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FM woos Govt staff, farmers with sops
New Delhi, Feb 03: Unveiling the last batch of sops before the elections, Finance Minister Jaswant Singh on Tuesday presented the interim Budget for 2004-05, which promised to reconsider the present income tax exemption limits, the standard deduction for salaried class, raised the free baggage allowance and merged 50 per cent of dearness allowance (DA) with basic pay for central Government employees.
New Delhi, Feb 03: Unveiling the last batch of sops before the elections, Finance Minister Jaswant Singh on Tuesday presented the interim Budget for 2004-05, which promised to reconsider the present income tax exemption limits, the standard deduction for salaried class, raised the free baggage allowance and merged 50 per cent of dearness allowance (DA) with basic pay for central Government employees.
However contrary to expectations, no changes in the income tax structure were proposed by Singh.
In a bid to step up investment in the power sector, Singh said fiscal benefits available to new projects in the sector should be extended by six years beyond 2006.
Projecting a high 7.5-eight per cent growth, Singh pegged the fiscal deficit at a low 4.8 per cent of GDP as against the target of 5.6 per cent for the current fiscal.
He also reduced by 50 per cent stamp duty on all central Government stamp papers as a first step towards reduction of stamp duty on all instruments where the authority to fix rates is of the central Government.
In the wake of massive stamp paper scam, a comprehensive reform of the entire stamp duty regime is being addressed in consultation with the state Governments as a high duty increases transaction costs restricting economic activity.
Singh said free baggage allowance is proposed to be raised from Rs 12,000 to Rs 25,000. Customs duty on such baggage will also be reduced from 50 to 40 per cent with immediate effect.
Singh announced setting up of a non-lapsable Defence Modernisation Fund of Rs 25,000 crore to ensure money for modernisation and procurement of weapons systems.
Outlining the mid-term perspective on the direct tax front, Singh said the regime of listed equities acquired on or after March 1, 2003, now being exempt from long-term capital gains, should be extended for a further period for three years.
To make Indian shipping industry internationally competitive, a tonnage tax with notional income at a fixed rate on the basis of net registered tonnage should be considered.
Capital gains on aquisition of agricultural land should be exempt from tax. It is also proposed that there should no deduction of tax at source on the interest earned on enhanced compensation for aquisition of such land.
If outsourced services are ancillary and auxiliary in nature and adquate remuneration is paid to the Indian call centre, then there shall be no tax on such foreign companies which have outsourced their activities to India.
The Finance Minister announced measures to fully consolidate and enhance growth momentum which the country has achieved.
As part of measures to ensure availability of timely credit at affordable rates to farmers and rural areas, Singh said banks were being urged to offer loans for agricultural purposes at rates lower than the prevailing rates.
Banks were being instructed not to insist routinely on additional collateral through a mortagage of entire land holding. All eligible farmers will receive kisan credit cards by March 31 this year and existing cards would be modified for use in ATM machines.
Singh also announced that farm insurance schemes, introduced on a pilot basis, will be extended to 100 districts.
A special Tea term loan repayable in five years with a moratorium of one year is to be provided. In the case of small tea growers, banks have agreed to extend fresh working capital limits upto Rs 2 lakh at an interest rate of nine per cent.
Sugar, another major agro-processing industry of the country, will also benefit from a package for the revitalisation of the industry in consultation with stake holders. As a measure of temporary relief, restructuring of loans taken by sugar factories will be examined by the lending agencies.
Underlining the important role played by cooperative banks in the delivery of rural credits, Singh announced a scheme to revitalise the cooperative credit structure with an outlay of Rs 15,000 crore to be shared by the Centre and states.
Public sector banks will increase credit limit of cards under the Laghu Udyami Credit Card Scheme. This will be for borrowers with a satisfactory track record and would range from Rs 2 lakh to 10 lakh.
Underlining the problem of water scarcity, Singh announced the Prime Minister's decision to initiate an accelerated supply of drinking water for mega cities like Bangalore, Chennai, Delhi and Hyderabad.
The provision for infrastructure development in mega cities is to be augmented by accessing infrastructure fund, LIC and other sources, he said.
Agriculture Infrastructure Credit Fund is being renamed as Lok Nayak Jaiprakash Narayan Fund.
Similarly, the small and medium enterprises fund will address the problem of inadequacy of financial resources for the small sector. The industrial infrasructure fund will provide credit at competitive rates for power generation, seaports, airports, telecomunication and urban infrastructure. Bureau Report
In a bid to step up investment in the power sector, Singh said fiscal benefits available to new projects in the sector should be extended by six years beyond 2006.
Projecting a high 7.5-eight per cent growth, Singh pegged the fiscal deficit at a low 4.8 per cent of GDP as against the target of 5.6 per cent for the current fiscal.
He also reduced by 50 per cent stamp duty on all central Government stamp papers as a first step towards reduction of stamp duty on all instruments where the authority to fix rates is of the central Government.
In the wake of massive stamp paper scam, a comprehensive reform of the entire stamp duty regime is being addressed in consultation with the state Governments as a high duty increases transaction costs restricting economic activity.
Singh said free baggage allowance is proposed to be raised from Rs 12,000 to Rs 25,000. Customs duty on such baggage will also be reduced from 50 to 40 per cent with immediate effect.
Singh announced setting up of a non-lapsable Defence Modernisation Fund of Rs 25,000 crore to ensure money for modernisation and procurement of weapons systems.
Outlining the mid-term perspective on the direct tax front, Singh said the regime of listed equities acquired on or after March 1, 2003, now being exempt from long-term capital gains, should be extended for a further period for three years.
To make Indian shipping industry internationally competitive, a tonnage tax with notional income at a fixed rate on the basis of net registered tonnage should be considered.
Capital gains on aquisition of agricultural land should be exempt from tax. It is also proposed that there should no deduction of tax at source on the interest earned on enhanced compensation for aquisition of such land.
If outsourced services are ancillary and auxiliary in nature and adquate remuneration is paid to the Indian call centre, then there shall be no tax on such foreign companies which have outsourced their activities to India.
The Finance Minister announced measures to fully consolidate and enhance growth momentum which the country has achieved.
As part of measures to ensure availability of timely credit at affordable rates to farmers and rural areas, Singh said banks were being urged to offer loans for agricultural purposes at rates lower than the prevailing rates.
Banks were being instructed not to insist routinely on additional collateral through a mortagage of entire land holding. All eligible farmers will receive kisan credit cards by March 31 this year and existing cards would be modified for use in ATM machines.
Singh also announced that farm insurance schemes, introduced on a pilot basis, will be extended to 100 districts.
A special Tea term loan repayable in five years with a moratorium of one year is to be provided. In the case of small tea growers, banks have agreed to extend fresh working capital limits upto Rs 2 lakh at an interest rate of nine per cent.
Sugar, another major agro-processing industry of the country, will also benefit from a package for the revitalisation of the industry in consultation with stake holders. As a measure of temporary relief, restructuring of loans taken by sugar factories will be examined by the lending agencies.
Underlining the important role played by cooperative banks in the delivery of rural credits, Singh announced a scheme to revitalise the cooperative credit structure with an outlay of Rs 15,000 crore to be shared by the Centre and states.
Public sector banks will increase credit limit of cards under the Laghu Udyami Credit Card Scheme. This will be for borrowers with a satisfactory track record and would range from Rs 2 lakh to 10 lakh.
Underlining the problem of water scarcity, Singh announced the Prime Minister's decision to initiate an accelerated supply of drinking water for mega cities like Bangalore, Chennai, Delhi and Hyderabad.
The provision for infrastructure development in mega cities is to be augmented by accessing infrastructure fund, LIC and other sources, he said.
Agriculture Infrastructure Credit Fund is being renamed as Lok Nayak Jaiprakash Narayan Fund.
Similarly, the small and medium enterprises fund will address the problem of inadequacy of financial resources for the small sector. The industrial infrasructure fund will provide credit at competitive rates for power generation, seaports, airports, telecomunication and urban infrastructure. Bureau Report