Click to play videoNew Delhi: Under pressure to control inflation, Finance Minister P Chidambaram on Wednesday presented a Union Budget that does not change Income Tax rates, promises help to farmers and hikes funds for health and education.
In his 100-minute speech in the Lok Sabha, Chidambaram sought to cut import tariff on crude oil to 6 percent from 8 percent, even as he said futures trading in wheat and rice would stop with immediate effect to curb speculative trading in an attempt to bring down the prices of the common man's staple.
Tax break
Chidambaram also said while slabs for individual income tax assesses will remain unchanged, the threshold limits for each such slab will be raised by Rs.10,000. This will mean a Rs-1,000 saving for every assesssee.
The new threshold limit for women in income tax will be Rs.1.45 lakh and for senior citizens Rs.1.95 lakh.
"Revenues were buoyant for the third year in succession. I have put the revenues to good use to promote inclusive growth, equity, social justice," he said. But his remarks failed to impress the corporate sector.
Chidambaram brought down excise duty on petrol and diesel by two per cent but increased the taxes on cigarettes and bidis.
The peak rate of customs duty for non-agricultural products has been slashed from 12.5 per cent to 10 per cent and duty on paan masala not containing tobacco reduced from 66 per cent to 45 per cent.
Fiscal deficit at Rs 1,50,948 crore
The budget estimates the fiscal deficit to be at Rs 1,50,948 crore, which is 3.3 per cent of the GDP. The direct tax proposals are estimated to earn an additional Rs 3000 crore.
Defence allocation has been increased to Rs.96,000 crore, including Rs 41,921 crore for capital expenditure
By removing two lakh assessees from the service tax net, the Budget will sacrifice Rs 800 crore annually. Chidambaram also hiked the maximum limit of deduction for medical insurance premium to Rs 15,000, which will be Rs 20,000 in the case of senior citizens.
Withdrawals, tax on companies
Chidambaram has removed the income tax surcharge on firms and companies with a taxable income of Rs one core or less. He has given a five-year income tax holiday for construction of new hotels in the National Capital Territory to meet the shortfall of 20,000 rooms for the 2010 Commonwealth Games in Delhi.
The rate of dividend distribution tax has been increased from 12.5 per cent to 15 per cent on dividends distributed by companies and to 25 per cent on dividends paid by money market mutual funds and liquid mutual funds.
The Budget raised the income limit from Rs.25,000 to Rs.50,000 in respect of withdrawals by individuals and Hindu Undivided Families (HUF) in the banking transaction tax and withdrew it for Centre and State governments.
Another tax on IT firms
Minimum alternate tax (MAT) will now be extended to information technology (IT) and they will now be paying a tax of 11.2 percent, the minister said.
The peak rate of customs duty on non-agricultural products has been slashed from 12.5 per cent to ten per cent and on most chemicals and plastics from 12.5 per cent to 7.5 per cent.
Customs duty on polyester fibres and yarn has been slashed from 10 per cent to 7.5 per cent and on gem and jewellery and cut and polished diamonds from five to three per cent.
Pet lovers rejoice
In good news for cat and dog lovers, Chidambaram reduced the duty on pet foods from 30 to 20 per cent. He has fully exempted from excise duty some category of biscuits and all kinds of good mixes including instant mixes.
The Excise duty on umbrellas and part of footwear and plywood was halved from 16 to eight per cent. Bio-diesel has been completely exempted from excise
"This budget focuses on fiscal consolidation," Prime Minister Manmohan Singh said, added that an attempt had been made to address the concerns and aspirations of a larger section of society, especially the common man.
"This is a common man's budget and not the corporate India's budget," said R. Seshasayee, president of the Confederation of Indian Industry (CII), adding; "It is neither bold nor courageous."
(Inputs from IANS, PTI and Reuters)
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