I-T brackets altered, corporate tax lowered

NEW DELHI: Union Finance Minister P Chidambaram altered the income tax bracket on Monday. He said income between Rs 1 lakh and 1.5 lakh will attract 10 per cent tax, Rs.1.5 lakh to Rs.2.5 lakh 20 per cent and beyond Rs.2.5 lakh 30 per cent. The threshold level for women has been fixed at Rs 1.25 lakh and for senior citizens at Rs 1.5 lakh. The FM also announced the removal of Standard reduction. A Rs 1 lakh consolidated exemption limit will be allowed to all tax payers before computing taxable income, he said. Chidambaram also announced the removal of Section 80 L. Peak customs duty rates on non-agricultural products have been reduced from 20 to 15 per cent in line with India''s east Asian neighbours. Refrigerator duty has been brought down from 20 to 10 per cent. The specific excise duty on cigarettes has been raised by 10 per cent. Another 10 per cent ad valorem will be levied on tobacco products including gutka and chewing tobacco. Chidambarm announce that the cess on petrol and diesel has been raised by 50 paise, which will be exclusively earmarked for national highway development programme. Chidambaram abolished the one per cent surcharge on tea and Re 1 per kg surcharge on edible oil. The excise on some petroleum products including motor spirit and diesel has been reduced to 10 per cent from 15 and 20 per cent respectively. Service tax rate has been retained. There will be no reduction in excise duty on auto and aerated water and this will continue to attract 24 per cent duty. Earlier, pledging help to the common man, Chidambarm started his Budget speech by announcing a cut in the customs duty on crude to 5%. In view of the rural thrust and pledge to help farmers, Chidambaram pointed out that promise to farmers have been fulfilled. More loans were available for farmers. While credit to agriculture stood at Rs 1,08,500 cr, PSU banks added 58.2 lakh farmers to their portfolios. Non-farm credit went up by 21.2 per cent and business confidence restored. Growth rate in the current year is estimated to be 6.9 per cent. Despite high economic growth, there were several disturbing trends during 2004 when the UPA government came to power, Chidambaram said. The economy had to face excess liquidity overhang which spilled into 2004-05 and an inflationary build up because of oil prices increase, deficit in southwest monsoon and a decline in business confidence, he said. Inflation has been reined at 5.01 per cent as of February 12, one per cent less than what it was in the corresponding period last year, Chidambaram said. Inflation stood at 8.5 per cent on August 28 last year. Allocation for rural development would be Rs 18,334 crore. In the space of nine months, we have risen to challenges as outlined by the National Common Minimum Programme , Chidambaram said. As against the target of Rs 1.05 lakh crore of agricultural credit this fiscal, as much as Rs 1,08,500 crore was disbursed. As against the target of 1.85 lakh self help groups, the government has already achieved 2.26 lakh such groups as part of efforts to tackle poverty and unemployment. National Rural Health Scheme to be launched in the new fiscal. The allcation for the health sector has been increased to Rs 10,280 crore for 2005-06 as against Rs 8420 crore in the current year. The Antodya Anna Yojana Scheme coverage is being increased from two crore families to 2.5 crore families below poverty line. Gross budgetary support for Plan during 2005-06 has been fixed at Rs 1,72,500 crore, an increase of 16.9 per cent over the current year''s figure. In the current year, it was originally fixed at 1,45,590 crore to which an additional Rs 2,000 crore was done. Support for Central plan in the new financial year will be Rs 1,10,385 crore which, Chidamabram said, was very substantial and represent an unprecedented increase of over 25 per cent. In the current year, the Budget estimate was Rs 87,896 crore. Two thousand fellowships will be awarded under Rajiv Gandhi National Scholarship scheme for Scheduled Castes and Scheduled Tribes for pursuing courses like M Phil and Ph D. Outlining efforts of government to push up employment, Chidambaram said food processing is generating 2.5 lakh additional jobs, textiles 1.2 crore jobs, IT 70 lakh jobs by 2009 and construction industry lakhs of additional jobs in the face of industrial boom in the country. He announced the national rural health mission will be launched next fiscal. Six AIIMS-type medical institutions will start in different parts of the country in the near future, Chidambaram said. Fertiliser subsidy has been pegged at Rs 16,254 crore while allocation for rural development is put at Rs 18,334 crore for 2005-06. For Sarvashikha Abhiyan, the allocation has been raised to Rs 7,156 crore. Special plan assistance to Jammu & Kashmir. State Plan has been hiked from Rs 3,008 crore to Rs 4,200 crore. The Baglihar Hydel Project, which was given Rs 300 crore last year, would be given adequate funds next year. For midday meal scheme covering 11 crore children, the Budget estimate for the new year is increased to Rs 3,010 crore from Rs 1,675 crore in the Budget estimate for the current year. For the Rajiv Gandhi Drinking Water Mission, the allocation has been increased to Rs 4,750 crore in 2005-06 from Rs 3,300 crore in the current year. Observing that only 30 per cent of rural people enjoyed safe sanitation, Chidambaram said the scheme to provide proper sanitation facilities to all districts would get an allocation of Rs 630 crore this year. Largesse scholarships to be provided for SC/ST students in select top class institutes, details of which would be announced shortly. There will be greater credit flow for urban poor. Central assistance for recruitment and posting of Urdu teachers in primary and upper primary schools where majority of students speak that language. Funds will be provided for minority community meritorious candidates appearing in competitive exams. An allocation of Rs 5000 crore has been announced for backward regions grant fund for 2005-06 and this allocation will continue for the next four years. The 12 th Finance Commission has provided Rs 7975 crore for 2005-10 for development of backward regions in Bihar. The Udhampur-Baramulla rail section will be completed on a priority basis, the Finance Minister said. He said that Rs 450 crore is being provided for highway development in the Northeast. Bihar has been identified for special grant for health and education. For Jammu & Kashmir, the state plan has been fixed at Rs 4,200 crore. There will be 60 lakh additional houses for the poor. Chidambaram announced equity support of Rs 14,040 crore and Rs 3,554 crore for central PSUs including Railways, Launching the Bharat Nirmal Programme to give a new deal to rural India, Chidambaram announced the Budget would lay stress on development of six areas â€“ irrigation, roads, water supply, rural electrification, housing and rural connectivity. The proposal is to provide additional one crore hectare of irrigation, construct 60 lakh houses for poor, connect all villages with 1,000 population in plains and 500 in hilly areas with roads, drinking water to 74,000 remaining habitatations and electricity for 1,25,000 remaining villages and telephone connectivityy to 66,822 villages. Agriculture diversification will cover fruits, vegetables, poultry, diary, pulses and oilseeds. National Horticulture Mission will be launched on April 1. To improve the plantation sector, the government has set up a committee to modify the price stabilisation fund which has proved to be ineffective. A massive tea plantation and rejuvenation scheme will be taken up. A pilot project to improve water bodies will be taken up at a cost of Rs 100 crore, the Finance Minister announced. He also announced that a plan with a Rs 180-crore fund will be set up for flood control and erosion in eastern parts of UP, Bihar, West Bengal, Orissa and Northeast on account of floods in Bramaputra and Ganga. An additional Rs 52 crore will be allocated for Farakka Barrage. This is being done on the basis of a task force report submitted recently. Rs 400 crore will be provided for stepping up micro-irrigation comprising drip and sprinkler irrigation. So far, 1.2 million hectares have been covered by micro irrigation in the country which is to be stepped up to three million hectares by the end of the 10th Plan and 14 million hectares by the end of 11th Plan. Rural RRBs and cooperatives will be asked to extend agricultural credit by another 30 per cent to Rs 1,08,500 crore in the current year. The National Agriculture Insurance Scheme will be extended for kharif and rabi season of 2005-06. The task force''s recommendations on reforming cooperative banks have been accepted. The main features of the recommendations are restructuring of the accumulated debt and changes in legal framewoork to enable RBI to enforce prudential norms and strengthen the capital base of these cooperative banks. RBI has been asked to open a window for qualified NGOs to tap ECB route for micro finance, the FM said. The government will provide full support to the IRDA for encouraging micro-insurance which is proposed to be carried out by NGOs, self-finance groups and micro-finance Institutions. Knowledge centres would be set up following recommendations of the National Commission for Farmers under the Mission 2007, Chidambaram said. The recommendations of the Tuteja Committee Report on sugar industry have been accepted by the government and a financial package for revival of sugar factories with a two-year moratorium having regard to their commercial viability was announced. This will be applicable to sugar factories which were operational during 2002-03 sugar season. Chidambaram announced 10 per cent capital subsidy for the textile sector. The allocation for Rs 25,000 crore technology upgrade fund has been increased by Rs 435 crore. Rs 20,000 crore has already been spent by the textile industry to meet challenges of the post-quota regime. It is to go up to Rs 30,000 crore in the near future. He announced a manufacturing competitiveness programme to improve the small-scale and medium sized manufacturing industries. He also announced Rs 40 crore for modernisation of 20 clusters of handloom manufacturers. The government has set an ambitious merchandise export target of $150 billion by 2009 and would further liberalise the trade policy. Expressing concern over low teledensity in the country, the Finance Minister said Rs 1,700 crore was granted to the universal service obligation (USO) fund last fiscal. An amount of Rs 1,200 crore is being allocated to it this year. BSNL would provide VPT connections to the remaining 66,822 villages in the next two years, with 5.2 lakh VPTs being installed already. Allocation for Indira Awaas Yojana has been increased from Rs 2,200 crore to Rs 2,750 crore to build an additional 15 lakh houses. For rural electricification, a sum of Rs 1,100 crore is being allocated. A special purpose vehicle will be set up for viable infrastructure projects in roads, ports and airports. Some of these projects were not taking off because of lack of funds though being viable. The purpose of the SPV is to tackle this, Chidambaram said. A National Urban Renewal Mission launched with an outlay of Rs 5,500 crore in 2005-06 aimed at improving seven mega cities and other cities with over one million population. This would have a grant component of Rs 1,650 crore. RBI will prepare a roadmap for banking sector reforms and the government will introduce a comprehensive amendment to the Banking Regulation Act. The roadmap will aim at improving competition among nationalised banks as India''s top bank SBI ranks only 82 in the world in terms of business. The RBI Act of 1934 will be amended to provide flexibility to monetary policies, particulary on SLR and capital adequacy ratio. Finance Minister proposed to constitute high power experts committee in consultation with RBI to make Mumbai a regional financial centre. The government will rationalise stamp duty for commercial papers to bring them to international standards. Sebi will be asked to study gold trading. The Indian Institute of Science, Bangalore, will be made a world class university for which a one time grant of Rs 100 crore has been proposed. The defence budget will be increased to Rs 83,000 crore in 2005-06 which includes Rs 34,300 crore for capital outlay. This alllocation is against the current year''s revised expenditure of Rs 76,000 crore.

I-T brackets altered, corporate tax lowered

PC lowered coporate tax to 30% plus surcharge and created a I-T bracket in Rs 1 lakh-1.50 lakh category.

More from our Partners

Popular Categories

Hot on Web

In Case you missed it

Top Searched Companies

Latest News

Download ET APP

Follow us on

become a member