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DECODING UNION BUDGET ANALYSIS 2010-2011 BY C.A VIJAY VORA CHARTERED ACCOUNTANT

DECODING UNION BUDGET ANALYSIS 2010-2011 BY C.A VIJAY VORA CHARTERED ACCOUNTANT. BASICS OF BUDGET.

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DECODING UNION BUDGET ANALYSIS 2010-2011 BY C.A VIJAY VORA CHARTERED ACCOUNTANT

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  1. DECODING UNION BUDGET ANALYSIS2010-2011BYC.A VIJAY VORACHARTERED ACCOUNTANT

  2. BASICS OF BUDGET The Union budget is country’s Annual Financial Statement of Receipts and Payments similar to individual’s Cashflow.It contains expected Revenue ( to be received) and expected Expenditure ( to be met) in the coming Financial Year. • Who Prepares? • When the Union Budget is presented? • What is Budget Process?

  3. What is Budget Process? • Ministry of Finance is responsible for Budget preparations. • Draft Budget based on input • Approved by Finance Ministry in consultation with Prime Minister. • Final Budget is then presented in the Parliament. • A discussion is made in parliament. • FM responds to all issues based on discussion, revision is made in Budget • Once approved 2 Bills are prepared and introduced in Lok Sabha. Appropriation Bill ( Final approval of funds be given to each ministry ) and Finance Bill (Tax proposals) Union Budget is approved then Act is made.

  4. ROAD TO PROGRESS ?

  5. DECADE OF VOLATILITY ( In Capital Market )

  6. BUDGET ESTIMATE FISCAL DEFICIT CENTRAL VALUE ADDED TAX (CENVAT) DIRECT TAX INDIRECT TAX DIRECT TAX CODES ( DTC ) SURCHARGE & CESS SUBSIDY / GRANT GOODS & SERVICES TAX SERVICE TAX AD VALOREM & SPECIFIC DUTY BUDGET BIOPSYBasically many terms are used in the Budget which can be summarized as under

  7. CONSTRAINTS WITH FINANCE MINISTER • PRICE RISE / INFLATION • GLOBAL RECESSION • INTERNAL SECURITY • INVESTMENT CLIMATE FOR FII • INTEREST RATES – DOMESTIC • FOREIGN CURRENCY MOVEMENT • STRENGTHENING RUPEE / DOLLARS • CONTROLLING FISCAL DEFICIT • PSU – DISINVESTMENT – ASAP • STIMULUS PACKAGE • 13TH FINANCE COMMISSION 2010 - 2015

  8. AAM ADMI BACHAT

  9. NEW TAX CONCESSIONS: Tax Rate • Up to Rs 160,000 Nil • Rs.160,001 to Rs.500,000 10% • Rs. 500,000 to Rs.800,000 20% • Above Rs.800,001 30%

  10. TAX DEDUCTION AT SOURCE* made EASY *

  11. SALIENT BULLETS FROM BUDGET • DIRECT TAXATION : • More Relief to individual Tax Payers under Income Tax slab. • Additional deduction of Rs. 20,000 over Rs 100,000 limit on TAX Savings for long –term investment in Infrastructure Bonds – notified by Central Govt. • Minimum Alternate Tax ( MAT ) increased from 15% to 18% of book profit. • Tax Deduction at Source enlarged. • Surcharge on Domestic Companies reduced from 10% to 7.5 %

  12. 6.Expenditure on inhouse Research and Development Expenditure given weighted deduction from 150 % to 200%. • Investment linked deduction extended to New Hotels ( 2 Star) to increase investment in Tourism. • Limit of Turnover for accounts needs to be audited increased from Rs.40 Lacs to Rs.60 Lacs, for Business and from Rs.10 Lacs to Rs.15 Lacs for Professionals. • Direct Tax Code (DTC) to be introduced by April 2011. • New simplified SARAL – 2 Form to be introduced.

  13. INDIRECT TAXATION: • Goods and Services Tax to be introduced from April, 2011 ( extended limit) – Tax Rate @ 10% !! • Excise duty – on all products ( other than petroleum and diesel products ) increased from 8 % to 10%. Duty on cement increased. • Central Excise duty on petrol and diesel increased by Re.1. However Basic duty structure also changed. • Excise duty on Tobacco & related products enhanced. • Service Tax Rate remained unchanged @ 10%. However new 8 services included in list such as transport of goods through railway, maintainance of medical reports of employees, health check up and health services.

  14. GOLD / SILVER – duty increased – Prices to go up. • Giving GIFT after 1.6.2010 is Taxable • UNIQUE IDENTITY CARD (UIC)- A project headed by Former Infosys chief Mr. Nandan Nilekani- allocated Rs.1900 cr. For this project (Technology and system relating to IT for Tax Information, Pension Scheme, Treasury Management, Expenditure Information Net Work, Goods & Service Tax etc.)

  15. COMES FROM: 23% Corporate Tax 9% Income Tax 9% Customs Duties 10% Excise Duties 6% Service Tax 29% Borrowings and others 14% Non- Tax Revenue & Debt Capital Receipts. 100 TOTAL GOES TO: 19% Interest Payment 7% Plan to State 11% Defense 9% Subsidies 16% State Share of duties / Taxes 17% Others. (non-plan) 21% Central Plan 100 TOTAL BUDGET EQUATION RUPEE

  16. OTHER ISSUES IN BUDGET • RBI considering issue of additional Banking Licensing to Private Companies and NBFC having population of 2000. • A Unique Identity Symbol would be provided to Indian Rupee in line with US dollar, Japanese yen, British pound sterling, Euro, etc. • FM has imposed duties worth Rs.46,500 cr. and concessions / benefits worth Rs. 26,500 cr. • Pvt. Ltd. Companies to get converted into LLP. • FDI / FII /NRI investment criteria and Govt. Policy.

  17. THANKING YOU ALL Mr. VIJAY VORA (C.A) E-mail: vijayvora2@rediffmail.com

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