LS completes budgetary exercise without debate
New Delhi: Government on Tuesday ruled out imposition of wealth tax on agriculture land as the Lok Sabha completed the budgetary exercise in an unusual way with Finance Bill and Demands for Grants for various ministries being passed without debate after Opposition walkout.
Finance Minister P Chidambaram also exempted Railways from payment of service tax for period between July, 1, 2010 to October 1, 2012 to avoid burden on the state-owned carrier.
Making a brief statement while moving the Finance Bill for voting, he introduced an amendment on the issue of wealth tax in view of misapprehensions as to whether it will apply to agriculture land.
"There was apprehension that wealth tax was being imposed on agricultural land. Let me make it absolutely clear that the policy of the UPA government is not to impose wealth tax on agriculture land," he said.
The apprehensions arose on account of judgements following Punjab and Haryana High Court rulings, Chidambaram said, adding he had worked hard yesterday to prepare the amendment and obtain the approval of the President and "the matter should come to an end."
The passage of the General and Railway budgets was rushed through as the guillotine had to applied to meet the constitutional requirements.
BJP staged walk out over the coal issue, while Left, BJD and AIADMK left the House to protest against passage of important bills without discussion. DMK too walked out demanding removal of the JPC chief P C Chacko.
After the walkout, Speaker Meira Kumar said the passage of crucial bills without debate was being done in a "very difficult condition" and it was "immensely painful" for her.
The Speaker said: "The circumstances are such that we have to dispense with discussion and pass these bills."
As regards other changes in the Finance Bill, Chidambaram said the government is seeking authorisation to raise customs duty on cashew to 70 percent with a view to protecting the domestic industry.
"We are taking ...A tariff cushion to raise the import duty from 30 percent to 70 percent so that, if necessary, we can impose a higher duty on imported cashew," he said.
Referring to the proposal to impose Commodities Transaction Tax (CTT) on non-agriculture items, he said, "Trading in commodity derivatives will no longer be considered as a speculative transaction."
The Minister also announced changes in the tax laws to attract foreign investments.
"In order to attract investment in long term infrastructure bond, I propose to amend Section 194(H)C so that foreign currency routed through designated account by NRI in such bonds is deemed to be borrowing in such currency," the Minister said.
He clarified that PAN requirement and consequently higher withholding tax of 20 percent will not apply to interest paid to non-resident in respect of investment in long-term infrastructure bonds.
"These amendments will attract more investments in long-term infrastructure which is a very important need of the country," he said.
On the proposal to impose Tax Deducted at Source (TDS) of one percent on transfer of immovable property, Chidambaram said the person requiring to deduct tax would not be required to obtain TAN (Tax Deduction and Collection Account Number).
"...In order to be helpful to the person who is required to deduct the tax, we are dispensing with the requirement of obtaining a TAN. He need not have a TAN but he must deduct the tax," he said.
Chidambaram said he had rectified the provisions relating to one percent tax on cash sale of bullion or jewellery to prevent misuse of the provisions of the IT Act.
"There was an exclusion in parenthesis (of coin or article weighing less than 10 gms)...That exclusion was giving opportunity for misuse. That exclusion has now been withdrawn," he said.
Later talking to reporters, Chidambaram said changes have been made to make it clear that Tax Residency Certificate (TRC) issued by a foreign government will be accepted as a certificate of residence.
"Additional information can also be asked by the government but the TRC issued by a foreign government will be accepted as a certificate of residence," he said.
The proposal in Finance Bill 2012 had created uncertainty among foreign investors, especially those routing investments through Mauritius.
The Minister had earlier clarified that the status quo with regard to investment from Mauritius would continue till the double taxation avoidance agreement with that country is revised.
Referring to demand for removal of higher duty on SUVs, Chidambaram said the proposed increase is very small.
"98 percent of SUVs run on diesel. Diesel is subsidised. So by increasing the duty from 27 percent to 30 percent, we are only partially recovering (the subsidy)...From rich people who use SUVs," he explained.
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