh (Rs
180,000) -- is hardly substantial.
 This translates into a saving of just Rs 2,060 across income
groups. Similarly, the increase in the exemption for senior
citizens -- from Rs 2.4 to Rs 2.5 lakh (Rs 240,000 to Rs 250,000)
-- is even smaller, at just Rs 10,000. The net tax benefit is only
Rs 1,030.
 Women were not so lucky! Nothing is stored there for them. The
exemption for women has not been changed and remains at Rs
1.9 lakh (Rs 190,000).
 Age limit for senior citizens reduced from 65 to
60
 Introduced new category of “Super senior
citizens” _80+.
 Is it really going to help them?
 Medical services:
 Healthcare become expensive!
 All health check up services & diagnostics services
will now attract service tax at 10%.
 The government has proposed to put all forms of
payments -- by individuals, insurance firms and
business houses, for treatment in private hospitals
with more that 25 beds and air conditioning facility
under the service tax net resulting in an effective
tax of 5%.
 Vaccines, other than those included in National
Immunisation Programme, will also register an
increase as they will attract a concessional duty of
1%.
 Life Insurance:
 If you use life insurance as an investment instrument, be
prepared for slightly lower yields because of increased
taxation.
 On traditional insurance plans, the finance minister has
increased the amount on which service tax is levied.
Earlier, the customer paid service tax on 1 per cent of the
premium. From the next financial year, this will go up to
1.5 per cent.
 For example, if you paid an annual premium of Rs 10,000,
the service tax (of 10 per cent) was charged on Rs 100.
Now, the tax will be charged on Rs 150.
 These will be adjusted in the premiums and accordingly
the yield will fall.
Hospitality:
 Cut off holiday plans!!!!
 Stay in guesthouses and Hotels with rooms that
cost more than Rs.1000/- per day have also
become dearer because of service tax.
 It will attract effective tax of 5%.
 ready-to-eat food items, such as ketchups,
soups, mudis (puffed rice), coffee and tea
mixes, flavoured milk, supari will be dearer as
they will now attract higher excise duty.
 Drinking liquor in air-conditioned restaurants
will also be more expensive as it will now come
under the service tax net.
 Aviation:
 Travel is going to become a costlier affair for
middle class people.
 The service tax in economy air travel has been

increased by,
-Rs.50 for domestic and
-Rs.250 for International travel
 The existing service tax in economy class is,

-Rs. 100 for domestic and

-Rs.500 for International travel
 Service tax for travel by higher classes will

continue to cost a flat 10% more.

Oil trouble!!
 According to The Hindu, only 23,340 cr. has
been allocated for the oil subsidy, while the
shortfall is more than Rs. 38,000 cr.
 And the anticipated revenue losses are over
100,000 cr. for the next year.
 This will continue to increase in prizes
 Government should take care of this in the
rising prize war for oil i.e. US 112$ per barrel.
 Iron Ore Export:
 The uniform levy of 20% on iron ore exports from
India
 Increased export duty will adversely affect the
export quantities of iron ore from India.
 The Indian companies were earlier charged export
duty of 5% on the exports of iron ore fines and 15%
export duty on the exports of iron ore lumps.
 Indian companies are currently selling iron ores at
prices of $160-$180 per tonne.
 The Federation of Indian Mineral Industries (FIMI)
has said that the increased export duty will lead to
35% decrease in annual iron ore exports from India.
 Notebooks and Textbooks:
 According to the budgetary proposals, notebooks
and exercise books, which were earlier exempted
from excise duty will now attract 1% duty.
 Moreover, a general effective rate of 5 per cent
has been prescribed for these items and facilities.
 Similarly, fountain pen ink, ball pen ink, geometry
boxes, colour boxes and pencil sharpeners will
also now attract a similar levy.
 Educational text books are also expected to
become costlier as paper used in printing them
will no longer be exempted from excise duty.
 Gold Industry:

 The Concessional excise duty of 1 per cent without CENVAT

credit facility is being imposed on
(a) Articles of jewellery manufactured or sold under a brand name
(b) Branded articles of gold, silver, platinum, palladium, rhodium,
iridium, osmium or ruthenium.
 Excise duty of Rs 300 per 10 gram is being imposed on serially
numbered gold bars, other than tola bars, and gold coins
manufactured during the process of copper smelting.
 Excise duty of Rs 1,500 per Kg is being imposed on silver
manufactured during gold refining starting from ore/concentrate
stage or from gold dore bar or during the process of copper
smelting.
 Imposition of 1 per cent excise duty on branded Jewellery is a
negative impact for the Gem and Jewellery Industry, although
the industry has been reporting healthy financial results.

 This move will increase the prices of branded jewellery when

the raw material prices of the precious metals and stones are
hardening.

 If the demand gets sluggish, this may also impact the

financials of the leading branded jewellery companies like
Titan Industries (Tanisqh), Gitanjali Gems and Shree Ganesh
Jewellery house and mony more………..
 Branded apparels:
 Consumers continue to pay for goods of daily
necessities and now discretionary spends are going
to pinch their pockets even more.
 Youngsters prefer branded apparels!!
 Union budget has levied a 10% excise duty on
branded garments
 Here, there is no respite for them as branded
apparels across retail stores are going to cost more
as much as 20-25%
 It is going to force all the brands like
Pantaloons, Provogue, United colors of
Benetton and Reliance Trend to relook their
pricing strategy.
 Surely going to hit garment industry and can
definitely impact the demand adversely.
 Black money Market:
 Richer is becoming richer and poor is becoming more
poorer.
 No concrete steps to unearth the huge sums of black
money stashed in offshore tax havens were
announced.
 The DTAA (Double Taxation Avoidance Agreement)
with Mauritius, through which 42% of FDI inflows into
India is routed, is the biggest conduit of tax evasion
by MNCs and Indian corporate.
 Rather than plugging such channels, the Finance
Minister is signing more tax avoidance treaties with
other countries.