singrodia goyal & co. booklet... · 2016-09-21 · 2010-11. • allocation for bharat nirman...

LadderupEngineering Growth INDIA BUDGET 2011

Singrodia Goyal & Co.

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1

Foreword ................................................................................. 2

Budget Highlights ..................................................................... 4

Economic Outlook .................................................................... 9

Direct Tax Proposals ................................................................13

Indirect Tax Proposals

• CentralExcise ..................................................................20

• CustomDuty ...................................................................25

• ServiceTax ......................................................................29

CapitalMarket ........................................................................33

SectoralAnalysis .....................................................................36

INDEX

LadderupEngineering GrowthINDIA BUDGET 2011


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FOrEwOrD

This isaplainbudget froma seasonedFinanceMinister.Amidstallthehullahsof scamsand theongoingCricketWorldCup fever, theFMpresentedacalmandacautiousBudget. Inourview, theFinanceMinisterhasput inplaceabudget thatwillpreservethebalancethatIndiahasachievedbetweengrowth,sustainability,stimuluspackagesandinflationworries.Onmostfronts,theFMhasdecidedtotakeacareful,butperhaps,pragmaticapproach.Forexample,thefiscalconsolidation….the fiscal deficit as well as the net market borrowing numbers are surprisingly low.TheFMhopes topeg thedeficit inFY12at4.6%ofGDP and has budgeted for net borrowings of about `340,000Crores.Atfirstglancethereseemstobeanupsideriskofbothfiscaldeficitaswellasnetmarketborrowingnumbersestimatedby theGovernment.Butperhaps,whatheissignalingisthatsometimesduringtheyear,maybepostassemblyelections,hewouldlookatdoingawaywithadministeredpricingfordieselandkerosene.Thatwoulddefinitelyreducethesubsidyburden.

On financial sector reforms,whilehehasnot announcedenhancedForeignDirect Investment(FDI) inInsurance,buthasannouncedtwoothersignificant initiatives.First isallowingFDI indomesticMFswhichshould come as huge relief to a battered sector and second is that the RBIwillbeannouncingthefinalguidelinesfornewprivatesectorbanks.Thebudgetspeechalso indicated furtherprogressontheDTCaswellastheGST,bothcriticalmeasures.This isawelcomemove,thoughonewouldhavehopedforgreaterexpeditiousness.Themeasuresofmakingmore foreign investments in infrastructurebyraising the limit forFIIinvestmentintobondsbyanadditionalUSD20Bn,takingthelimittoUSD25Bn is welcome as the sector was facing a huge problem as most banks had reached their prudential limits of exposure to this sector.

Onthecorruption front,while formationofaGroupofMinisters isbyitself nopolicyannouncement,butwhat itmeans is that fromnowonwardstheGovernmentwillbeforcedtoactmoreforcefully.Thisisalsoawelcomedevelopment.Itishoweverlefttobeknown,astohowmuchtheGovernment isserious inbringingbacktheblackmoneyparked intheSwissBankAccounts.

TheFMalsosprungafewpleasantsurprisesfortaxpayersinhisBudget.Keepinghis taxproposals revenue-neutral for theGovernment, helightenedthe income-taxburdenbyafractionforthecountry's1croretaxpayers,whileraisingexcisetaxesselectivelytocompensate for thelosses from lower income-tax.TheFMraised theexemption limit forpersonalincome-taxfrom` 1.6 Lacs to `1.8Lacs,effectivelysavingtax-payers`2,000annually.Inaddition,he loweredthethresholdageforseniorcitizens-whonowenjoyahighertax-exemptionlimitof` 2.5 Lacs -to60from65,thusbringinga largenumberofpeople intotheranksoftaxbeneficiaries.Healsocreatedanewcategorynamedveryseniorcitizensforthoseattheageof80andabove,givingthemanexemptionlimit of ` 5 Lacs.



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Thisapart, theFM loweredthesurchargeoncorporatetax from7.5%to5%,whichwill lowerthetaxoutgo-andimprovenetprofits-forallCompanieswhodonothavetopaytheirtaxesunderMAT.Forthelatter,the taxwillbemarginallyhigher,with therategoingup from18%to18.5%.Inaddition,developersandunitsofSEZhavebeenbroughtunderMAT.IndianCompanieswithforeignsubsidiarieshavea lottocelebrate,astheirdividendearningswouldnowbetaxedatalowerrateof15%.

Contrarytoapprehensions,however,theFMdidnotrollbackanyoftheexcisedutycutsthathehadeffected inordertoprovideastimulustospendingduring the low-growthyears following theglobal recession.Hemaintainedthepeakrateofexcisedutiesandservice taxat10%,sothatall itemsalreadyatthat levelwillnotbecomemoreexpensive.Thismayparticularlypleasecar-makersaswellascar-buyers,whowerepreparedforan increase inprices.However,bybringing inanumberofnewitemstotheservice-taxnetandothermeasuresinIndirectTax,theFMhasendeavoredtomakeupthesimilar lossonaccountofDirectTaxproposals.

Havingexceededhisdirecttaxtargetsfor2010-11,theFMreasonedthattherewasprobablynoneedtoraisetaxratesto increasegovernmentrevenue.Havingsethimselfa stiffdisinvestment targetof`40,000Croresfortheyear,he isobviouslybettingonothermeansforshoringuphisrevenues.Thatissomethinghemustdoifheistobringthefiscaldeficitdownto4.6%of theGDP in2011-12,ashehasproposed.Thefactthatthefiscaldeficit for2010-11willcome inat5.1%,well lowerthanthetargeted5.5%,musthaveencouragedhisdecisionto let thestimulus remain.

Whatwasmissing,however,wereboldmoveson the reformsaxis.There was no announcement of allowing or increasing FDI in retail and insurance,aswidelyexpected.Ofcourse,suchannouncementsdonotnecessarilyhavetobemade inabudgetspeech,eventhoughtheplatformhastraditionallybeenutilisedtoannouncesuchinitiatives.

Much depends on how well the large number of points aboutimplementationofvariousplansandschemesareactuallyexecuted.However,onthewhole, itwasageneralsignal thattheeconomyisonagrowthpath,heading intodoubledigits intheforeseeablefuture,andperhaps it'sbestforthegovernmenttoeschewover-planningandfocusondistributionandsocioeconomicequity. If that is indeed the intentofFM’sannualfinancialstatement,hemaystillenduphavingdoneareasonablejob,despitethelackoffireworks.

Whilewecontinueour journeyofbecomingSuperPower in times tocome,somedeservingboldstepswouldhavegivenaflip inachievingthisveryobjectiveinashorterspanoftimethanitwillotherwisetake.

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General• Indianeconomysettoregainthepre-crisisgrowthmomentum,

expectedtogrowat9%during2011-12,(+/-)0.25%.

• EconomyhasrecordedaGDPgrowthof8.6%in2010-11inrealterms.

• Exportshavegrownby29.4%,while importshaverecordedagrowthof17.6%.

• Actualfiscaldeficithasbeenat5.1%ofGDPin2010-11againstbudgetestimateof5.5%.

• Rollingtargetsforfiscaldeficitpeggedat4.6%,4.1%and3.5%for2011-12,2012-13and2013-14respectively.

• DirectTaxCode(DTC)proposed tobeeffective fromApril1,2012andConstitutionAmendmentBill tobe introduced forrollingoutofGoods&ServicesTax(GST).

• Amendments proposed to the Banking Regulation Act forprovidingadditionalbankinglicencestoprivatesectorplayers.

• Target to raise ` 40,000Crores in 2011-12 through PSUsdisinvestments.

• Mutual fundspermitted toaccept subscription from foreigninvestorsforequityschemes.

• RaisedFII limitbyUSD20BntoUSD 25Bnfor investments ininfracorporatebonds, takingthetotal limit toUSD 40 Bn for investmentinbonds.

• Tax-free bonds of ` 30,000Crores to boost infrastructuredevelopment.

• Severalmeasures announced to dealwith generation andcirculationofblackmoney.

• Direct transferof cashsubsidy tobelowpoverty linepeopleinaphasedmanner forbetterdeliveryofkerosene,LPGandfertilisers.

• Allocation for infrastructure accounts 48.5%of total planallocation in2011-12 (`2,14,000crore) i.e.an increaseof23.3%over2010-11.

• Shareofmanufacturing inGDPexpectedtogrowfrom16%to25%overaperiodof10years.

BUDGETHIGHLIGHTS



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• Scaledup flowof resources to the ruralareasby launchingvarious social schemesand increasedoutlays inAgricultureareas.

• Allocationforsocialsectoramountsto`1,60,887Crores(36.4%oftotalplanallocationin2011-12)i.e.anincreaseof17%over2010-11.

• AllocationforBharatNirmanprogrammeincreasedfrom`48,000Croresin2010-11to`58,000Croresin2011-12.

• Creditflowforfarmersraisedfrom`3,75,000crorein2010-11to `4,75,000Croresin2011-12.

• Interestsubventionhikedfrom2%to3%forshort-termcroploans to farmers.

• Existingschemeof interestsubventionof1%onhousing loansfurther liberalised and loan limit hiked from ` 20 Lacs to ` 25 Lacs.

• Allocationforeducationincreasedby24%(` 52,057crore)overcurrentyear.

• `21,000CroresallocatedtoSarvaShikshaAbhiyan,which is40%higherthanBudgetfor2010-11.

• AllocationforDefenceincreasedto`1,64,415Croresincluding` 69,199Croresforcapitalexpenditure.

• Setup15moreMegaFoodParksduring2011-12toenhancefoodsecurityandstoragecapacity.

• Proposaltointroduceschemeforrefundoftaxespaidonservicesused for export of goods.

• Introduced a new simplified form ‘Sugam’ to reduce thecomplianceburdenofsmalltaxpayers.

• The total expenditureproposed in theBudgetEstimates is `12,57,729Croreswhichisanincreaseof13.44%overthelastyear.

DIreCT TaX• BasicExemptionlimitincreasedincaseofindividuals(Male)and

seniorcitizentaxpayers.

• Agelimitforseniorcitizensreducedfrom65yearsto60years.

• ConceptofVerySeniorCitizens(80yearsandabove)introducedwith basic exemption of ` 5 Lacs.

• SurchargeonDomesticCompaniesreducedfrom7.50%to5%andonForeignCompaniesfrom2.50%to2%.



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• MATrateincreasedfrom18%to18.5%onCorporateAssessees.

• InvestmentlinkedtaxincentivesextendedtonotifiedAffordableHousingProjectsandtoProductionofFertilizers.

• SEZdevelopersarenowliabletoMAT&DDTandSEZunitstoMAT.

• DDTonprofitdistributedbymutual funds increased incaseofassesseesotherthanIndividualandHUF.

• LLPbroughtunderAlternativeMinimumTax(AMT)likeCorporateAssessees.

• Weighted deduction for contribution to scientific researchassociationsincreasedfrom175%to200%.

• Employers’ContributiontowardsPensionSchemenowallowableasdeductionlikePF/ESIC.

• Separatedeductionallowedup to10%ofSalary/GrossTotalIncomeinrespectofcontributiontoPensionScheme.

• Deductionfor investmentinlong-terminfrastructurebondupto`20,000extendedforonemoreyear.

• Extensionofsunsetclausefortaxholidaytopowersectorupto31-3-2012.

• DuedateforfilingtaxreturnforCompanies,whicharesubjecttoTransferPricingaudit,extendedto30thNovember.

• DividendsfromaForeignSubsidiaryCompanytaxableatreducedrateof15%.

• DirectTaxesCodeproposedtobeeffectivefromApril1,2012.

• Liaisonofficesofnon-residentsnowtosubmitAnnualInformationStatementtothetaxauthorities inIndia.

• Eligibilityconditions forfilinganapplicationbeforeSettlementCommissionrelaxedandmodified.

InDIreCT TaX

Central excise

• Standard rateofCentralExciseDutymaintainedat10%ad valorem.

• ExciseDutyratesrationalisedforcementindustry.

• Air-conditioningequipmentforcoldstoragesexemptfromExciseDuty.



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• 1%CentralExciseDuty leviedon130new items inthe listofconsumer item.

• Mandatory levyofExciseDutyat10%onbrandedgarments.Creditof taxpaidon inputs,capitalgoodsand inputserviceswouldbeavailabletomanufacturersoftheseproducts.

• Basicfood,fuel,preciousstones,goldandsilverjewelleryexceptbrandedones,tobeexempted.

• LowerrateofCentralExciseDutyincreasedto5%from4%.

• ReductioninCentralExciseDutyonsanitarynapkins,babyandadultdiapersfrom10%to1%.

Customs

• PeakrateofcustomsDutymaintainedat10% inviewof theglobal economic situation.

• 20%ad valoremExportDutyleviedonironore.

• CustomsDutyonyarnreducedfrom7.5%to5%.

• CustomsDutyonrawsilkreducedfrom30%to5%.

• BasicCustomDutyonPetCokeandGypsumreducedto2.5%.

• BasicCustomsDutyonagriculturalmachineryreducedfrom5%to2.5%.

• BasicCustomDutyonmicro-irrigationequipmentreducedfrom7.5%to5%.

• De-oiledricebrancaketobefullyexemptedfromBasicCustomDutyonImports.ExportDutyof10%tobeleviedonitsexport.

• ExportDutyonalltypesof ironoreunifiedat20%advalorem.

• CustomsDutyonsolar lanternsreducedfrom10%to5%.

• Full exemption fromImportDuty isavailableonsparesandcapitalgoodsrequiredbyship-repairunitsalsoextendedtoship-owners.

• Basic Customs Duty on lactose for the manufacture ofhomoeopathicmedicinesreducedfrom25%to10%.

Service Tax

• ServiceTaxwidenedtocover i)Hotelaccommodationchargingabove ` 1,000aday, ii)A/C restaurants serving liquor, iii)Hospitalswith25ormorebedswith facility of central air-conditioning.



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• ServiceTaxonair travel increasedby`50fordomestictraveland `250for international travel ineconomyclass.Onhigherclasses, itwillbe10%flat.

• Servicesprovidedby life insurancecompanies in theareaofinvestmentandsomemorelegalservicesproposedtobebroughtundertheServiceTaxnet.

• All individualandsoleproprietortaxpayerswithaturnoverupto` 60 Lacs freed from the audit premises at their premises.

• Toencouragevoluntarycompliance, thepenalprovisions forServiceTaxarebeingrationalized.Similarchangesbeingcarriedout inCentralExciseandCustomlaws.

• ScopeofLegalServicesextended to includerepresentationalandarbitrationservicesby individuals tobusinessentitiesorviceversa.Notaxonservicesprovidedby individualstootherindividuals.

• AdoptionofpointofTaxationRules,2011w.e.f1stApril,2011forservices toshift thebasis for taxcollections from“Cash”towards“Accrual”.

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economic Survey 2010-11

OverviewTheIndianEconomyhasemergedsuccessfully fromtheslowdowncausedby theglobal financial crisisof2007-09.With thegrowthin2009-10,estimatedat8%,theturnaroundhasbeenquite fast.Growthhasbeenstrong in2010-11witha rebound inagricultureandcontinuedmomentuminmanufacturingsector.Althoughtherewasadecreaseingrowthintheservicessectorcausedmainlybythedecelerationincommunity,socialandpersonalservices,reflectingthebaseeffectoffiscalstimulusintheprevioustwoyears.ThemediumtolongtermprospectoftheEconomy,includingtheindustrialsector,continuestobepositive.

Reformsandconvergenceinvariousschemesarekeytakeawaysforthesocialsector intheEconomicSurvey.

Therehasbeenanincreaseintheexpenditureonsocialservices.Itincreasedsince2005-06,from5.49%to7.27%ofGDPin2009-10.However,thebudgetestimatefor2010-11revealsadipintheshareto6.63%oftheGDP.ThisfitsinwiththeSurvey’semphasisesontheGovernment’schallengeinmobilisingfunds,especially intheareaofhigher education.

The financial situation remainedorderlywithapickup in creditgrowth,vibrantequitymarketandstableforeignexchangemarket.Themoderation in the current account ofBalanceof Paymentsposition is likelywithdeceleration in importsandacceleration inexportsasperthe latestmonthlymerchandisetradedata.Althoughdownsiderisksofglobalevents,particularlymovement inpricesofcommodities likecrudeoil (markedbythecurrentpolitical turmoilin theNorthAfrican&MiddleEasteconomies) remain, theIndianeconomyispoisedtofurtherstrengthen.

Prices and Monetary Management Thechallengeofmaintainingthegrowthmomentumintheeconomywithpricestability isgoingtoremainakeyfocusareaformonetarypolicyandmacro-economicmanagement.

India’swholesaleprice index(WPI)-based inflationwasat8.23%inDecember,2010, reflectingpriceshocks inessentialcommodities.Foodinflationstoodat11.49%inthesecondweekofFebruary2011.

TheReserveBankof Indiahas raisedpolicy ratesseven times in2009-10,makingborrowingscostlier.

Non-foodmanufacturing inflationhas remainedsticky, reflectingoptimisticdemand.However,thedomesticfoodpricessituationcouldgetworsebytheincreaseinglobalprices.

ECONOMYOUTLOOK



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Fiscal DeficitFiscaldeficit in2009-10hadsurgedto6.3%of theGDP,primarilydrivenbystimulusspendingtobattlethefinancialslowdowninwakeoftheglobalfinancialeconomiccrisis.

India’sfiscaldeficit is likelytobe4.8%for2010-11, lowerthanthe5.5%projectedinthelastUnionBudget,primarilyduetoauctionof3Gspectrumandbuoyancyinrevenues.

Balance of PaymentsOnaBoPbasis,India’scurrentaccountdeficit increasedby37.5%in2009-10 toUSD 38.4Bn(2.8%ofGDP) fromUSD27.9Bn in2008-09(2.3%ofGDP).Goingahead,highercrudepricesowingtogeopoliticaluncertaintiescouldfurtherincreaseIndia’scurrentaccountdeficit.

Global investors’perceptionabout theIndianrecoveryencouragedarevival incapital inflowsin2009-10primarilythroughFII inflows.

India’sforeignexchangereservescontinuetoremainhealthyatUSD 297.3BnmakingIndiathefourth largest foreignexchangereserveholder–thissheltersIndiafrompotentiallyextrememonetaryflowsandcommoditypricespikes.

India’sexternaldebtstoodatUSD295.8BnattheendofSeptember,2010outofwhich77.7%was in the formof long-termdebt;USD denominateddebtstoodat53.9%of totalexternaldebt- there isnowanincreasingtrendofprivateplayers inIndia’s long-termdebtshowingresilienceinIndia’sprivatesectorexpansionplansandrisk-takingability.

IndustryThe industrial sector needs another round of multifaceted reforms withinthepolicy frameworkoverseeing it, tosustainadouble-digitoutputgrowthwhichwillreducethevulnerabilitiesinthesectoroverthemedium-to-longterm.

Ofthe17industrialgroupscoveredunderthemanufacturingsector,only9groupsregisteredadouble-digitcumulativegrowthratewhileonly5witnessedlessthan5%growth.Overallmanufacturingoutputgrowthdippedfromapeakof18%inApril,2010to1%inDecember,2010,indicatingasimilarpatternintheindexofindustrialproduction.

Annual industrialgrowthratein2010-11isexpectedtoremaincloseto lastyear’srateof8.8%-theIndexofIndustrialProduction(IIP)basedcumulativeindustrialoutputgrowthrateduringApril-December,2010wasrecordedat8.6%.

Themanufacturingsector,whichhugelydrivestheIIP,needsbothpolicyandreformsboosttoshoreuptheIIP.



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Infrastructure, Communication and energyTheEconomicSurveyhasexpressedconcernoverthelackofprogressinkeyinfrastructureprojects,especiallyinroads,powerandrailways.Morethanhalf theCentralprojectshavebeendelayed,resulting inhighercosts.Of the559projectscosting150Croresormore,293arebehindschedule;117areonschedule,andamere14projectsareaheadofschedule.Ofthebalanceprojects,nodateshavebeenfixedforcommissioning.However,thetelecomsectorcontinuestodowellandmostoftheprojectsareonschedule.

Thesurveynotedthattheinfrastructuresectorneeds41LacsCroresofInvestments inthe12thPlanperiod,andat leasthalfwouldhavetocomefromtheprivatesector.

agricultureTheEconomicSurveyindicatedabreak-pointcominguponthefarmfront:higherincomes,risingfoodcosts,shiftingdemands(especiallyforhigh-endfoods),slowersuppliesandmissingmarket linkages—allpointtoasystemabouttostopbreathing.

Thedecline inpercapitaavailabilityof foodgrains isamatterofmajor concern. Today India rankshigh inproductionof severalcommodities…However,thissector inIndiaisatcrossroads.

Farm growth is currently a robust 3.46%, very close to thegovernment’s targetof4%.Bythisfinancialyearend, itwillgrowto5.4%.

However,toachievethe4%growthtargetfortheentireplanperiod,thesectorneedstogrowat8.5%thisyearalone.

retailTheEconomicSurveyhasmadeoutacaseforallowingforeigndirectinvestment(FDI) inmulti-brandretail,arguingthatthemovecouldhelpboththeconsumersandfarmerstobringtechnicalknow-howtosupplychains.

Permitting FDI in retail in a phased manner beginning with metros and incentivisingtheexistingretailshopstomodernisecouldhelpaddress the concerns of farmers and consumers.

AllowingFDIinmulti-brandretailchainshasbeenacontentiousissue,as its opponents fear it could impact the sales of local kirana shops. India’sretailsector isestimatedataround22LacsCrores,ofwhichorganisedsector isonlyaround5%.

exportsTradedeficits(oncustomsbasis) increasedby2.4%toUSD 82 Bn in2010-11(April-December)fromUSD 80.1 Bn in the corresponding periodof thepreviousyear.The relativelyhigher importgrowth



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comparedtoexportgrowthrate in thefirsthalfof2010-11raisedconcernsofunsustainablecurrentaccountdeficit levels.

Amoderationinthecurrentaccountofbalanceofpaymentspositionis likelywithdecelerationin importsandaccelerationinexports.

economy Outlook for 2011-12Basedontheperformanceof theeconomyoverthe lastfiveyearsandanalysisof theunderlying trendsofcriticalvariables, India’srealGDPisexpectedtogrowby9%(+/-0.25%)in2011-12and isexpectedtoreverttopre-crisisgrowthlevelsnextyear.

Lookingfurther,intothemediumtolongterm,theexpectationisthatIndia’spaceofeconomicdevelopmentwillpickupevenmore.Thereareacoupleof reasons for thisexpectationviz., themomentumin thesavingsand investment ratesandalso the fact that India’sdemographicdividend isyettopeakandthere isevidencethatthesavingsrate for theworkingagepopulationofIndia,especially forthoseinthe30’sand40’s isdisproportionatelyhigh.

It isknown thatonceaneconomybegins tooperateclose to itscapacity, the savings and investment rates are no longer sucheffectivedriversofGDPgrowth.Growththenmuchmoredependsonskilldevelopmentandinnovativeactivity inthecountry.Fortunately,there is awareness of this in India and efforts are afoot in terms of budgetaryallocationandactual initiativestoboostthedevelopmentof skill and human capital.

It is expected that these initiativeswill gather steamandmorethanmakeupforeventuallywaningpowerofthesavingsrateasadriverofeconomicgrowth.Asaconsequenceofwhich,thenexttwodecadesshouldseetheIndianeconomygrowingfaster than ithasdoneanytimeinthepast.

Conclusion Toconclude,theIndianeconomywillbreachthe9%mark in2011-12.Therewouldbemuchmore focuson“aamaadmi”andhigherfundsforflagshipprogrammestorealizethedesiredoutcomes.

Notwithstandingthetighteningmoneymarketsandmoderategrowthindeposits,therehasbeenapickup increditgrowth,higherequitymarketvolumesandstableforeignexchangemarket.AmoderationinBoPpositionis likelywithdecelerationin importsandaccelerationin exports.

Despitedownsiderisks,particularlythroughmovement inpricesofcommodities likecrudeoil, theIndianeconomyispoisedtofurtherimproveandconsolidateintermsofkeymacroeconomicindicators.

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1. Threshold limit/rates of Tax

a. Individual, HUF, association of Persons or Body of Individuals:

- Basicexemptionsformaleindividualsincreasedfrom` 1.60 Lacs to ` 1.80 Lacs.

- BasicexemptionsforSeniorCitizensincreasedfrom` 2.40 Lacs to ` 2.50 Lacs.

- AgeeligibilityforSeniorCitizensreducedfrom65yearsto60years.

- Newcategoryof VerySeniorCitizens (aged80years&above)introducedwithbasicexemptionlimitof` 5 Lacs.

- No change in EducationCess@2%andSecondary&HigherEducationCess@1%.

- Theeffectivetaxrateshallbeasunder:–

Taxable Income Tax ratesSlab (`) General Women Senior Very Citizens Senior Citizens

Upto1,80,000 NIL NIL NIL NIL1,80,001to1,90,000 10.30% NIL NIL NIL1,90,001to2,50,000 10.30% 10.30% NIL NIL2,50,001to5,00,000 10.30% 10.30% 10.30% NIL5,00,001to8,00,000 20.60% 20.60% 20.60% 20.60%8,00,001andabove 30.90% 30.90% 30.90% 30.90%

b. Firm/limited liability Partnership (llP):

- Nochangeintaxrate.


- AlternateMinimumTax(AMT)onLLP ItisproposedtobringLLPunderthepurviewofAMTonits

[email protected]%(excludingapplicableCess).ProvisionsinrespectofcreditofAMTpaidbyLLPareatparwithprovisionsofMATu/s115JAA.(w.e.f.1-4-2012).

- Theeffectivetaxrateshallcontinuetobe30.90%.

DIRECTTAXPROPOSALS



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c. Corporate:

- NochangeinbasictaxrateonincomeofDomesticaswellasForeignCompany.

- SurchargeonDomesticCompanyreduced from7.5%to5%.

- SurchargeonForeignCompaniesreducedfrom2.5%to2%.


- Thustheeffectivetaxrateshallbeasunder:–

assessee Category Total Income Total Income < = ` 1 crore > ` 1 crore

DomesticCompany 30.90% 32.45%

ForeignCompany 41.20% 42.02%

- MinimumAlternativeTax(MAT)chargeableonbookprofitisincreasedfrom18%to18.50%.ThuseffectivetaxunderMATshallbeasunder:

assessee Category Total Income Total Income < = ` 1 crore > ` 1 crore

DomesticCompany 19.06% 20.01%

ForeignCompany 19.06% 19.44%

- DividendDistributionTax(DDT)reduced from16.61%to16.22% duetoreductioninSurcharge.

d. Tax on Income distributed to unit holders. (w.e.f. 1-6-2011)

TheratesofadditionalincometaxpayablebyaMutualFundu/s115R(2)ondistributionofincomeareproposedtoberevisedasunder–

Sr. recipient of nature of Mutual Fund Present Proposed no. Distributed rates rates Income (i) IndividualorHUF MoneyMarketMutualFundor 25% 25% Liquid Fund(ii) OtherPerson MoneyMarketMutualFundor 25% 30% Liquid Fund(iii) IndividualorHUF DebtFundotherthanMoney 12.50% 12.50% MarketorLiquidFund(iv) OtherPerson DebtFundotherthanMoney 20% 30% MarketorLiquidFund



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2. Business Income

a. SeZ units and SeZ developers liable to MaT/DDT

- ItisproposedtobringtheSEZunitsanddevelopersofSEZunder thepurviewofMinimumAlternativeTax(MAT)u/s115JBw.e.f.A.Y.2012-13.

- It isalsoproposedtodiscontinuetheexemptionfromDDT,whichwasavailabletoundertakingsengagedindeveloping,operatingand/ormaintainingSEZfordividendsdeclared,distributedorpaidonorafter1-6-2011.

b. Increase in weighted deduction for scientific research

Itisproposedtoincreasetheweighteddeductionu/s.35(2AA)(a)forcontributionmadetowardsScientificResearchfrom175%to200%.

c. extension of scope of Investment linked incentive – Section 35aD

- For investment linked deductions, following two newbusinessesincludedasspecifiedbusiness;

• DevelopingandBuildingAffordableHousingProjects.

• ProductionofFertilizers.

- Accordingly,100%deductionofanycapitalexpenditureother than land,goodwill&financial instrument,shallbeallowed if operations commences on or after 1stApril,2011.(w.e.f.1-4-2012).

- It is further provided to remove theword “new” fromexistingdefinitionof“specifiedbusiness”(onlyhotelandhospitals).Afterthisamendment,the lossofanassesseefromsuch“specifiedbusiness”wouldbefreelyallowedtobesetoffagainsttheprofitofanother“specifiedbusiness”u/s73A. (w.r.e.f.1-4-2011).

d. Deduction in respect of Pension Scheme

It isproposedtoallowdeductionu/s36, inrespectofanysumpaidby theassesseeasanemployerbywayofcontributiontowardspensionschemeonaccountofemployeestotheextentit doesnot exceed10%of the salary (Basic anddearnessallowance).

3. Deductions under Chapter VIaa. The additional deduction of `20,000/-toindividualsandHUFfor

investment in longterminfrastructurebondsextendedforA.Y.2012-13.(u/s80CCF).



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b. It isproposed toamendSection80CCE toprovide that theemployers’contributionmadetoapensionschemeu/s80CCD(2)shallbeallowedoverandabovethemaximumdeductionof` 1 lacavailableu/s80CCE.

4. International Taxation / Taxation for non resident

a. Reporting of Activities of Liaison Offices

Inordertogatherregularinformationfromnon-residentsregardingtheactivitiesof their liaisonoffices in India, it isproposedtoprescribeanAnnual InformationStatementwhichshallbesubmittedwithinsixtydaysfromtheendofthefinancialyear.

b. Transfer Pricing

- It isproposedthatinsteadof5%allowablevariationacrossallbusiness transactions, thegovernmentwillnotify theallowablepercentageof variationsacross thedifferentsegmentsofbusinessactivities.(w.e.f.1-4-2012).

- It isprovidedthat the jurisdictionof theTransferPricingOfficer (TPO)shallextend to thedeterminationofArmsLength Price in respect of international transactions other thanthosethatarespecificallyreferredbytheAssessingOfficer.(w.e.f.1-6-2011).

- InordertoenabletheTPOtoconducton-the-spotenquiryandverification,it isproposedtoauthorizeTPOtoexercisepowersofSurveyu/s133A.(w.e.f.1-6-2011).

- Inorder toovercomethedifficulty ingettingcomparabledata forTransferPricingaudits, theduedate for filingof returnof Income in thecaseofCorporateAssessees,whereTransferPricingaudit isapplicable,isproposedtobeextended to 30thNovemberoftheassessmentyear.(w.e.f.1-4-2011).

c. anti avoidance Measures (w.e.f 1-6-2011)

In order to discourage transactions with persons located in certainnotified jurisdictions thatdonoteffectivelyexchangeinformation with India, it is proposed that the CentralGovernmentwillnotify such jurisdictions. The following anti avoidanceprovisionshavebeenproposedinthisregards:

- Iftheassessee isentering intotransactionwithanypartylocated in such jurisdictions, then all parties to suchtransactionshallbedeemedtobeAssociatedEnterprisesandalltheprovisionsofTransferPricingwillbeapplicable.



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- Nodeductionwillbeallowedfor:

• Anypaymentmadetoanyfinancial institutionslocatedinsuch jurisdiction,unless theassesseeprovidesanauthorization to the income tax authority to seekrelevantinformationsubsequently.

• Anyotherexpenditureorallowancearising fromthetransactions unless the assessee maintains such other documentsasmaybeprescribed.

- Iftheassesseedoesnotoffersatisfactoryexplanationaboutthe sourceofany sum received from transactionswithanyperson located insuchjurisdiction,suchsumshallbedeemed to be the income of the assessee.

- Anypaymentmadetoapersonlocatedinsuchjurisdictionshall be liable to Deduction of Tax at higher of the following rates;

• attherateorratesinforce;or

• at theratespecified intherelevantprovisionsof theIncomeTaxAct;or

• attherateof30%.

d. Interest from Infrastructure Debt Fund received by a non-resident

It is proposed to tax the interest from an Infrastructure Debt FundreceivedbyaNon-Residentat therateof5%. It is also proposedtointroduceprovisionsforwithholdingoftaxes@5%onsuchincomeu/s194LB.(w.e.f.1-6-2011).

e. Dividend from Foreign Subsidiary Company

It isproposed thatDividenddeclared,distributedorpaidbyaSubsidiaryForeignCompanytoanIndianCompanyshallbetaxed@15%.It isalsoproposedthatnodeduction inrespectofanyexpenditureordeductionshallbeallowedagainstsuchdividend.(w.r.e.f.1-4-2011).

5. Other Proposals :

a. Document Identification Number – Section 282B

Theproposal for providinguniqueDocument IdentificationNumber for any correspondencemade by a tax officer isproposedtobedeleted.(w.r.e.f.1-4-2011).



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b. Provisions in relation to Settlement Commission.

- With a view to expand the benefit of SettlementCommissiontothetaxpayers,it isnowproposedtoextendtheeligibilityof filinganapplicationbeforeSettlementCommissiontotheentitiesrelated(tobedefined)toataxpayeronwhomthesearchis initiated, ifadditionalIncometaxpayable in theircaseexceeds` 10 Lacs. The entities shouldalsobesubjecttosearch(w.e.f.1-6-2011).

- Withaviewtorectifyanymistakeapparent fromrecord,it isalsoproposed that theSettlementCommissionmayamendanyof itsOrderwithin6months from thedateofsuchOrderaftergivinganopportunityofbeingheard.(w.e.f.1-6-2011).Similaramendmentsareproposed inwealth Tax.

c. Hitherto,advancementofanyotherobjectofgeneralpublicutilitywerenot coveredunder thedefinitionof “CharitablePurpose” if it involvedcarryingonofanyactivity inthenatureof trade, commerceorbusinessoranyactivityof renderinganyservice inrelationtheretoprovidedtheaggregatevalueofthereceipts fromsuchactivities isabove` 10 Lacs. It is now proposedtoenhancethesaidmonetary limitfrom` 10 Lacs to ` 25 Lacs.

d. Inordertoaugment longterm, lowcost fundfromabroadforinfrastructuresector,It isproposedtoexemptu/s.10(47)theincomeofanInfrastructureDebtFund(w.e.f.1/6/2011).

e. Collection of Information on request received from tax authorities outside India.

Inorder to facilitate thepromptcollectionof information,onrequests received from taxauthoritiesofother jurisdiction,pursuanceofanagreement forexchangeof informationu/s90or90A,anamendment isproposed inSection131. It isproposedtoprovidethatany incometaxauthority,notbelowthe rankofAssistantCommissionerof Income-tax, shallbecompetent to exercise the powers currently conferred onincome-taxauthoritiesu/s131even if noproceedings arependingbeforeitoranyotherincometaxauthoritywithrespectto such person or class of persons. It is further proposed to empower theaforesaidauthority to impoundand retainanybooks of account and other documents produced before it in anyproceedingundertheAct.(w.e.f.1/6/2011).Amendmentonsimilar linesisalsoproposedinSection133.



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f. extension of Time limit for assessments in case of exchange of information.

while computing the period of limitation for completion of assessmentsandreassessments, it isproposedtoexcludefromthestatutorytimelimitprescribedforcompletionofassessmentor reassessment, the time taken in obtaining informationfromthetaxauthorities in jurisdictionsituatedoutsideIndia.Accordingly, it isproposedtoexcludetheperiodcommencingfrom the date on which a reference for exchange of information ismade by an authority competent under an agreementreferred to inSection90orSection90Aandendingwith thedateonwhichthe informationsorequested isreceivedbytheCommissioner,oraperiodof sixmonths,whichever is less.SimilaramendmentsareproposedtobemadetoSection153BoftheIncome-taxAct.(w.e.f.1-6-2011).

g. Withaviewtoreducethecomplianceburdenofsmallsalariedtaxpayers, it isproposedthattheCentralGovernmentmaybynotificationinOfficialGazette,mayexemptanyclassorclassesofpersonsfromtherequirementoffilingofreturnofincomeu/s.139(1).(w.e.f.1-6-2011).

qq



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INDIRECTTAXPROPOSALS

CenTral eXCISe(Note: Changes comes into effect immediately unless otherwise specified)

1. ThestandardrateofCentralExciseDutyfornon-POLproducts(nonpetroleumproducts)hasbeenmaintained at 10%. The merit rateofExciseDuty(CENVAT) fornon-petroleumgoodshas been increased from 4% to 5%. The increased rate wouldapplytoallsuchgoodsthathithertoattractedtherateof4%.Someoftheindustriesareanalysedbelow:

a. Cement:

Ratesofdutyapplicable to cementmanufacturedbymini-cementplantshavebeenrevisedfromspecificratestoeitherad valorem or ad valorem+ specificrateswithsomereduction. The rateofdutyonbulkcement(i.e.otherthanpackagedform),whethermanufactured inamini-cementplantornot, isbeingunifiedat10%ad valorem.

b. Branded ready-made garments and made-up articles:

- Excisedutyattherateof10%shallnowapplytoready-made garments and made-up articles of textiles fallingunderChapters61,62and63(headingnos.63.01to63.08)oftheCentralExciseTariffexceptthosefallingunder heading nos. 63.09 and 63.10 when they bear or are sold under a brand name. In the case of ready-made garments and made-up articles bearing a brand name or sold under a brand name, no such option would be available and a duty of 10% would be payable regardless of the composition of the item/article.

- It is thepractice in thegarmentandmadeup industryfor brand owners to have goodsmanufactured fromseveral job-workers.Thebrandownersmayormaynot,themselves,possessanymanufacturing facility.Central excise rules are being amended to incorporate sub-rule (1a) in rule 4 to prescribe that in such a situation the liability to pay duty and comply with Central excise procedure shall be on the person on whose behalf the goods are manufactured by job-workers.



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c. Precious Metals

- ExciseDutyonseriallynumberedgoldbars,other thantolabars,whenmanufactured fromtheore/concentratestage is being reduced from ` 280 per 10 grams to ` 200 per 10 grams. This concessional rate is also being extended when such bars are manufactured starting from thestageof“golddorebars”.GoldandSilverarise inthecourse of manufacture of unwrought copper from copper ore or concentrate through the smelting process. The ratesofExciseDutyonsuchgoldandsilverarealsobeingrationalized at ` 300 per 10 grams and ` 1500 per kg respectively.

d. Goods for Mega-Power Projects:

- Full exemption fromCentralExciseDuty isavailable togoodssuppliedtoultra-megapowerprojectssubjecttothefulfillmentofcertainconditions.

- Full exemption fromCentralExciseDutyhasalsobeenextendedtospecifiedgoodssuppliedtoexpansionprojectsof existingmega power projects, subject to certainconditions.

2. Withdrawal of exemptions/concessions

a. Anumberofexemptions fromCentralExciseDuty(about130exemptionentries)arebeingwithdrawn.These includesomecaseswheretherateofduty isNilbytariff.a nominal duty of 1% ad valorem is being imposed on these items with the condition that no credit of the duty paid on input and input services is taken. Foreaseof reference, this rate isbeingprescribedthroughacommonnotificationno.1/2011-CEdated 1st March,2011.

b. Inthecaseofjewelleryofgold,silverorotherpreciousmetalsas well as articles of these metals falling under heading no. 7114,thelevywouldapplyonlytogoodseitherbearingabrandname or sold under a brand name. Full exemption from excise dutyisbeingretainedforunbrandedproductsofthisclass.

c. ThefollowingamendmentshavebeenmadeintheCenvatCreditRules,2004fortheimplementationofthe1%scheme:

- Thedefinitionof“exemptedgoods”hasbeenamendedtoincludegoodsinrespectofwhichthebenefitofnotificationno.1/2011-CEisavailed.Thiswould implythatthecreditattributabletosuchgoodswouldhavetobereversedwhen



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commoninputsandinputservicesareusedforboththesegoods and otherwise dutiable goods.

- Creditofdutypaidoninputsorinputserviceswouldnotbeavailabletoamanufacturerofthesegoods.Credit of the duty paid on items that are being subjected to the levy of 1% would not be available to a manufacturer or service provider who buys them.

- It isalsobeingprescribed intheCenvatCreditRulesthatthe manufacturer of these goods cannot discharge the duty liabilityonthembyutilizingCenvatcreditotherwiseavailableinhisbooksofaccounts.

d. Fullexemption fromExciseDutyavailable toautomatic loomsandprojectile looms isbeingwithdrawn.Full exemptiononmicro-processors,otherthanmotherboards;floppydiscdrive;harddiscdrive;CD-ROMdrive;DVDdrives /writers; flashmemoryandcombodrivesmeantforfitmentinsidealaptop/CPUisalsobeingwithdrawn.Allthesegoodswouldbechargeabletoaconcessionalrateof5%.

3. Other relief measures Full exemption fromexcise duty has beenprovided in the

following cases:

a. Air-conditioningequipment,panelsandrefrigerationpanels forinstallationofcold-chain infrastructureforpreservation,storageor transport of agricultural produce and others.

b. Conveyorbelt systems foruse incoldstorages,mandisandwarehouses for the storage of food grains and sugar

c. Goodsrequiredforexpansionofanexistingmega/ultramegapowerproject

d. Cottonstalkparticleboard

e. Colour,unexposedcinematographicfilm in jumborollsof400feet and 1000 feet

f. Pipefittingsrequiredforawatersupplyproject

Concessional duty of 1% is being provided for the following:

- Sanitarynapkins,babyandclinicaldiapersandadultdiapers

- Waterfiltersusingpressurizedtapwaterbutnoelectricityand their replaceable kits



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excise duty is being reduced from 10% to 5% on:

- Kits for theconversionof fossil fuelvehicles intohybridvehiclesandpartsofsuchkits

- Greaseproofpaperandglassinepaper

4. Important legislative amendments in Central excise act

TheprovisionsofSection11Arelatingtotherecoveryofdutynot levied, short levied,notpaid, shortpaidorerroneouslyrefundedhave been redraftedwith a view to improve thesequenceinwhichprovisionsoccurandsimplifytheir language.Thefollowingimportantamendmentshavebeenproposedinthissection:

a. Aseparatecategoryhasbeencarvedout fromcases involvingextendedperiodof limitation (fraud, collusion,willfulmis-statementetc.)whereina lowermandatorypenaltyof50%ofthedutywouldapplytothetransactionsenteredinthespecifiedrecords.

b. The facility of compounding the penalty amount has beenconfinedonlytothenewcategoryandifthepersonchargeablewithduty (for anextendedperiod)pays theduty in full orpart along with interest before the issuance of a show cause notice,thepenaltyshallstandreducedto1%permonthbutnotexceeding25%ofthedutyamount.

- Theprovisions of Sections11AAand11ABhavebeenmerged intoarevisedSection11AA.Undertheproposedprovision,interestwouldbepayableonanydutynotlevied,short levied,notpaid,shortpaidorerroneouslyrefundedfromthefirstdateofthemonthsucceedingthemonth inwhichthedutyoughttohavebeenpaidundertheActorfrom the date of erroneous refund.

- Section11E isbeing inserted intheCentralExciseAct tocreatea first chargeon thepropertyofadefaulter forrecoveryofCentralExciseDuessubject totheprovisionsof theCompaniesAct, Recovery ofDebt due toBankandFinancial InstitutionAct,1993andSecuritisationandReconstructionof FinancialAssets andEnforcementofSecurityInterestAct,2002.

- It has beendecidedtoempowertheJointCommissioner/AdditionalCommissioner ofCentral Excise (instead ofAssistantCommissioner) tocarryout thesearchofanypremisesortoauthorizeacentralexciseofficertodoso.



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- TheStandardsofWeightsandMeasuresAct,1976isbeingrepealedwitheffectfrom01.03.2011andreplacedbyTheLegalMetrologyAct,2009.Section4AoftheCentralExciseActisbeingamendedtoincorporateareferencetothenewAct.

- Amendments are beingmade in the Schedule to theAdditionalDutiesofExcise(GoodsofSpecialImportance)Act,1957toremovesugar,textileandtextileproductsfromitspurview.Thiswouldenable theStateGovernments tolevyVATontheseitems.

5. amendments in Central excise rules and Cenvat Credit rules, 2004

Amendmentshavebeenmade intheprovisionsof theCenvatCreditRules(CCR),2004.Thebasicthrustofthesechanges istobroadbaseandsimplifydefinitions toreducedisputesandtoachieveamorerealisticattributionwhencommoninputsorinputservicesareusedforthemanufactureofbothdutiableandexempt goods.

a. Thedefinitionof ‘Input’containedinrule2(k)hasbeenrevised.Allgoodsused inthe factorybythemanufacturerof thefinalproduct,except thosespecified in thenegative listandgoodshavingnorelationshipwhatsoeverwiththemanufactureoffinalproduct,wouldqualifyfortreatmentasinputs.

b. Thedefinitionof ‘InputService’hasalsobeenrationalized toimpartclarityand toachievecongruencebetweengoodsandservicessothattheservicesrelatedtoanygoodsexcludedfromthedefinitionof ‘inputs’arealsoexcludedfromthedefinitionof‘InputService’.

c. Shipbreakingunitsareallowedtoavail fullcreditofadditionalduty of customs paid on the shipwhen it is imported forbreaking.CCRhasbeenamendedtoprescribethatCenvatCreditshallnotbeallowedinexcessof85%oftheadditionaldutyofcustomspaidonships,boatsetc. importedforbreaking.

d. Rule5BisbeingamendedtorequireamanufacturerorserviceprovidertopayanamountequivalenttotheCENVATcredittakeninrespectof inputsorcapitalgoodsevenwhere thevalueofsuchinputsorcapitalgoodsiswrittenoffpartiallybeforebeingput touse.Currently, this is requiredonlywhenthevalue iswrittenofffully.



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CUSTOM DUTY(Note:Changes comes intoeffect immediatelyunlessotherwisespecified)

1. rate Structure:

- Thereisnochangeinthepeakrateofbasiccustomsdutyof10%.Theexistingratesof2%,2.5%and3%arebeingunified intoasinglerateof2.5%.Consequently,all itemsthathithertoattractedbasiccustomsdutyof2%or3%wouldnowbechargeabletomedianrateof2.5%.

- Changes inbasicrateofCustomDutyonsomekey itemsare:

Description Basic Custom Duty rates

Food / agro Processing/ agriculture Present rate revised rate

Micro- irrigationequipmentcovered 7.5% 5% undertariff item8424,8100

Sun-drieddarkseedlessraisins 100% 30%

Cranberryproducts 30% 10%

Textiles

Rawsilk(notthrown)ofallgrades 30% 5%

PolyTetraMethyleneEtherGlycol(PTMEG) 7.5% 5% andDiphenylmenthane4,4-Diisocyanate (MDI)

Nylonchips,fibre&yarn 10% 7.5%

Rayongradewoodpulp 5% 2.5%

Capital Goods/ Infrastructure

Gems&Jewellerymachinery 7.5% 5%

environment- Friendly Items

Solar lanternor lamps 10% 5%

Health Sector

Lactoseforuseinmanufactureof 25% 10% homoeopathic medicines

Paper

Wastepaper 5% 2.5%



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Description Basic Custom Duty rates

Metals Present rate revised rate

Ferro-nickel 5% 2.5%

Vanadiumpentoxide/sludge 7.5% 2.5%

Miscellaneous

Carbonblackfeedstock 5% 2.5%

Petroleumcoke 5% 2.5%

Mineralgypsum 5% 2.5%

2. Sector specific measures

a. Food/agro Processing

- BasicCustomsDuty(BCD) isbeingreduced from5%to2.5%onspecifiedagriculturalmachinerysuchaspaddytransplanter, laser landleveller,cottonpicker,

- BCD isbeing reduced from7.5%to2.5%onpartsandcomponents required for the manufacture of equipment mentionedabove.

- Exemptionfrombasiccustomdutyisbeingextendedtode-oiled rice bran oil cake.

b. Special economic Zone

- AllclearancesfromSEZintoDTAarebeingexemptedfromSADprovidedtheyarenotexempt fromthe levyofVAT/SalesTax.

- TheCVDexemptioncurrentlyavailabletoplasticmaterialsreprocessed in India out of the scrap or waste of goods falling under specified chapters is being extended to domestic tariff area clearances of such plastic materials manufacturedinSEZunitsalso.

c. Textiles:

- CottonwasteisbeingfullyexemptedfromBCD.

d. Capital Goods/Infrastructure:

- ThescopeforfullCustomsDutyexemptiontowatersupplyprojectsforagriculturalandindustrialuseisbeingexpandedtothewaterpumpingstationandwaterreservoirofsuchprojects.

- Theconcessional importdutyof5%BCD,5%CVD&NilSADcurrentlyapplicabletohigh-speedprintingmachinery



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is being extended to mailroom equipment compatible with suchprintingmachineryimportedbyregisterednewspaperestablishments.

- Aconcessionalrateof5%BCD,5%CVD&NilSADisbeingextended to parts and components for manufacture of 23 specifiedhighvoltagetransmissionequipments.

e. environment-friendly items:

- Concessional CVD@5% (byway of a central exciseexemption)andfullexemptionfromSADisbeingprovidedto LEDs used for manufacture of LED lights and light fixtures.

- Full exemption fromcustomsduty isbeingextended totoughenedglassandsilverpasteimportedformanufactureof solar cells or solar modules on actual user basis.

f. Health Sector:

- EndovascularstentsarebeingfullyexemptedfromBCDof5%.

- Aconcessional importdutyregimeof5%BCD,5%CVD&NilSAD isbeingprescribedonspecifiedrawmaterial forthemanufactureofsyringes,needles,catheters,cannulaeon actual user basis.

- BCDonfourspecifiedlifesavingdrugsandtheirbulkdrugsisreducedfrom10%to5%withNilCVD(bywayofexcisedutyexemption).

g. electronics Hardware:

- Aconcessional importdutystructureof5%CVDandNilSAD isbeingprescribedonpartsof inkjetand laser-jetprinters imported for manufacture of such printers.

- Full exemption from SAD presently available upto31.03.2011onparts, components andaccessories formanufacture of mobile handsets including cellular phones is being extended upto 31.03.2012.

- Full exemption fromcustomsduty isbeingextended toadditionalspecifiedcapitalgoodsandrawmaterialsforthemanufacture of electronic hardware.



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- Aconcessional importdutystructureof5%CVDandNilSADisbeingprescribedonpartsformanufactureofDVDwriters,combodrivesandCDdrivessubjecttoactualusercondition.

h. Metals:

- Fullexemption fromBCD isbeingextended tostainlesssteel scrap.

- Ironorepelletsarebeingfullyexemptedfromtheexportduty.

– Exemption frombasic customsduty is beingprovidedon thevalueofgoldandsilver contained in thecopperconcentrate.

i. Precious Metals:

- An importdutyofNilbasiccustomsduty,CVDof` 140 per 10gramandNilSADisbeingprescribedforgolddorebarsofupto80%goldpurityimportedforrefiningandmanufacturingseriallynumberedgoldbarsinIndia.

j. IT software

- TheCVDonpackagedsoftware,which isnot required tobearRSP isnowrequired topayCVDonlyonportionofvaluerepresentingthevalueofthemediumonwhich it isrecorded along with freight and insurance.

k. export Promotion:

- Thelistofspecifiedgoods,allowedtobeimporteddutyfreeforuse inmanufactureoftextileand leathergarments, isbeingexpandedby includinganti-theftdevices like labels,tags and sensors therein.

- Benefitofdutyfree importontrimmings,embellishments,componentsetc.formanufactureofleathergoods,footwearand textile garments is being extended to merchant exporterssubjecttocertainconditions.

3. relief Measures:

- Fullexemption from importduty isavailable toworksofart imported for exhibition in a public museum or national institution. The scope of this exemption is being expanded to include imports made for exhibition of works of art in privategalleries thatallowunrestrictedaccesstogeneralpublic,subjecttothefulfillmentofcertainconditions.



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SerVICe TaX1. new services included in Service Tax net

(Applicable from date of notification after enactment of Finance Bill 2011)

a. Servicesprovidedbyairconditionedrestaurantshavingalicensetoservealcoholicbeveragesinrelationtoservingoffoodand/orbeverages[Section65(105)(zzzzv)]

b. Short termaccommodationprovidedbyahotel, inn,guesthouse,cluborcampsiteoranyothersimilarestablishmentforacontinuousperiodof lessthanthreemonths.[Section65(105)(zzzzw)]

2. Scope of existing services modified

(Applicable from date of notification after enactment of Finance Bill 2011)

a. TheScopeof the“LifeInsuranceService” isbeingwidenedtocoverallservicesprovidedtoapolicyholderoranyperson,byaninsurer, includingre-insurercarryingonlife insurancebusiness.[Section65(105)(zx)]

b. Thescopeofthe“CluborAssociationService”isbeingextendedto includeserviceprovided tononmemberswithin itsambit.[Section65(105)(zzze)]

c. ThescopeofLegalConsultancyServices isbeingexpandedbybringing within its ambit :

- Servicesprovidedbyabusinessentity to individuals inrelationtoadvice,consultancyorassistanceinanybranchof law,inanymanner;

- Representational serviceprovidedbyanyperson toanybusinessentity (representational services, provided toindividualswillcontinuetobeexempt)and

- Serviceof ‘arbitration’providedbyarbitral tribunaltoanybusinessentity.

- The definition of Business Support Services is beingamended to include the services provide byway ofoperationaloradministrativeassistanceinanymanner.

- TheScopeof“AuthorizedServiceStation”isbeingextendedto :

• Includeservicesprovidebyanyperson



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• Cover allmotor vehicles other than thosemeantforgoodscarriageand threewheeler scooter,autorickshaws;and

• Also cover the services of decoration and similarservices in respect of vehiclesalongwith servicesalreadycovered.

- Thedefinitionof“CommercialTrainingorCoachingService”is being amended to bring all unrecognized courses within thetaxnet, irrespectiveofthefactthatsuchcoursesareconductedbyaninstitutewhichalsoconductscourseswhichmayleadtograntofrecognizeddegreeordiploma.

- The scope of Health Services is being expanded byincluding:

• Allservices, includingdiagnosticservices,providedbyacentrallyairconditioned(whollyorpartially)clinicalestablishmenthavingmorethan25bedsforin-patienttreatmentduringanypartoftheyear;

• Diagnostic services being provided by a clinicalestablishmentwith the aid of laboratory or othermedicalequipment;and

• Servicesprovidedbyadoctor,notbeinganemployeeofaclinicalestablishment,fromthepremisesofsuchestablishment.

3. exemptions

(ApplicablefromdateofnotificationafterenactmentofFinanceBill2011)

a. Exemptionisbeingprovidedtoservicesprovidedbyanorganizerof business exhibitions in relation to business exhibition held outsideIndia.[NtfnNo.5/2011-ServiceTax]

b. Anabatementof25%fromthetaxablevalueisbeingprovidedforthepurposeof levyofservicetaxunder“Transportofgoodsthroughcoastalandinlandshipping”[NtfnNo.16/2011-ServiceTax]

c. Valueofairfreightincludedintheassessablevalueofthegoodsforchargingcustomsdutiesisbeingexcludedfromtaxablevalueforthepurposeof levyofservicetax.[NtfnNo.9/2011-ServiceTaxApplicablefrom01.04.2011]

d. Servicesrelatedtotransportationofgoodsbyroad,railorairwhen both the origin and the destination are located outside



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India isbeingexempted fromservice tax. [NtfnNo.8/2011-ServiceTaxApplicablefrom01.04.2011]

4. Withdrawal or amendments of exemptions

Notification26/2010-STdated22-6-2010 isbeingamendedbyNotification4/2011-

STand theservice taxapplicable in respectof “Transportofpassengersbyairservice”isbeingrevisedasfollows:

a. Domestic(economy):From` 100 to ` 150

b. International(economy):From` 500 to ` 750

c. Domestic(otherthaneconomy):Standardrateof10%.

5. Amendment in Act/Rules/Notifications

a. AmendmentsintheFinanceActare:

- Themaximumpenalty for delay in filing of returnu/s70 is proposed to be increased from ` 2,000/- to`20,000/-.

- TheprovisionsofSection73(1A)andboththeProvisosofSection73(2)areproposedfordeletion.Asaresult, thebenefitof reducedpenaltyshallnotbeavailable incases offraud,mis-statement,suppression,collusionetc. intheordinarycourse.

- Interest rate fordelayedpaymentofservice tax isbeingincreased to18%p.a,effective01.04.2011(Notification15/2011-ST).Aconcessionof3%hasbeenproposed fortax-payerswhoseturnoverduringanyoftheyearscoveredinthenoticeortheprecedingfinancialyear isbelow` 60 Lacs.

- Reducethepenalty fordelayedpaymentu/s76from2%to1%permonthor`100perday,whichever ishigher.Maximumpenaltyreducedto50%ofthetaxamount.

- Themaximumpenaltyu/s77forcontraventionofvariousprovisions isproposed to increased from` 5000/- to`10,000/-.However, thedaily rateofpenalty,whereverapplicable, isbeingretained.

- Penaltyu/s78isbeingalteredfromuptotwicetheamountof tax to an amount equal to the tax.

- Section80 isbeingamendedbysubstitutingSection78withthewords“provisotoSection78”andthusthepower



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towaivepenaltyshallbeavailableonlyincaseswheretheinformationiscapturedproperlyinthespecifiedrecords.

b. The revised position relating to penalties and their mitigation or waiver is summed up in the following table:

- Power to issuesearchwarrantu/s82 isproposedat thelevelof JointCommissionerand theexecutionofsearchwarrantatthelevelofSuperintendent.

- Provisionsrelatingtoprosecutionareproposedtobere-introducedandshallapplyinthefollowingsituations:

• Provisionofservicewithout issueof invoice;

• AvailmentandutilizationofCENVATcreditwithoutactualreceiptof inputsor inputservices;

• Maintainingfalsebooksofaccountsorfailuretosupplyanyinformationorsubmittingfalseinformation;

• Non-paymentofamountcollectedasservicetaxforaperiod of more than six months.

• Thereshallbenopowerofarrestandtheprosecutioncan be launched onlywith the approval of ChiefCommissioner.

c. Amendments in Rules & Notifications

- PointofTaxationRules,2011:

Point of TaxationRules, 2011 have been framed videnotification 18/2011-ST and made effective from01.04.2011. These rules determine the point in time when theservicesshallbedeemedtobeprovided.Thegeneralrulewillbethatthetimeofprovisionofservicewillbetheearliest of the following dates:

i. Dateonwhichserviceisprovidedortobeprovided

ii. Dateof invoice

iii. Dateofpayment

ConsequentialchangeshavealsobeenmadeintheServiceTaxRules,1994toalter thepaymentofservicetax from“receiptofpayment”to“provisionofservice”andalsotopermitadjustmentoftaxwhenserviceisnotprovided.

qq



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equity Capital MarketTheyear2010-11hasseentheIndianCapitalMarketputtheworstbehindandmove towardsstronggrowth.Thecumulativeamountmobilized as on 30thNovember,2010throughIPO’s,FPO’sandRightsIssues stood at `46,701Croresascomparedto`46,737Crores in2009-10.During2010-11,sofar,40newCompanieswerelistedbothat theNSEandBSEamounting to`33,068Croresasagainst39Companiesamountingto`24,696Croresin2009.ThemeanIPOsizeforthecurrentfinancialyear is`827Croresascomparedto` 633 Crores inthepreviousfinancialyear,showinganincreaseof30.6%.Theamountofcapitalmobilizedthroughprivateplacementsin2010-11(ason30thNovember,2010)is`1,47,400Croresascomparedto`2,12,635Croresin2009-10.

It has beena reboundyear for IndianM&AandPrivateEquityinvestmentsafter theweakactivity levelsseen inyear2009.TheincreasingconfidenceintheIndianEconomy,buoyancyintheCapitalMarkets, significant improvements inglobalperceptions for Indiaand improvedperformanceof theearliercrossbordertransactions,resulted in India Inc’s total M&A and PE activity reachUSD 62.24Bn registeringagrowthof159%over2009.This renewedmomentumhas taken thedealactivityback toalmost the levelsseen in2007.

Privateequity investorshavealso returned to themarkets inasignificantwayfocusingonthekeydemandsectorsof infrastructureduringtheyear.Thereweretotalof253PEtransactionsworthUSD 6.3Bnin2010upfromUSD3.45Bninthepreviousyear.

Opportunitiesacrosssectors inIndiacontinuedtofuelM&Aactivity.The increasingneed for telecom infrastructure,oil&gas,primaryand tertiaryhealthcareandpower sectorsensuredbothgrowthand consolidation related transactions within these sectors and thus registeringhighvalueM&Adeals.

Withthecapitalmarketsopeningup,IndiaInc’sappetiteforstrategicM&Ahasmorethanquadrupledover2009clockingUSD49.78Bnin2010.Withcorporatedebtraisings,IPOsandQIPhelpingCompaniesfundtheiracquisitionplans,IndiaIncproceededtomakesomeofthelargestdealsever in2010.Thetelecomsector,drivenbyamassivedemandforassets, inparticular towersand infrastructurewasthemostsoughtafterM&Asector in2010.

CAPITALMARKET



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resource Mobilisation through Primary Market

` inCrores

Sr. Mode 2007-08 2008-09 2009-10 2010-11* no.

1. Debt - 1,500 2,500 2,197

2. Equity 54,511 2,082 46,737 46,701

3. PrivatePlacement 1,18,485 1,73,281 2,12,635 1,47,400

4. EuroIssues(ADR/GDR) NA NA NA NA

Total 1,72,996 1,76,863 2,61,872 1,96,298

Source: SEBI and RBI (Euro Issues)Notes: NA indicates Not Available.

* As on 30th November, 2010

resource Mobilization by Mutual FundsDuring2010-11(ason30thNovember,2010),mutualfundsmobilized`12,185Croresfromthemarketascomparedto`83,080Croresin2009-10.Themarketvalueofassetsundermanagementstoodat` 6,65,282Croresason30thNovember,2010comparedto`6,13,979Croresason31stMarch,2010,showinganincreaseof8.4%.

(` inCrores)

Sr. Mode 2006-07 2007-08 2008-09 2009-10 2010-11* no.

1. UTI 7,326 10,677 (3,659) 15,653 (5,237)

2. Public 7,621 9,820 9,380 12,499 (2,956)

3. Private 79,038 1,33,304 (34,018) 54,928 20,378

Total 93,985 1,53,801 (28,297) 83,080 12,185

Source: SEBI and RBI (Euro Issues)

Note: *As on 30th November, 2010

The domesticmutual fund industrywas impacted by liquiditytighteninginthebankingsystem,whichresultedinsystemicoutflowfromthe industry.Akey factor for the tight liquiditywas the3Gauctions in the laterhalfof theyear, fromwhich theGovernmentcollectedover` 1 trillion.

Secondary Market PerformanceTheyear2010hasbeenoneof thestronggrowth for the IndianCapitalMarkets.Bullstossedoff themarkets intheyear2010toa



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netgainof18%, followingglobal recoveryandwithFII’spumpingmoneyintothemarketonaccountofsoliddomesticgrowthcoupledwitha resurgingcorporate sector. Indicesachieved recordhighsduringthespecialone-hourmuhuruttradingon5thNovember,2010withtheSensextouching21004andNifty6312mark.

Indianmarketshavebeenmakinggains for eightquarters in arow, their longestwinning run inat least20years.While2009wasbasicallyayearofrecoveryfromthecrisisyearof2008,2010wasoneof consolidationofgains. From9647on31st Dec2008,theSensexclimbedto17464on31stDecember,2009and furtherconsolidated its rallyat20509on31stDecember,2010.The totalmarket capitalization as on 31stDecember,2010stoodat`72,96,725Crorescomparedto`60,81,308Croresason31stDecember,2009.

For2010,thedomesticconsumptionstoryprovidedapushfor theconsumerdurables,auto,FMCG,bankingandhealthcaresectors,helping themarkets to deliver 18% returns. However realty,metals,power, infrastructureandoil&gassectorsunderperformedthe broader markets. Net FII inflow in 2010 was `627Bn in thesecondaryequitymarkets.

Theyear2011hasstartedwithstrongheadwinds in the formofhigh inflation, risingcrudeprices,monetary tighteninganddentin corporate credibility. These domestic concerns coupledwithimprovement indevelopedeconomieshavesofar ledtonetsellingofover`30Bninthesecondaryequitymarkets.Asaresult,Indianmarkets havenot only underperformedmost of the developedmarketsbutalsomostemergingmarketssignificantlyinthepasttwomonths.

Post Budget Market reactionsThemoodamong investorswas jitteryaheadof thebudgetwithstockspricesbruisedbytheopeningcorrectionandinvestorsfurtherworriedthattheFinanceMinistermightroll-backsomeofthestimulusused to fight theslowdown.Thestockpricesmovedupwith theFinanceMinister’sspeechandsurgedfurtheroncetheGDPgrowthforthefiscalwasreiteratedbetween8.75%and9.25%andvariousmeasurestoimproveagriculturaloutputwereannounced.

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Banking & Finance Positive

Budget Proposals

– ` 6,000Crorestobeprovidedduring2011-12toenablepublicsectorbankstomaintainaminimumofTierICRARof8%.

– Existingschemeof interestsubventionof1%onhousing loansliberalizedfurtherbyextendingthesametohousingloansupto` 15 Lacs where cost of house does not exceed ` 25 Lacs.

– Toboostinfrastructuredevelopment,tax-freebondsof`30,000Croresproposed tobe issuedbyGovernmentundertakingsduring2011-12.

– Mutual Funds allowed to accept subscriptions from foreigninvestorswhomeetKYCnormsforequityschemes.CurrentlyonlyFIIsandsub-accountsregisteredwithSEBIareallowed.

Impact

– Theproposedcapital infusion inPSUbankstomaintainaTierICRARisaimedatfurtherstrengtheningtheircapitalstructureand fund credit growth.

– Foreign investors (inaddition to theFIIsand sub-accountsregisteredwithSEBI)cannow invest in IndianMutualFundstherebyallowingthese investorstoaccesstheexpertiseoftheIndianfundmanagers.Asaresult thesubscriberbasefor themutualfundindustrywill increaseandis likelytoleadtohigherassets under management.

Consumer Goods neutral

Budget Proposals

– Excisedutyexemptionson130itemswithdrawnandnowsubjecttominimumexcisedutyof1%.

– Settingupadditional15MegaFoodParksduring2011-12.

Impact

– Removalof130 itemsfromexcisedutyexemptionand levyingdutyof1%isexpectedtomarginallyincreasetheirprices.Someof the items which are going to be affected owing to this change areinstantfoodmixesandready-to-eatfoods.However,rise inthe taxslab isexpected toneutralise thenegative impactbysome extent.

SECTORALANALYSIS



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education Positive

Budget Proposals

– Theallocationforeducationhasbeenincreasedby24%overthecurrentyearto`52,057Croresfortheyear2011-12.

– TheexistingoperationalnormsofSarvaShikshaAbhiyanhavebeenrevised to implement theRightofChildren toFreeandCompulsoryEducationAct.Fortheyear2011-12,anallocationof `21,000Croreshasbeenmadewhich is40%higher than`15,000CroresallocatedintheBudgetfor2010-11.

– A revisedCentrallySponsoredScheme“VocationalisationofSecondaryEducation” is proposed tobe implemented from 2011-12toimprovetheemployabilityofyouth.

Impact

– The increasedallocationwillaidtheGovernment ineffectivelyimplementingtheRTEActandis indicativeoftheGovernment’scontinuedeffortstopromoteelementaryandhighereducationwithinthecountry.

– Therevised“VocationalisationofSecondaryEducation”schemeintroduced by theGovernment is a positive step towardsincreasingtheemployabilityoftheburgeoningyouthpopulationofthecountry.

Gems and Jewellery neutral

Budget Proposals

ConcessionalExcisedutyof1%withoutCENVATcreditfacilityisbeingimposedonthefollowinggoods,namely:–

– Articlesofjewellerymanufacturedorsoldunderabrandname.

– Brandedarticlesofgold,silver,platinum,palladium,rhodium,iridium,osmium,orruthenium.

– Excisedutyreducedonseriallynumberedgoldbars,otherthantolabars,startingfrom` 280 to ` 200 per 10 grams.

– Customs duty on specified gems and jewellerymachineryreducedfrom7.5%to5%.

Impact

– Marginalimpactofimpositionofexcisedutyonseriallynumberedgold bars.

– Thereductionofcustomsdutyonspecifiedgemsandjewellerymachinery is a step towards improvingG&Jmanufacturingactivity inIndia.



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Hospitals and Healthcare neutral

Budget Proposals

– ServiceTaxonall servicesprovidedbyhospitals (excludinggovernmenthospitals)whichhave25ormorebedswithacentralizedairconditioningfacilitywithanabatementof50%.

– Service Tax to be levied on all diagnostic tests with anabatementof50%.

– Plannedallocationforhealthcaresteppedupby20%to`26,760Crores.

Impact

– Thelevyofservicetaxwithregardtomedicalservicesrenderedbyhospitalhasbeenexpanded to include thenon-insurancepatients which were hitherto applicable to patients where paymentwasmadeeitherby insurancecompanyorbusinessentity.

– Furthermore,thescopeofservicetaxhasalsobeenexpandedtocoverallkindsofdiagnostic tests.However, thehospitalsare expected to pass on the incidence of tax to the recipient of service.

Oil and Gas Positive

Budget Proposals

– Basiccustomsdutyonpetroleumcoke isreducedfrom5%to2.5%.

– MATtobeleviedonunitsoperatinginSEZwithchangesinthetaxrateeffectivefromApril2012.

– GovernmentwillprovideadirectcashsubsidyonkeroseneandLPG toBPLpopulace& thesamedirect cashsubsidy isalsoproposed in case of LPG.

Impact

– Thedirectcashsubsidyonkerosenegiventobelow-the-poverty-linepopulacewouldsignificantly reduce theunder-recoveriesof theOilMarketingCompanies(OMCs).Subsidyonkeroseneaccounts foraround30-35%of theunder-recoveries for theOMCs.



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real estate neutral

Budget Proposals

– Interestsubventionof1%onhousing loansup to` 15 Lacs (from`10Lacs)wherethecostofthehousedoesnotexceed`25Lacs(upfrom` 20Lacs).Also,homeloanupto` 25 Lacs wouldqualifyasprioritysector lending,upfrom` 20 Lacs.

– ProvisionunderRuralHousingFund(RHF)enhancedto`3,000Croresfrom`2,000Crores.

– Tax-freebondstobe issuedbyHUDCOtothetuneof`5,000Crores.

– Investment-linkeddeductiontobusinessesdevelopingaffordablehousing.

Impact

– Interestsubventionaswellashigher limitofhomeloanunderpriority lending isexpected toboostdemand foraffordablehousing.

– Developerscateringtotheaffordablehousingsegmentthereforewillbebenefited.Increaseintaxslab,beingmarginal,maynothaveany impactonthesectorwhile increasedexcisedutyoncement, ifpassedontothedevelopers,would increasecostofconstruction.

Pharmaceuticals negative

Budget Proposals

– MATapplicableforSpecialEconomicZone(SEZ)developersandunitsoperatinginSEZ.

– Increaseinconcessionalrateofexcisedutyfrom4%to5%onallgoodsattractingsuchduty.

– Increase in theweighteddeductiononpayments forscientificresearchfrom175%to200%.

– Increaseinplanallocationforhealthcareby20%in2011-12to`26,760Crores.

Impact

– Increase in the rateofMATby0.5%and inclusionofunitsoperating in SEZ underMATwould negatively impact theCompaniesinSEZ.

– Increase in theconcessional rateofexciseduty from4%to5%willbeapplicable for formulationmanufacturers.However,



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the impactwouldbeneutralastheexcisedutyrateon inputsishighercomparedtothatforthefinishedproductresulting inaccumulationoftheCENVATcredit inthebooksof formulationCompanies.

– Increase inplanallocation forhealthby20%in2011-12willimprovehealthcareaccessinthecountrywhichisapositiveforthe sector.

Textiles negative

Budget Proposals

– Ready-madegarmentsandmade-upsof textilesarebroughtundermandatoryexcisedutyataunifiedrateof10%fromanoptionalexcisedutyregime.

– Creditoftaxpaidoninputs,capitalgoodsandserviceswouldbeavailabletomanufacturers.

– Provisionof`3,000Crores toNABARDwhichwould in turnbenefit15,000co-operativesocietiesand3,00,000handloomweavers.

– Reductionofbasiccustomsduty from5%to2.5%oncertaintextile intermediates.

Impact

– Imposingmandatoryexcisedutyof10%onbrandedgarmentsandmade-ups frombeinganoptional levy till nowwill putfurther pressure on margins unless manufacturers are able to pass on the cost to end users.

– Proposal of ` 3,000CrorestoNABARDisexpectedtoeasethefinancialburdenofhandloomweavers.

Metals and Mining neutral

Budget Proposals

– Exportdutiesonironorelumpsandfinesincreasedtoauniformrateof20%from15%and5%respectively.

– Basiccustomsdutyonferronickelreducedfrom5%to2.5%.

– Stainlesssteelscrapexemptfrombasiccustomsduty.

Impact

– Negative for iron oremining companies; positive for non-integratedsteelplayersasitwillreduceironoresourcingcosts.



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roads and Highways Positive

Budget Proposals– TheallocationduringthecurrentyeartoInfrastructuresector,

Roads&TransportSectorhasbeenproposedtobehikedby23%to `2,14,000Crores.

– Investment limit by FIIs in corporate bonds issued byinfrastructureCompaniesraisedtoUSD 25 bn from USD 20 bn.

– Creationofspecialvehiclesintheformofnotifiedinfrastructuredebt funds.

– ProposalforissuanceofTax-freebondstotalling` 10,000CroresbyNationalHighwaysAuthorityofIndiaintheyear2011-12.

Impact– Attractive option for foreign funds investment thereby

augmenting the funds accessible for overall infrastructureincluding,roadsandhighwayssector.

– The impetuson infrastructuredevelopmentshouldaid India’seconomicrecovery.

– Enhancedavailabilityofroadconstructionequipmentscoupledwithdutyexemptions inselectareas isexpectedtoacceleratethepaceofexecutionofhighwaysprojectsandalsomake itmoreattractiveforprivatesectorparticipation.

Steel neutral

Budget Proposals– Exportdutyonironorelumpsandfinesincreasedto20%from

earlier15%.

– CustomsdutyonStainlessSteelScrapexempted.

Impact– Enhancementofexportdutyon ironorefinesand lumpsfrom

the existing 15% to the proposed20% is in linewith thedemandsofdomesticsteelmanufacturingindustry.

– Theincreaseindutyaimsatdiscouragingtheminingcompaniesfromexportsof ironore,whichwillhelpconservethe ironorereserveswithinthecountry.

– The5% increase inexportduty isunlikely todiscourage theminerstoexport ironoreandtheriseinexportdutyis likelytobe passed on.

– Exemptionofcustomsdutyonstainlesssteelscrap is likelytobemarginallypositiveforthestainlesssteel manufacturers.

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singrodia goyal & co. booklet... · 2016-09-21 · 2010-11. • allocation for bharat nirman...

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