Union Budget (2009-10)

Finance Minister Pranab Mukherjee presented the Union Budget for 2009-10 in the Parliament on July 6, 2009. In a budget to please the middle class, farmers and those in rural areas, the budget hiked the personal income tax exemption limit and abolished the 10 per cent IT surcharge, did away with
the Fringe Benefit Tax but left corporate taxes untouched.

Battling effects of the global slow down and keeping in line with the Congress' poll promises, the first budget after the elections provides for cheaper food for poor, a guaranteed minimum Rs 100 a day for rural employment, massive provisions for infrastructure, farm and social sector schemes for raising the economic growth to
at least nine per cent.

The budget raised the personcal income tax exemption by Rs 10,000 for women and others, besides Rs 15,000 for senior citizens above 65 years and abolished Fringe Benefit Tax that would help employers in giving more benefits to employees.

The budget, however, raised the Minimum Alternate Tax from 10 per cent to 15 per cent while leaving the Securities Transaction Tax largely untouched to the chagrin of industry and investors.

However, the budget did away with the Commodities Transaction Tax introduced in 2008-09 budget though it was yet to be notified.

On reviving the economy, Mukherjee said that Indian Infrastructure Finance Corporation Ltd (IIFCL) along with banks would be in position to finance up to Rs one lakh crore for the infrastructure project.

The budget announced a slew of tax sops, including an additional Rs. 10,000 personal income tax exemption and scrapping of 10 per cent surcharge, while announcing cheaper loans to farmers and incentives for export and infrastructure to attain 9 per cent growth.

Beginning with incentives for individual tax payers that included an additional exemption of Rs. 15,000 for senior citizens and Rs. 10,000 for women and others, the Finance Minister also abolished Fringe Benefit Tax that could ease pressure on employers in giving benefits to the workers, but there was no change in corporate tax as also the rates for customs, excise and service tax.

The exemption limit will now be Rs 240,000 for senior citizens, Rs 190,000 for women and Rs 160,000 for others.

Highlights of Union Budget:

* Govt plans to bring back economy to high growth of 9 per cent

* GDP growth dipped to 6.7 per cent in financial year '09

* FM to make pre-Budget talks with State FMs annual affair

* Fiscal deficit up from 2.7 per cent to 6.8 per cent of the Gross Domestic Product (GDP)

* Return to fiscal prudence at the earliest

* 'Aam admi' is under focus of all programmes and schemes

* IT exemption limit raised; Rs 50,000 for senior citizens

* Limit raised by Rs 10,000 for taxpayers, including women

* 10 per cent surcharge on personal income tax scrapped

* Fringe Benefit Tax abolished

* No change in corporate tax

* Defence gets Rs 1,41,703 crore, up 34 per cent

* Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 crore

* IIFCL to evolve mechanism for increased funding of infrastructure

* IIFCL to re-finance commercial bank loans up to 60 per cent in critical projects through PPP to tune of Rs 1,00,000 crore

* Allocations for highways being stepped up by 23 per cent

* Funds for housing, amenities for urban poor up Rs 3,973 crore

* Funds for JN Urban Renewal Mission up 87 per cent to Rs 12,887 crore

* Assistance for storm-water drainage project up by Rs 300 crore

* Farm credit target up at Rs 3,25,000 crore from Rs 2,87,000 crore

* Interest rates incentive to farmers to repay loans on time

* Additional Rs 1,000 crore for accelerated irrigation scheme

* Export Credit Guarantee scheme extended till March 2010

* 2 per cent Interest Subvention (IS) scheme extended till March 2010

* IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.

* Customs, excise and service tax base rates unchanged

* For Indira Awas Yojana, allocation increased 63 per cent

* IT returns to be made simpler

* 8 missions being launched under Plan on climate change

* Allocation for market development assistance scheme up 148 per cent

* Allocation for Rural Health Mission raised by Rs 257 crore above interim budget

* Rs 500 crore for rehabilitation of Sri Lankan Tamils

* Rs 1,000 crore for infrastructure in cyclone-hit area in WB

* Total expenditure crosses Rs 10 lakh crore for first time

* Share of direct taxes in revenue increased to 56 per cent in financial year 2009.