In a few moments finance minister Mr.Pranab Mukherjee is about to unfold the Indian Union Budget 2011.In Budget 2010-11 the main debating point will be, how the government handles the huge fiscal deficit and the degree up to which the economy can take a rollback of the stimulus package given earlier.

Controlling inflation and taking a stand on disinvestment is certainly on the cards, however any opinion on implementation Direct Taxes Code replacing the archaic Income Tax Act is unlikely.To pull up some socks budget may take present exercise duty of 8% up to 10% and elevate service tax value of 10% .

Interesting things to watch out will be how budget addresses the cause of fiscal consolidation, rather than launching worthless schemes. We expect him certainly to speak something on how we align our industries on to green technology to bring about inclusive growth.

The Indian Union Budget 2010-11 has been announced. So  analyze the Union budget 2010-11 in details and look at the finer points of this Budget.

 Analysis And Highlights Of Indian Union Budget 2010-11 :-

The new income tax slabs for 2010-11 financial year are as follows :-

> No income tax for income upto Rs 1.6 lakh which was same last year.
> For income range of 1.6 lakh- 5 lakh the tax rate is 10%. The slab was 1.6 to 3 lakhs till last year.
> For income range of 5 lakh- 8 lakh the tax rate is 20%. The slab was 3-5 lakhs earlier.
> For income range of 8 lakhs and above the tax rate is 30%. The slab was 5 lakhs and above till last year.

NB: In addition to the existing deduction of Rs 1 lakh under section 80C of Income Tax Act, the govt has now decided to allow another deduction of Rs 20,000 in long term infrastructure bonds. So totally a tax payer can show a saving of Rs 1.2 lakhs from the next financial year. The new tax slabs will benefit about 60% of the tax payers in India and finance minister said that he wished to increase the minimum alternate tax (MAT) from 15% to 18% of book profits.

The service tax rate will be retained at the current 10% levels. Plans to bring many more services under service tax net.

The excise duty will now be increased from 8% to 10%. Import duty on silver metal to be increased to Rs 1500/kg. The duty on gold is also increased.This is not a good sign for gold and silver related stocks.

The govt will also impose excise duty of 10% on all non petroleum products.
The surcharge rates on companies will now be reduced to 7.5%.

The govt has decided to implement the new direct tax code from April 2011 onwards. This will simplify the entire taxation system. The govt will be losing approximately Rs 26,000 crores due to the introduction on direct tax code from April 2011.

The fuel prices of petrol and diesel will be up by Rs 2.67/litre and Rs 2.58/litre respectively due to the hike in custom and excise duties. Items like refrigerator, washing machine, ACs, TV,cigarettes etc will cost more by 2-4% due to increase in excise duty and fuel price rise.

The fiscal deficit of the country is seen at 4.8% in 2011-12 and 4.1% in 2012-13. The GDP rate is expected to be at 8.5% and inflation to be 4% in the fiscal year 2011.

The market has reacted very positively to the Indian Union Budget 2010-11. The markets opened in a positive bias and when the announcements from the budget came in, markets reacted momentarily and went up by almost 300+ points in sensex. Sensex closed 175 points up at 16429 and Nifty closed at 4922 levels up by 62 points. Auto stocks, Metal stocks, and banking stocks reacted positively.RCap, IFCI,Tata Motors, Hindalco,M&M gained smartly. Now we need to see how the markets settle down and where does it go from here. Monday being Holi, the stock markets will be closed.

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