DIRECT TAXES
More relief for individual income taxpayers. Those falling under the tax slab of up to Rs 1.6 lakh now do not have to pay any tax. From Rs 1.6 lakh to Rs 5 lakh the tax rate is at 10 per cent; Rs 5 lakh to Rs 8 lakh at 20 per cent; and income above Rs 8 lakh will be taxed at 30 per cent.
To promote savings, deduction of an additional amount of Rs 20,000 has been allowed, over and above the existing limit of Rs 1 lakh on tax savings, for investment in long-term infrastructure bonds notified by the Central government.
Apart from contributions to health insurance schemes currently allowed as a deduction under the Income-tax Act, contributions to the Central Government Health Scheme will also be allowed as a deduction.
The current surcharge of 10 per cent on domestic companies has been reduced to 7.5 per cent. Minimum Alternate Tax (MAT) has been increased from 15 per cent to 18 per cent of book profits.
To encourage R&D, the weighted deduction on expenditure incurred on in-house R&D has been enhanced from 150 per cent to 200 per cent.
The benefit of investment linked deduction under the Act has been extended to new hotels of two-star category and above, to boost investment in the tourism sector.
Pending projects will be permitted to be completed within a period of five years instead of four years, for claiming a deduction of their profits, as a one-time interim relief to the housing and real estate sector.
Limits for turnover over which accounts need to be audited have been enhanced to Rs 60 lakh for businesses and to Rs 15 lakh for professions.
Limit of turnover for the purpose of presumptive taxation of small businesses has been enhanced to Rs 60 lakh. INDIRECT TAXES
# Rate reduction in central excise duties has been partially rolled back and the standard rate on all non-petroleum products enhanced from 8 per cent to 10 per cent ad valorem.
# Excise duty on large cars, multi-utility vehicles and sports-utility vehicles has been increased from 20 per cent to 22 per cent.
# The basic duty of 5 per cent on crude petroleum, 7.5 per cent on diesel and petrol, and 10 per cent on other refined products has been restored. Central excise duty on petrol and diesel has been enhanced by Re 1 per litre each.
# Excise duty on all non-smoking tobacco such as scented tobacco, snuff, chewing tobacco etc has been enhanced.
# The service tax rate has been retained at 10 per cent to pave the way for GST. But certain services, hitherto untaxed, are being brought within its purview which include health checkups, services by electricity exchanges, services of sponsorship of sports, services of promoting of a "brand" of goods, services and events amongst others. However accredited news agencies which provide news feed online and meet certain criteria have been exempted from service tax.
# Refrigeration units required for the manufacture of refrigerated vans or trucks will be fully exempt from customs duty. Specified equipment for preservation, storage and processing of agriculture and related sectors will be exempt from Central excise.
# To build the corpus of a National Clean Energy Fund, a clean energy cess on coal produced in India at a nominal rate of Rs 50 per tonne will be levied. This cess will also apply to imported coal.
# Central excise on LED lights has been reduced from 8 per cent to 4 per cent, at par with Compact Fluorescent Lamps.
INDIRECT TAXES
A nominal duty of 4 per cent has been imposed on electrical cars and vehicles.
Exemptions from basic, CVD and special additional duties have been extended to mobile phone accessories such as parts of battery chargers and hands-free headphones. Exemption from special additional duty will be valid until March 31, 2011.
All medical equipment will be subject to uniform, concessional basic duty of 5 per cent and CVD of 4 per cent with full exemption from special additional duty.
Customs duty on gold and platinum has been raised from Rs 200 per 10 grams to Rs 300 per 10 grams. Duty on silver goes up from Rs 1,000 per kg to Rs 1,500 per kg.
Monorail projects for urban transport will be granted project import status and be charged a concessional basic duty of 5 per cent.
