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Budget 2010: Tax relief but fuel prices to go up

Updated on Friday, February 26, 2010, 10:44 Print Email
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Zeebiz Bureau

New Delhi, Feb 26: The Union Budget 2010-11, presented by Finance Minister Pranab Mukherjee in the Lok Sabha on Friday, proposed a sizable tax relief for individuals, but hiked the excise and minimum alternate tax (MAT) as part of the partial stimulus rollback, besides imposing a Re 1 per litre increase on petrol and diesel duty.

With the economy expected to grow 8.5 percent in the next fiscal, the Finance Minister estimated a deficit of 5.5 percent for 2010-11, lower from the current estimated 6.9 percent this fiscal.

In his marathon 100-minute speech, Mukherjee sounded upbeat about the resilience of the country’s economy and said India has successfully “weathered” the global crisis.

Mukherjee said 46 percent of the plan allocation will be set aside for infrastructure, while hiking the outlays for rural and urban development, as also for education and healthcare. He also promised to implement the direct tax code from April next year, and assured a simplified foreign investment policy soon.

Income Tax Direct Tax Indirect Tax Fundamentals
Reforms Budget Estimates Infrastructure Agriculture
Inflation Social Schemes Other highlights Banking
National Security


Income Tax

  • Personal Income Tax slabs widened

  • Income up to Rs 1.6 lakh – NIL

  • Above Rs 1.6 lakh to 5 lakh -- 10%

  • Above Rs 5 lakh to 8 lakh -- 20%

  • Above Rs 8 lakh -- 30%

  • Deduction of Rs 20,000 in long term infrastructure bonds

  • Contribution under central scheme to be included for Health Insurance exemption

  • Income Tax Department ready with Saral-2 form for salaried tax-payers

  • 2,000 Income Tax Returns daily

  • Revamp needed of internal working system

  • One percent interest subsidy on home loan up to Rs 10 lakh March 2011

  • Weighted deduction on RD raised to 200% from 150%=
  • Professionals with Rs 15 lakh income need account audit

  • Interest on tax deduction, not paid, raised to 18%

  • Research and Development deduction hiked

  • Two more centres for tax filing

  • Income tax centres in Pune and Cochin -- Single window system to address grievances

  • Four more cities to get this system arrow

    Direct Taxes

  • Minimum Alternative Tax (MAT) hiked from 15% to 18%

  • Corporate Surcharge down from 10% to 7.5% and 7%

  • Service taxes unchanged

  • More services to be taxed arrow

    Indirect Taxes

  • Exemptions for two-star and above hotels anywhere in the country

  • Excise duty hiked on tobacco

  • Partial excise on cement, cars

  • Central Excise Duty to be hiked by Re 1/litre on petro-products

  • 2% interest subvention for some export companies extended by one year

  • Textiles, gems and jewellery to benefit from interest subvention extension

  • Customs duty 5% on machinery, instruments and appliances for solar thermal plants, exempt from central excise duty

  • Peak Customs Duty unchanged at 10%

  • Partial roll back of central excise cut

  • To raise excise on petro-products to 10% from 8%

  • Large cars, SUVs, MUVs’ excise rate at 22%, up by 2%

  • Restore 5% basic customs duty on crude petroleum

  • Excise on cigars, cigarettes to go up

  • Increased excise duty on all non-smoking tobacco

  • To raise central excise on non-petro products to 10% from 8%

  • Some rollback of excise on cement, cement products

  • Cereals, pulses transported via road exempted from service tax

  • Central excise on LED lights, CFLs cut to 4% from 8%

  • Imposed 4% excise duty on electric cars, vehicles

  • Uniform, concessional 5% duty on all medical appliances

  • Special duty exemption on mobile phone accessories extended

  • Customs duty rationalized on music, gaming, software

  • Transfer of intellectual property right to attract service tax

  • Import duty on gold, platinum, silver to go up arrow


  • India has weathered crisis well

  • Economy in better position now than a year ago, but challenges remain

  • Three challenges and medium-term perspective that was outlined last year

  • First challenge: Need to revert to high GDP of 9% and then breach 10% barrier

  • Second challenge: Harness economic growth to make it more inclusive. Thrust of Infrastructure in rural areas, education and health

  • Third challenge: Public delivery mechanism needs to improve through reforms of structures and institutions and mechanisms

  • Deceleration in Q2 FY 09 slowed our growth to 6.9% from over 9% in past three years

  • Economy stabilised and GDP was 6.8%

  • Optimistic about Q3 and Q4

  • Renewed growth in manufacturing; December growth was 18.5%, highest in past two decades

  • FY 10 economy stabilized in Q1 with 6.1%, Strong rebound in Q2 at 7.9%

  • We are averaging growth of 7.2% as of now but can be higher once final figures of Q3 and Q4

  • Signs of revival in exports in Nov-Dec, Jan encouraging too

  • Fiscal deficit at 6.9% at FY 10

  • Tax collections in FY 10 at Rs 746,651 crore

  • Non-tax revenue in FY 10 at Rs 148,118 cr

  • FDI inflows April-December $2,090 crore

  • Direct tax proposals revenue loss Rs 26000 crore

  • FY10 food subsidy seen at Rs 56,000 crore

  • FY10 petroleum subsidy seen at Rs 15000 crore

  • FY10 fertiliser subsidy seen at Rs 53000 crore

  • FY10 interest payment seen at Rs 2.12 lakh crore

  • FY10 total subsidies Rs 1.31 lakh crore arrow

    Budget Estimates

  • 10% GDP growth can be achieved in not too distant future

  • To cap combined Centre-State debt at 68% of GDP by 2014-15

  • Total spending FY11 Rs 11.08 lakh crore

  • FY11 plan spend Rs 3.73 lakh crore

  • FY11 non-plan expenditure at Rs7.35 lakh crore

  • Non-plan expenditure increase at 6%

  • Fiscal deficit projections at 4.8% and 4.1% for FY 12 and FY 13

  • Fiscal deficit projection at 5.5% for FY 11

  • FY11 fiscal deficit Rs 381,408 crore

  • Net tax revenue estimate as per 11 Finance Commission recommendations

  • Divestment proceeds in FY11 seen over Rs 40,000 crore, up from 25,000 crore in FY10

  • FY11 power sector allocation at Rs 5130 core

  • FY11 renewable energy plan outlay up 61% at Rs 1,000 crore

  • Ganga mission allocation doubled to Rs 500 crore in FY 11

  • Rs 7,300 crore for backward regions in FY11

  • Urban development allocated Rs 5400 crore in FY11

  • Allocated Rs 2400 crore for micro, SMEs in FY11

  • FY11 net market borrowing pegged at Rs 3.45 lakh crore

  • Customs, excise net revenue gain Rs 43,500 crore in FY11

  • Central excise on latex, rubber thread cut to 4% from 8%

  • To bring more services under the service tax net

  • Cut excise duty on water heaters, purifier to 4%

  • FY11 indirect tax net revenue gain seen Rs 46,500 crore

  • FY11 net revenue gain from tax proposals at Rs 20,500 crore

  • FY11 food subsidy seen at Rs 55,600 crore

  • FY11 petroleum subsidy seen at Rs 3,100 crore

  • FY11 fertiliser subsidy seen at Rs 50,000 crore

  • FY11 total subsidies Rs.1.162 lakh crore

  • Revenue loss from direct taxes to be Rs 26,000 crore

  • Corporate tax mop up seen at Rs 3.01 lakh crore in FY11

  • Income tax mop up seen at Rs 1.28 lakh crore in FY11

  • Customs duty mop up seen at Rs 1.15 lakh crore in FY11

  • Excise duty mop up seen at Rs 1.32 lakh crore in FY11

  • Service tax mop up seen at Rs 68000 crore in FY11 arrow


  • Major concern has been double digit food inflation

  • Fear of food inflation spreading to other items as well

  • Consulting states to bring down inflation

  • Consulting state governments to control food prices

  • Supply-demand imbalance need to be managed

  • Expect inflation to come down in next few months arrow


  • New steps to simplify FDI regime

  • Effective management of public expenditure is also part of fiscal consolidation procedure

  • Companies Bill introduced, will address regulation in corporate sector

  • Interest subversion of 2% extended by one year

  • Will mull Parikh panel recommendations on fuel prices

  • Need to open retail trade, will bridge wholesale and retail price

  • Financial Sector Reforms Commission to be set up

  • ARC recommendations are being implemented

  • Need to review public spendingarrow


  • Southwest monsoon undermined kharif crop

  • Need for better management of food security in the country

  • Four-pronged strategy on agriculture

  • Extend Green Revolution to eastern side of the country

  • Rs 400 cr for this initiative

  • 60,000 pulse and oils villages to enhance productivity

  • Rs 200 cr for the project

  • Rs 200 cr for climate resilience agriculture

  • To increase credit to farmers; target raised to Rs 375,000 cr

  • Five more food parks to be set up

  • Banks taking pro-active role to provide loans to farmers

  • Rs 375,000 cr credit by banks to farmers raised from Rs 3,25,000 cr

  • Repayment period for farm loans extended by 6 months

  • FY 11 bank credit to farm sector at Rs 3,750 crore

  • Subvention for timely farm loans up to 2% from 1%

  • Those who repay loans on time can get fresh loans at 5%

  • Direct transfer of subsidy to farmer on fertilizers

  • Fertiliser subsidy to be reduced

  • Nutrient-based fertilizer policy effective from this April

  • Proposed Rs 300 crore in FY11 for Rashtriya Krishi Vikas Yojana

  • Concessional customs duty of 5% on agri machines arrow


  • To maintain thrust in upgrading infrastructure

  • 20 km/day of national highway to be built

  • 13% increase in road allocation to Rs 19,894 cr

  • IIFCL to be set up to provide finance to infra projects

  • Infrastructure for food processing: 5 more projects

  • Doubled plan allocation to power sector to Rs 5200 cr

  • Rs 500 cr for power projects in Ladakh

  • Coal regulatory authority to be set up

  • Rs 1.73 lakh crore for infrastructure development

  • 46 percent of total plan expenditure for infra

  • To loan Rs 16752 crore for railway development projects

  • Mega power plant policy modified to cut production costs

  • More than doubled allocation to power sector

  • To set up 20,000 MW of solar power by 2022

  • To develop new port at Sagar Island in West Bengal

  • 25% of plan allocation for rural infrastructure

  • Monorail projects get special imports statusarrow

    Social Schemes

  • Rs 40100 crore for NREGA in FY11

  • Shaakshar Bharat Mission to make 7 crore adults literate was launched

  • Rs 4,500 cr for Ministry of Social Justice

  • To support the program for target groups like SCs and STs

  • Indian Fine Language Research and Development Centre to be set up

  • Minority affairs allocation increased to Rs 2600 crore

  • 15% target lending for minorities achieved

  • Banks for villages with population over 2,000

  • Health insurance for NREGA beneficiaries

  • Rs 1,200 crore for drought-hit Bundelkahnd

  • 30 lakh people to be helped in textiles

  • Women and Child Development Ministry to get 50% more funds vis-à-vis last year

  • Mission for empowerment of women

  • Rs 4,500 crore for Social Justice and Empowerment Ministry

  • Rs 1,000 crore for workers in unorganised sector

  • Education allocation at Rs 31,000 crore

  • Will spend divestment earnings on social sectors

  • Spending on social sector upped to Rs 1.37 lakh crore

  • Annual health survey for all districts in 2010

  • To allocate Rs 22300 crore for the Ministry of Health in FY11

  • Bharat Nirman allocation at Rs 48,000 crore

  • Indira Aawas Yojana FY11 allocation at Rs 10,000 crore

  • Rajiv Awaas Yojana allocated Rs 1,270 crore in FY11

  • National security fund for unorganized sector workers allocated Rs 1000 crore in FY11 arrow

    National Security

  • Defence allocation Rs 147,344 crore for FY 11

  • Defence capex Rs 60,000 crore in FY 11

  • Integrated plan for 33 Naxal-hit districts’ growth

  • To recruit 2,000 youths as constables in CRPF in 2010

  • Rs 430 crore more for modernization of the police force

  • Additional Rs 2284 crore for strengthening border management

  • 100,000 dwellings for central paramilitary forces personnelarrow


  • FY11 capital for public sector banks at Rs 16,500 crore

  • Rs 16,500 crore to be infused into PSU banks in 2010-11

  • RBI considering giving new banking licenses

  • Capital for Regional Rural Banks (RRBs)
    Other Highlights

  • Acted on 11th Finance Commission

  • To exit stimulus in calibrated month

  • Need to review stimulus and move towards fiscal consolidation in 5 years

  • Need to make growth broad-based and demand-supply balance better managed

  • In six months a status paper on detailed analysis of public debt followed by annual reports

  • Need to strengthen domestic macroeconomic environment

  • Need to review public spending

  • Accepted the recommendations of 13th Finance Commission

  • Listing of PSUs is a priority

  • Both ownership and control has been identified as important

  • New financial stability apex council to be set up

  • Have adhered to fiscal roadmap

  • We have not issued fertilizer or oil bonds

  • Private investment can sustain 9% growth

  • Focus on financial literacy and inclusion

  • First set of UID numbers in the coming year

  • Rs 1900 cr for UIDA

  • Technology advisory group to be set up under UIDA chief Nandan Nilekani to expedite technological roll out in the government

  • New symbol for Indian rupee in the offing

  • Committed to SEZ to improve employment and growth

  • Better rural infra must for better economic growth

  • Had to give fiscal expansion and liberal monetary support in FY10

  • India among few nations to implement broad-based stimulus

  • India among first two nations to have counter-cyclical steps

  • Focus to cut waste of foodgrain in storage, supply chain

  • To relax norms for shops, built-up area in housing projects

  • Budget belongs to Aam aadmi, farmers, entrepreneur

  • Will implement direct tax code from April 1, 2011

  • Deadline for repayment of loan extended by six month to June 2010

  • Finalising the structure of GST, planning to implement it by April 2011

  • External borrowing allowed for cold storages

  • System to tackle tax evasion and get black money abroadarrow
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