New Delhi, Feb 28: Finance Minister P Chidambaram left out the personal and corporate taxes untouched even as he rolled out Union Budget 2006-07 with the aim of achieving 10% growth. The economy is already on the accelerated path with a robust growth rate of 8.1% GDP. However, some new services have been brought under the tax net.
Pro-common man budget: PM
Budget for growth: PC
Budget highlights include:
Direct Taxes
No change in rate personal income tax
No new direct tax imposed
1/6 criteria for filing income tax returns abolished
No change in corporate tax
Minimum Alternate Tax increased from 7.5% to 10%
MAT credit period increased to 7 years
Rate of Securities Transaction tax (STT) rate increased by 25%
Cash Withdrawal Tax to continue
Bank FDs of over 5 years brought under tax exemption under section 80C of IT Act
10,000 rupee ceiling on pension contribution removed
Open, close-end equity MFs on par for div distribution tax
PAN needed for more transactions
To continue with cash withdrawal tax
Hopes debate on FBT ends; FBT is justified
Announce changes in computation of fringe benefit tax
Lauds cash withdrawal tax role in curbing money laundering
Retirement contribution cap of 100,000 rupees for FBT
To issue statement of revenue foregone
Include LPG under declared goods for CST
States taxing LPG at high rates
Direct tax proposals to yield 40 bn rupees more FY-07
Fringe Benefit Tax
FBT justified, but changes to be brought in computation
Value benefit on tour and travel cut to 5% from 20%
Value the benefit in the form of hospitality and use of hotel boarding and lodging facilities in the case of airlines companies and shipping industry at 5% instead of 20%
Expenses on free sample of medicines and of medical equipment distributed to doctors excluded
Brand Endorsement excluded
Announce changes in computation of fringe benefit tax
Superannuation in excess of Rs 1 lakh per year per employee to attract FBT
Economy
Growth is antidote to poverty
FM attributes success to CMP and vision of PM
FY05 GDP growth was 7.5% with manufacturing growing at 8.1%
GDP to grow at 8.1% in 2006-07
Govt determined to achieve 10% growth rate
Gross saving up at 21.9%
Fiscal
Gross capital formation at 30% in FY-05
Non food credit growing at 25%
Investment rate up from 25.3% in FY-03 to 30.1% in FY-05
Manufacturing at 9.4% in FY-07
Agriculture bounced back at 2.3%
Rs 1,72,700 crore budget support for plan, up 20.4% in FY-07
Support to Central Plan at 1,31,285 crore
Fiscal deficit at 4.1% VS 4.3%; to be further lowered to 3.8%
FY06 Revenue deficit revised to 2.6 % Vs 2.7%
Gross fiscal deficit lower than gross budgetary support plan
Non plan expenditure at Rs 391263 crore
Total expenditure for FY-07 pegged at Rs 563900 crore
Increased allocation for North-East at Rs 12041 crore
Outcome Budget to be presented on March 17
Provide Rs 16901 crore equity support to Central PSUs
Public sector outlay at Rs 1.23 lakh crore
Rs 10000 crore corpus for RIDF-XII in FY-07
Separate window for rural roads under RIDF
To unwind special securities by converting to SLR papers
Rs 89000 crore for defence up from Rs 83000 crore
VAT a resounding success
Next stage of reforms depends on all states implementing VAT
To provide Rs 3000 crore as VAT compensation to states
States revenue share up at Rs 94400 crore for FY-07
Gross Tax : GDP ratio increased to 10.5% Vs 9.8% year ago, will increase to 11.2% in FY-07
Calamities and drought – govt provided interim relief . Govt assures money for further relief and rehabilitation
Agriculture
Food grain output up at 209.5 mt up 5 mn tonnes over last year
Farm credit increased to Rs 1,75,000 crore in FY-07
Special sops for farms
Banks asked to add 50 lakh more farmers to credit portfolio
Interest subsidy of 2% for farm loans taken in FY-06
To provide Rs 1700 crore for farmers relief
Farmers to receive short-term credit at 7% with an upper limit of Rs 3 lakh w.e.f. Kharif 2006-07
New NABARD credit lines for self help groups
Central Institute of Horticulture to be set up in Nagaland
Food Processing to be priority sector for bank credit
NABARD to set up Rs 1000 crore centre for food processing
Irrigation outlay increased to Rs 7121 crore with Rs 2350 grant from Centre
Industry
All sectors improve performance barring mining
Special purpose tea fund formed with corpus of Rs 100 crore in 2005-06
National Fisheries Board to be constituted soon
Rs 535 crore in FY-07 for textile upgradation scheme
Rs 189 crore for textile parks
Jute Technology Mission to be set up
National Jute Board to be set up
Govt proposes Handlooom Mark
Provision for Handloom sector increased to Rs 241 crore
To develop 3 investment regions for oil sector in FY-07
180 SSI items to be de-reserved
To recognize small, medium enterprises in services sector
For cut in SSI credit guarantee fee to 1.5% Vs 2.5%
Infrastructure
Highway schemes progressing at 4.4 km/day
96% of GQ project to be completed by June 2006
GQ corridors to be completed by 2008 end
Plans of 1000 km of access control highway on BOT basis
National Highway Authority of India to be reconstituted
New Deep Draft Port in West Bengal
5083 MW capacity to be added in FY06
Govt determined to execute Bharat Nirman programme
To increase budgetary provision for Bharat Nirman to Rs 18,696 crore in FY 07
8,70,000 rural houses built under Bharat Nirman
17,182 villages got telephones under Bharat Nirman
5337 habitations connected under Rural Roads Programme
Education allocation increased by 31.5% to Rs 24,154 crore
Rs 10041 crore for Sarva Siksha Abhiyan
Mid-Day meal allocation at Rs 4813 crore
Rural Employment to cost Rs 11700 crore in FY07
FY07 Drinking Water outlay at Rs 4680 crore Vs Rs 3645 crore
Rs 4595 crore outlay for National Urban Mission in FY-07
20,000 water bodies to be covered under renewal plan
India Infrastructure Investment Company to be set up
3.92 million foreign tourist arrived in 2005
Four new hotel management institutes in Chhattisgarh, Jharkhand, Haryana and Uttaranchal
Allocation for Tourism at Rs 830 cr for FY-07
15 tourism sites to be developed
Empowered Ministers Group on Cluster Development
Rs 1500 crore in FY07 to boost telephone connectivity
10,366 villages electrified at cost of Rs 1100cr
40,000 more villages to be electrified in FY-07
82 new power projects underway
To electrify 40,000 more villages in FY07
4.75% rise in power generation so far
597 crore rupee for non-conventional energy resources FY07
Rs 9945 crore budget support for National Highway Development Programme in FY07
735 crore rupees for development of sea ports in FY07
Sectors
Committed to strong, efficient public sector
Expert body to look into gems, jewellery sector taxation
2000 crore tonne coal to be de-blocked for power sector by 2012
45 coal blocks allocated for power, coal and steel sectors
22000 crore rupee investment expected in refinery sector
To introduce comprehensive bill on insurance in FY-07
Debt Markets
Cap on FII in gilts raised to USD 2 billion
Cap on FII investment in corporate debt raised to USD 1.5 billion
To raise cap on aggregate investment by MFs in overseas instruments to USD 2 billion
To remove 10% cap on overseas investment by mutual funds
To allow a limited number of qualified Indian MFs to invest, cumulatively up to USD 1billion, in overseas exchange traded funds
NDS-OM to be extended to some MFS, PFs, pension funds
To create unified exchange traded market for corporate bonds
Investor Protection Fund to be set up under aegis of SEBI
Social Sector
To eliminate polio by December 2007
Leprosy to be eliminated by December 2006
4595 crore rupee outlay for National Urban Mission in FY07
To raise old age pension to Rs 200 per month Vs Rs 75
Allocation for SC/STs raised 14.5% to Rs 2902 crore
20,000 merit scholarships for minority students
Rs 16.47 crore for National Minorities Development Corporation
Rs 50 crore to 3 Universities to begin with; on conclusion another grant of Rs 50 crore
New grants to Calcutta, Madras, Mumbai universities
To allocate Rs 97 crore for upgrading ITIs in FY07
Rs 100 crore for Punjab Agriculture University in Ludhiana
Rs 5000 crore for new fund under Panchayati Raj in FY-07
Rs 1300 crore special aid to J&K for power reforms
Rs 848 crore to be provided for J&K reconstruction Plan
Rs 8207 crore allocated for National Rural Health Mission
Rajiv Gandhi Drinking Water Mission – allocation hiked to Rs 4680 crore
Allocation for Rural Sanitation Campaign hiked to Rs 720 crores
Allocation for Integrated Child Development Services scheme hiked to Rs 4087 crore
Corpus Fund for Maulana Azad Education Foundation doubled at Rs 200 crore
Allocation for National Council for Promotion of Urdu Language increased from Rs 10 cr to Rs 13 cr
Equity contribution to National SC Finance and Development Corporation increased to Rs 37 crore
Equity contribution to National Safai Karamchari Finance and Development Corporation hiked to Rs 80 crore
Rs 3000/- deposit for girl child completing Class VIII; to be given on maturity at age of 18
Rs 1156 cr dispensed for backward districts, allocation upped to Rs 5000 crore
Rs 10 crore for Gandhian institutes
Rs 5 crore for the preservation of old traditions of Kuttiyattam, Vedic Chanting and Ram Lila
External Sector
FDI estimated at USD 4 billion till Nov 2005
Confident of more FDI, especially in infrastructure
To double world export share to 1.5% by FY09
Taxation
Tax rates should be moderate
Tax revenue increased 19.9%
Indirect Taxes
Customs Duty
Peak rate on non-agri imports reduced from 15% to 12.5%
Customs duty on ferrous alloy reduced to 7.5% from 10%
Customs on steel melting scrap raised to 5%
Import duty on ores, concentrates cut to 2% from 5%
Customs duty on inorganic chemicals cut to 10% from 15%
Customs on steel melting scrap raised to 5%
Import duty on ores, concentrates cut to 2% from 5%
Customs on mineral products cut to 5% Vs 15%
Duty on catalysts cut to 7% from 7.5%
Customs duty on inorganic chemicals cut to 10% from 15%
Customs duty on anti-AIDS, anti-cancer drugs cut to 5%
Customs on packaging machines cut to 5% Vs 15%
To impose countervailing duty of 4% on oil imports
Customs duty on vanaspati raised to 18%
Import duty on man-made fibre yarn cut to 8% Vs 18%
Basic Plastics reduced to 5%
Duty on Naphtha reduced to Nil
Excise Duty
Aerated Drinks reduced to 16% from 24%
Small Cars excise cut to 16% from 24%
Ice Cream, Condensed Milk, Chocolates, Yeast, Pasta reduced to Nil
Instant Food cut to 8%
Compact fluorescent lamps cut to 8%
16% Excise on STBs but Customs Duty reduced to NIL
Excise on Cigarettes increased by 5%
Footwear cut to 8%
Service Tax
Service Sector to contribute 54% to GDP in FY-06
Service tax raised to 12% from 10%
More services brought under service tax net
ATM operation, maintenance and management to come under service tax
Registrars, share transfer agents and bankers to an issue to come under service tax net
Sale of space and time other than in print media for advertisement to come under service tax net
Sponsorship of Events other than Sports by companies included under service tax
International Air Travel barring Economy Class to come under service tax
Container Services on Rail excluding the Railway Free Charges to come under service tax
Business support services, Auctioneering, Recovery Agents, Ship Management Services, Travel on Cruise ships and Public Relations brought under service tax
Apr 1, 2010 deadline for national level goods, services tax
Political reactions
Maruti, Santro cuts prices after budget
Tax exemption will help banks to mobilise retail deposits: SBI
Budget has scopes to buoy agri sector: FM
I give PC ten out of ten for the budget: Nalini
Defence spending hiked
Industry hails budget
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