Finance Minister leaves taxes unchanged
the Interim Budget today slashed excise duty on cars and two-wheelers, and capital goods and consumer durables to boost manufacturing and growth
New Delhi: Leaving direct taxes untouched except for continuing the income tax surcharge on ‘super-rich’ individuals and corporates, the Interim Budget today slashed excise duty on cars and two-wheelers, and capital goods and consumer durables to boost manufacturing and growth.
Presenting the Interim Budget for 2014-15 along with a vote-on-account for spending up to July, Finance Minister P Chidambaram also provided service tax exemption for storage and warehousing of rice like it was done in the case of paddy last year. Also, blood banks have been exempted from its purview.
The 10 per cent surcharge on ‘super-rich’ having income above Rs 1 crore in a year and the up to 5 per cent surcharge on corporates imposed last year will continue.
“In keeping with the conventions I do not propose to make any announcements regarding changes to the tax laws,” he said.
The Budget document does not give figures of the indirect tax concessions, which are valid up to June 30, 2014 and could be reviewed later. They will be notified later.
In a major relief to ex-servicemen, the Minister announced that the government has accepted in-principle their demand for one-rank-one-pay.
The allocation for Defence for the coming year has been enhanced by 10 per cent from Rs 2,03,672 crore in Budget estimate of 2013-14 to Rs 2,24,000 crore in 2014-15.
Non-plan expenditure estimated at Rs 12,07,892 crore. Of this expenditure on food, fertiliser and fuel subsidy will be Rs 2,46,397 crore, which will be slightly more than the revised estimate of Rs 2,45,452 crore in 2013-14.
Giving Budget estimates, the Minister said the current financial year will end on a satisfactory note with the fiscal deficit at 4.6 per cent, below the redline of 4.8 per cent, and the revenue deficit at 3.3 per cent.
The fiscal deficit for 2014-15 has been pegged at 4.1 per cent, which will be below the target of 4.2 per cent set by the new fiscal consolidation path. Revenue deficit is estimated at 3 per cent.
Justifying the excise duty reliefs, Chidambaram said, “The current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost.”
To encourage domestic production of mobile handsets, he restructured the excise duty for all categories fixing it at 6 per cent with CENVAT credit or 1 per cent without CENVAT credit.
Customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has been pegged at 7.5 per cent to encourage to domestic production of soaps and oleo chemicals.
Current account deficit to be USD 45 bn this year
India’s current account deficit (CAD) will be contained at USD 45 billion this financial year, well below the record high level of 2012-13, Finance Minister P Chidambaram said today.
“CAD that threatened to exceed last year’s USD 88 billion will be contained at USD 45 billion,” he said in the interim budget presented in Parliament.
The Finance Minister also said, “I am happy to inform the House that we expect to add about USD 15 billion to the foreign exchange reserves by the end of the financial year.”
In the first half (April-September) of 2013-14, CAD narrowed to USD 26.9 billion (3.1 per cent of GDP) from USD 37.9 billion (4.5 per cent of GDP) in the first half of 2012-13.
Both the government and the Reserve Bank of India had taken steps to bring down gold imports, one of the major causes for the widening of the CAD in 2012-13.
The government had increased customs duty on gold thrice in 2013 to 10 per cent and the RBI had imposed a series of curbs on inward shipments of the yellow metal.
Chidambaram also said India’s exports are likely to touch USD 326 billion in 2013-14. Exports were about USD 304.5 billion in 2012-13.
The aim, he said, “must be robust growth in exports and imports, both.”