Home > Money > Budget 2001 > PTI > Report Banner Ads
Channels: Astrology | Broadband | Contests | E-cards | Money | Movies | Romance | Search | Weather | Wedding | Women
Partner Channels: Auctions | Auto | Bill Pay | Jobs | Lifestyle | Technology | Travel
February 28, 2001                                       Feedback  

    - EXIM POLICY '00



    - BUDGET 00-01
    - BUDGET 99-00
    - BUDGET 98-99
    - BUDGET 97-98


Information you can use

   The Best Budget Sites
   Ministry of Finance
   Budget 2000
   Reserve Bank of India


Banner Ads
Banner Ads
Banner Ads
Banner Ads
 Search the Internet
 Sites: Finance, Investment
E-Mail this report to a friend
Print this page

Budget broad-bases service tax, gives sops to I-T payers

The Union Budget for 2001-02 on Wednesday proposed unified CENVAT of a single excise duty of 16 per cent, broad-based service tax and gave sops to income tax payers removing all surcharges except the two per cent levy for Gujarat, while slapping a 15 per cent special excise surcharge on cigarettes and bidis.

Presenting his fourth budget, Finance Minister Yashwant Sinha provided tax incentives for housing, rural development and special economic zones (SEZ) and reduced duty on gold imports.

While the changes in direct tax proposals will result in a loss of Rs 55 billion, the excise duty changes will fetch in an additional Rs 46.77 billion.

Changes on the customs duty front would result in a revenue loss of Rs 21.28 billion.

The special excise duty on aerated soft drinks, soft drink concentrates for vending machines and motor cars have been reduced to 16 per cent from the present 24 per cent while all items under eight per cent excise duty category will now attract 16 per cent.

However, cotton yarn, sewing thread, LPG, kerosene and diesel upto 10 HP will continue to attract eight per cent excise duty. Food preparations based on fruits and vegetables have been completely exempted from excise duty.

Enlarging the scope of service tax, Sinha proposed to bring in 14 more services including specialised banking and financial activities, authorised vehicle service stations, port services, broadcasting, photographic, telex, telegraph, facsimile, online information and data-based retrieval, auxuliary insurance and video tape production into it.

Achieving for the first time in recent years the targeted fiscal deficit of 5.1 per cent in the current year, Sinha pegged the fiscal deficit for the next financial year at an ambitious 4.7 per cent, in line with the proposal in the fiscal responsibility legislation.

The budget has stepped up outlay on defence by Rs 75.39 billion taking the non-plan expenditure in the coming year to Rs 2751.23 billion as against Rs 2492.84 billion in the revised estimates for the current year.

Interest payments of Rs 116.33 billion and grants to state governments of Rs 22.21 billion were the other main ingredients that raised the non-plan expenditure.

The budget estimates a total expenditure of Rs 3752.23 billion of which Rs 1001 billion is for plan and Rs 2751.23 billion for non-plan.

Sinha raised the basic customs duty on import of second hand cars, multi-utility vehicles, scooters and motorcycles to 105 per cent to prevent flooding of goods from abroad with the dismantling of Quantitative Restrictions (QRs) from April one this year.

The total duty now applicable on these will be more than 180 per cent, he said, adding, from April 1 second hand cars would be freely importable.

The excise duty on high-speed diesel, which was reduced to 12 per cent in September has now been restored to 16 per cent.

The special excise duty on motor spirit is also being restored to the previous level of 16 per cent.

The 8 per cent excise duty on LPG is being extended to CNG.

In the direct tax proposals, finance minister extended the ten-year tax holiday for infrastructure projects to airports, ports, inland ports, industrial parks and distribution and generation of power.

The five-year tax holiday available to the telecommunication sector till March 31, 2000 is being re-introduced for units commencing operations before March, 2003.

These concessions will also be available to Internet service providers and broad-band networks.

Taking note of the popularity of TV game shows, the minister proposed to levy a lower tax rate of 30 per cent on winning of lotteries and cross-word puzzle which will be deducted at source.

The limit on income interest on time deposit for tax deduction at source is being lowered to Rs 2500 from Rs 10,000 and even loss making companies will now have to file returns.

The tax incentives allowed by the way of deductions on payment of LIC premium has been extended to all approved insurance companies.

Foreign telecasting channels will henceforth be taxed in India under the Income Tax Act.

The interest on housing loans for self-occupied properties has been enhanced from the present level of Rs 100,000 to Rs 150,000.

In the indirect tax front, the finance minister in a bid to protect the domestic sector has doubled customs duty to 70 per cent on import of tea, coffee, copra and coconut.

With the same objective the rate of duty on crude edible oils has been raised to a 75 per cent uniformed rate from the present level ranging from 35 to 55 per cent.

Taking WTO commitment into account, Sinha lowered the rate on soyabean oil to 45 per cent but customs duty on crude palm oil by vanaspati manufacturer has been more than doubled to 55 per cent to restrict it only to sick vanaspati units.

The customs duty on Information Technology and Telecom products and their inputs and components has been reduced to15 per cent from March 1, 2001.

The customs duty on specified textile machines has been reduced to five per cent to help modernisation of textile industry.

The duty on silk waste, cotton waste and flax fibres has been more than halved to 50 per cent.

The customs duty on cut and polished colour gem-stones has been brought down to 15 per cent to help enhance export of these items.

CNG kits and parts will, now attract a low duty of five per cent. The same is extended to LPG conversion kits and their parts. Since LNG is not produced in India, the CVD on import of LNG is being exempted.

Customs duty on cements and clinkers has been reduced to 25 per cent to help the customers.

Journalists can now import cameras, computers and fax machines upto a value of Rs 1,00,000 for personal use duty free once in two years instead of five years.

The duty on cinematographic cameras, projectors and related equipments used by the film industry has been reduced to 15 from 25 per cent.

In order to curb gold smuggling, the duty on gold has been reduced to Rs 250 for 10 grams from Rs 400.

Sinha said the revenue loss of Rs 55 billion from direct tax proposals would be made up by tax buoyancy and increased voluntary compliance.

The direct tax revenue during 2000-01 would be of the order of Rs 848 billion.

The indirect tax revenue for the next year would be about Rs 1409.92 billion.

All these proposals, the minister said, would bring in revenue receipts estimated at Rs 1630.31 billion leaving a fiscal deficit of Rs 1163.14 billion--4.7 per cent of GDP.

He said he could have managed a lower deficit, but that would have been at the cost of growth, which was unacceptable to him.

Budget 2001

Back to top
(c) Copyright 2000 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.

Tell us what you think of this report