| Proposal |
Implication |
Impact |
| Personal Tax |
Exemption threshold for personal Income Tax raised from: Rs. 1,60,000 to Rs. 1,80,000 for general male assesses
Senior citizens: Reduction in qualifying age to 60 years from 65; exemption limit at Rs. 2.5 lakh
New tax slab for senior citizens above 80 years; exemption limit at Rs. 5 lakh.
|
Tax relief up to Rs. 2,060 for low and middle income groups.
Relief up to Rs. 26,780 for rich senior citizens above 80 years of age.
|
Marginally positive |
| Tax deduction for investment in infrastructure bonds up to Rs. 20,000 extended for one more year. |
Will help in Savings and raising funds for the growth of infrastructure.
|
Positive |
| Corporate Tax |
| Current surcharge of 7.5% on domestic companies reduced to 5% and in case of foreign companies from 2.5% to 2.0%. |
Would marginally reduce the tax burden on corporate.
|
Positive |
Minimum Alternate Tax (MAT) rate up from 18% to 18.5%.
Developers of Special Economic Zones and units operating in SEZs to come under MAT. |
Would not have a significant impact on auto industry. |
Marginally negative |
Lower rate of 15% on dividends received by an Indian company from its foreign subsidiary.
Expenditure in relation to such income is not allowed to be deducted. |
Will help bring in funds to India.
|
Marginally positive |
| Customs Duty |
Duty rates by and large remain unchanged
Full exemption from BCD and SAD has been provided and concessional CVD of 5% is proposed on specified parts of the Hybrid Vehicles, namely, battery pack, battery chargers, AC/DC electric motors and motor controllers (Earlier the parts were chargeable to 10% BCD).
Concessional import duty is proposed on LED's used in manufacture of LED lights and fixtures.
|
Will help promote development of Alternate Energy Driven Vehicles. |
Positive |
| Custom duty on crude oil unchanged at 5 per cent. |
Rising fuel prices should have been checked through adjustment in duty rates. |
Neutral |
| A definition for "Completely Knocked Down (CKD) unit" of a vehicle including two-wheelers, eligible for lower BCD of 10%, is being inserted for clarity. The definition now specifically excludes units containing a pre-assembled engine or gearbox or transmission mechanism or a chassis.
|
Will adversly impact some manufacturers of high end cars. |
Marginally negative |
| Excise Duty |
| Standard rate of Central Excise Duty retained at 10 per cent. |
There were apprehensions of rollback of stimulus measures. |
Positive |
Excise duty is reduced to 5% from 10% on kits for conversion of fossil fuel vehicles to hybrid vehicles (including parts of such kits).
Concessional rate of duty @ 10% proposed for Hydrogen Vehicles based on fuel cell technology. |
The concessions intend to give a further boost to environment friendly vehicles. |
Positive |
Concessional rate of excise duty @10% extended to factory built ambulances.
Refund of the excise duty paid in excess of 10% in case of vehicles subsequently retrofitted & registered as ambulances to continue as earlier. |
Avoids the hassle of complicated refund procedure in case of factory built ambulances. |
Positive |
| Taxi Refund Scheme is being extended to include vehicles carrying 13 persons including the driver and concessional excise duty is being rationalized to provide refund of 20% of the excise duty paid on vehicles. |
Refund scheme extended to cover vehicles carrying 8 to 13 persons.
As against earlier 10% concessional duty, 20% of the duty paid is proposed to be refunded. |
Generally positive, but negatively impacts bigger cars attracting excise duty of 22% |
| Service Tax |
| No change in the existing service tax rate of 10%. |
|
Positive |
The scope of Authorised Service Station expanded to:
|
| i) |
Include service provided by any person (including independent garages). |
| ii) |
Cover all motor vehicles other than those meant for goods carriage and 3-wheeler autorickshaws; and |
| iii) |
Also cover the services of decoration and similar services along with the services already covered. |
|
Provides level playing field to authorised service stations vis-à-vis independent garages.
Brings into the ambit of Service Tax, service/repair of buses as well. |
Marginally positive |
Point of Taxation Rules, 2011 brought in for identifying the point of taxation for levying Service tax.
The time of provision of service would be earliest of the following:
|
| i) |
Date on which service is provided or to be provided; |
| ii) |
Date of invoice; and iii) Date of payment. |
|
Not a substantive change.
|
Neutral |
| General Proposals |
National Mission for Hybrid and Electric Vehicles to be launched for promotion of electric and hybrid mobility
Additional funding of Rs. 10,000 crore to the National Highway Authority of India (NHAI) for development of highways by way of tax free bonds |
|
Positive |
| Higher allocation for capital expenditure in defence sector. |
Would help–
|
| ▪ |
Increase talent pool & capacity building; |
| |
| ▪ |
Increase R&D capability and competitiveness of Indian auto industry; |
| |
| ▪ |
Prevention of pilferage and adulteration of kerosene with diesel/petrol; |
| |
| ▪ |
Boost demand for tractors and motor vehicles; and |
| |
| ▪ |
Promote development of AED vehicles. |
|
Positive |
| Higher agricultural credit support to farmers. |
| Endeavour to come up with comprehensive policy to be used by the Centre and State Government for developing Public-Private Partnerships (PPP). |
| National Manufacturing Policy to bring down compliance burden on industry through self regulation is proposed to be rolled out within three months. |
| Vocationalisation of Secondary Education' to be implemented to improve the employability of youth. |
| Setting up of Innovation Councils in each state in conjunction with the National Innovation Council. |
| Manufacturing sector growth to account for 20% of GDP in next 10 years; up from 15% now. |
| Additional Rs. 500 crore funding towards the National Skill Development Council (NSDC). |
| Direct cash transfer of subsidy for kerosene, LPG and fertilisers to be phased in. |
| Infrastructure |
| Rs. 2,14,000 crore allocated for infrastructure - 23.3% higher than 201 0-11. |
Higher allocation for infrastructure development augurs well or auto industry
|
Positive |
| Increase in Fll limit for investments in corporate bonds of infrastructure companies. Further, Flls permitted to invest in unlisted bonds with minimum lock-in period of three years. |
| Tax free bonds of Rs. 30,000 crore to be issued for developing Railways, roads, ports and housing. |
| Duty concessions for expansion of ultra mega power projects. |
| Financial assistance to be provided for speedy implementation of the ongoing Metro projects of Bengaluru, Kolkata and Chennai. Delhi Metro Phase-Ill and Mumbai Metro Line III are also proposed to be taken up in 2011-12. |
| Tax incentives for storage capacity and cold chains. |
| Roadmap for Fiscal Consolidation |
| Fiscal Deficit for 201 1-1 2, 2012-13 and 2013-14 pegged at 4.6%, 4.1% and 3.5 % respectively. |
Fiscal discipline is essential for sustained growth and containing inflation.
|
Positive |
| Budget Overall |
Increased outlays for infrastructure, rural and social sectors is expected to translate into the growth of auto market.
|
Positive |
