Key Features - Union Budget 2009
Finance Minister Pranab Mukherjee
presented the 2009-10 Union Budget in the Parliament on Monday.
Following are the key highlights:
BUDGET 2009 CHALLENGES
· To lead economy to high GDP growth rate of 9 per cent per annum at the earliest
· To deepen and broaden the agenda for inclusive development to improve delivery mechanisms of the government.
BUDGET 2009 OVERVIEW OF THE ECONOMY
· Growth rate of
Gross Domestic Product dipped from an average of over 9 per cent in the
previous three fiscal years to 6.7 per cent during 2008-09.
· Whole sale price
index rose to nearly 13 per cent in August, 2008 and had an equally
sharp fall to zero per cent in March, 2009.
· The structure of
India’s economy changed over the last ten years with contribution of
the services sector to GDP at well over 50 per cent and share of
merchandise trade doubling to 38.9 per cent of GDP in 2008-09.
Recognising economic recovery and growth as co-operative effort of the
Central and State Governments, meeting with Finance Ministers of States
held as part of preparation of the Budget. This is intended to become
an annual feature.
BUDGET 2009 TOWARDS ECONOMIC REVIVAL
BUDGET 2009 Short-term Measures
· To counter the
negative fallout of the global slowdown on the Indian economy,
Government responded by providing three focused fiscal stimulus
packages in the form of tax relief and increased expenditure on public
projects along with RBI taking a number of monetary easing and
liquidity enhancing measures.
· Fiscal accommodation led to an increase in fiscal deficit from 2.7 per cent in 2007-08 to 6.2 per cent of GDP in 2008-09.
· The fiscal stimulus at 3.5 per cent of GDP at current market prices for 2008-09 amounts to Rs.1,86,000 crore.
· Measures taken by
the Government were effective in arresting the fall in GDP growth rate
in 2008-09. 6.7 per cent growth rate recorded in 2008-09.
BUDGET 2009 Infrastructure Development
· IIFCL to evolve a
Takeout financing scheme in consultation with banks to facilitate
incremental lending to infrastructure sector.
· IIFCL to
refinance 60 per cent of commercial bank loans for PPP projects in
critical sectors over the next fifteen to eighteen months. IIFCL and
Banks are now in a position to support projects involving total
investment of Rs.1,00,000 crore.
BUDGET 2009 Highway and Railways
· Allocation to
National Highways Authority of India (NHAI) for the National Highway
Development Programme (NHDP) increased by 23 per cent over B.E. 2008-09
in B.E. 2009-10 and allocation for Railways increased from Rs.10,800
crore in Interim B.E. 2009-10 to Rs.15,800 crore in B.E. 2009-10.
BUDGET 2009 Urban Infrastructure
· Allocation under
Jawaharlal Nehru National Urban Renewal Mission (JNNURM) stepped up by
87 per cent to Rs.12,887 crore in B.E. 2009-10 over B.E. 2008-09.
· Allocation for
housing and provision of basic amenities to urban poor enhanced to
Rs.3,973 crore in B.E. 2009-10. This includes provision for Rajiv Awas
Yojana (RAY), a new scheme announced.
BUDGET 2009 - Brihan Mumbai Storm Water Drainage Project (BRIMSTOWA)
· Provision for the
project BRIMSTOWA initiated in 2007 and funded through Central
Assistance to address the problem of flooding in Mumbai, enhanced from
Rs.200 crore in Interim B.E. 2009-10 to Rs.500 crore in B.E. 2009-10 to
expedite completion of the project.
Power
· Allocation under
Accelerated Power Development and Reform Programme (APDRP) increased by
160 per cent to Rs.2,080 crore in B.E. 2009-10 over B.E. 2008-09.
Gas
· Blueprint to be
developed for long distance gas pipelines leading to a National Gas
Grid to facilitate transportation of gas across the length and breadth
of the country.
Assam Gas Cracker Project
· Outlay for Assam Gas Cracker Project stepped up suitably in B.E. 2009-10.
BUDGET 2009 AGRICULTURE DEVELOPMENT
· Target for agriculture credit flow set at Rs.3,25,000 crore for the year 2009-10.
In 2008-09 agriculture credit flow was at Rs.2,87,000 crore.
· Interest
subvention scheme for short term crop loans up to Rs.3 lakh per farmer
at the interest rate of 7 per cent per annum to be continued.
Additional subvention of 1 per cent to be paid from this year, as
incentive to those farmers who repay short term crop loans on schedule.
Additional allocation of Rs.411 crore over Interim B.E. 2009-10 made
for this.
Debt Relief for Farmers
· Time given to the
farmers having more than two hectares of land to pay 75 per cent of
their overdues under Debt Waiver and Debt Relief Scheme extended from
30th June, 2009 to 31st December, 2009.
· Taskforce to be
set up to examine the issue of debt taken by a large number of farmers
in some regions of Maharashtra from private money lenders who were not
covered by the loan waiver scheme announced last year.
Accelerated Irrigation Benefit Programme
· Allocation under Accelerated Irrigation Benefit Programme (AIBP) increased by 75 per cent over B.E. 2008-09.
· Allocation under Rashtriya Krishi Vikas Yojana (RKVY) stepped up by 30 per cent in B.E. 2009-10 over B.E. 2008-09.
BUDGET 2009 RESTORING EXPORT GROWTH
· Adjustment
assistance scheme to provide enhanced Export Credit and Guarantee
Corporation (ECGC) cover at 95 per cent to badly hit sectors extended
upto March 2010.
· Allocation for Market Development Assistance Scheme enhanced to Rs.124 crore in B.E. 2009-10.
· Interest
subvention of 2 per cent on pre-shipment credit for seven employment
oriented export sectors extended beyond the current deadline of
September 30, 2009 to March 31, 2010.
· To facilitate
flow of credit at reasonable rates, Rs.4,000 crore provided as special
fund out of Rural Infrastructure Development Fund (RIDF) to Small
Industries Development Bank of India (SIDBI). This will incentivise
Banks and State Finance Corporations (SFCs) to lend to Micro and Small
Enterprises (MSEs) by refinancing 50 per cent of incremental lending to
MSEs during the current financial year.
· Stimulus package
for print media comprising waiver of 15 per cent agency commission on
DAVP advertisements and 10 per cent increase in DAVP rates to be paid
as a special relief subject to documentary proof of loss of revenue in
nongovernmental advertisements, extended from 30th June, 2009 to 31st
December, 2009.
BUDGET 2009 MEDIUM-TERM SUSTAINABILITY
· To bring the fiscal deficit under control, institutional reform measures to be initiated during the current year itself.
Fertilizer Subsidy
· To ensure
balanced application of fertilizers for increasing agricultural
productivity, Government intends to move towards a nutrient based
subsidy regime so as to cover larger basket of fertilizers with
innovative fertilizer products available in the market at reasonable
prices.
It is intended to move to a system of direct transfer of subsidy to the farmers in due course.
Petroleum and Diesel pricing Policy
· With almost three
quarters of our oil consumption met through imports, it is important to
recognise that domestic prices of petrol and diesel are broadly in sync
with global prices. Government to set up an expert group to advise on a
viable and sustainable system of pricing petroleum products.
BUDGET 2009 Taxation
· SARAL – II forms to be introduced early.
People’s ownership of PSUs
· While retaining
at least 51 per cent Government equity in Public Sector Undertakings,
people’s participation in disinvestment programmes to be encouraged.
· Public Sector
Enterprises such as banks and insurance companies to remain in public
sector and will be given full support including capital infusion to
grow and remain competitive.
Financial Sector
· The threshold for non-promoter public shareholding for all listed companies to be raised in a phased manner.
· Scheduled commercial banks allowed to set up off-site ATMs without prior approval subject to reporting.
· A sub-committee
of State Level Bankers Committee (SLBC) to identify and formulate an
action plan for providing banking facilities in under-banked/unbanked
areas in the next three years. Rs.100 crore set aside as one-time grant
in-aid to ensure provision of at least one centre/Point of Sales (POS)
for banking services in each of the unbanked blocks.
· Government has
established Competition Commission of India, an autonomous regulatory
body. An Appellate body headed by a retired judge of Supreme Court also
constituted.
BUDGET 2009 TOWARDS INCLUSIVE DEVELOPMENT
National Rural Employment Guarantee Scheme (NREGS)
· Allocation under NREGS increased by 144 per cent to Rs.39,100 crore in B.E. 2009-10 over B.E. 2008-09.
· To increase
productivity of assets and resources under NREGA, convergence with
other schemes relating to agriculture, forests, water resources, land
resources, rural roads initiated. In the first stage 115 pilot
districts selected for convergence.
National Food Security Act
· National Food
Security Act to be brought in to ensure entitlement of 25 kilo of rice
or wheat per month at Rs.3 per kilo to every family living below the
poverty line in rural or urban areas. Food Security Bill to be put on
the website of the Department of Food and Public Distribution for
public debate.
· Allocation for
Bharat Nirman increased by 45 per cent in 2009-10 over B.E. 2008-09.
Allocations under Pradhan Mantri Gram Sadak Yojana (PMGSY) increased by
59 per cent over B.E. 2008-09 to Rs.12,000 crore in B.E. 2009-10.
· Under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), allocation increased by 27 per cent to Rs.7,000 crore.
· Allocation under
Indira Awaas Yojana (IAY) increased by 63 per cent to Rs.8,800 crore in
B.E. 2009-10. Allocation of Rs.2,000 crore made for Rural Housing Fund
(RHF) in National Housing Bank (NHB) to boost the resource base of NHB
for refinance operations in rural housing sector.
Pradhan Mantri Adarsh Gram Yojana (PMAGY)
· New scheme
Pradhan Mantri Adarsh Gram Yojana (PMAGY) with an allocation of Rs.100
crore launched on pilot basis for integrated development of 1000
villages having population of scheduled castes above 50 per cent.
BUDGET 2009 EMPOWERMENT OF WEAKER SECTIONS
The Swarna Jayanti
Gram Swarozgar Yojana (SGSY) restructured as National Rural Livelihood
Mission to make it universal in application, focused in approach and
time bound for poverty eradication by 2014-15. In addition to capital
subsidy at enhanced rate, interest subsidy to poor households to be
provided for loans upto Rs.1 lakh from banks.
· There are over
22 lakh Women’s Self Help Groups linked with banks. Reach of SHGs to be
widened to enrol at least 50 per cent of all rural women in India as
members of SHGs over the next five years.
· Corpus of Rashtriya Mahila Kosh to be increased from Rs.100 crore to Rs.500 crore over the next few years.
Female Literacy
· National Mission
for Female Literacy to be launched with focus on minorities, SC, ST and
other marginalized groups with the aim to reduce level of female
illiteracy by half in three years.
Integrated Child Development Services (ICDS)
· All ICD Services to be extended to every child under the age of six by March, 2012.
Student Loans to Weaker Sections
· To enable
students from economically weaker sections to access higher education,
a scheme to provide full interest subsidy during the period of
moratorium introduced to cover loans taken from scheduled banks to
pursue any of the approved courses of study in technical and
professional streams from recoganised institutions in India.
Welfare of Minorities
· Plan outlay of Ministry of Minority Affairs enhanced from Rs.1,000 crore in B.E.
2008-09 to Rs.1,740
crore in 2009-10 registering an increase of 74 per cent. This includes
Rs.990 crore for Multi-Sectoral Development Programme for Minorities,
Grants-in-aid to Maulana Azad Education Foundation, National Minorities
Development and Finance Corporation and pre and post matric scholarship
for minorities.
· Allocations made
for the new schemes of National Fellowship for Students from minority
community and Grants-in-aid to Central Wakf Council for computerization
of records of State Wakf Boards.
· Rs.25 crore each
allocated for establishing new campuses at Murshidabad in West Bengal
and Malappuram in Kerala by Aligarh Muslim University.
Welfare of workers in the unorganized sector
· Action initiated
to ensure implementation of social security schemes for occupation like
weavers, fishermen and women, toddy tappers, leather and handicraft
workers, plantation labour, construction labour, mine workers, bidi
workers and rickshaw pullers. Necessary financial allocation will be
made for these schemes.
Employment Exchanges
· New project for
modernization of Employment Exchange in public private partnership to
be launched so that a job seeker can register on line from anywhere and
approach any employment exchange.
Handloom
· One handloom mega
cluster each in West Bengal and Tamil Nadu and one powerloom mega
cluster in Rajasthan to be set up. New mega clusters for carpets to be
also set up in Srinagar (J&K) and Mirzapur (UP).
Health
· Allocation under
National Rural Health Mission (NRHM) increased by Rs.2,057 crore over
Interim B.E. 2009-10 of Rs.12,070 crore.
· All BPL families to be covered under Rashtriya Swasthya Bima Yojana (RSBY).
Allocation under RSBY increased by 40 per cent over previous allocation to Rs.350 crore in B.E. 2009-10.
Environment and climate change
· In furtherance to
National Action Plan on Climate Change, eight national missions
representing a multi-pronged long-term and integrated approach to be
launched.
· National Ganga
River Basin Authority set up. Budgetary allocation under National River
and Lake Conservation Plans increased from Rs.335 crore in B.E. 2008-09
to Rs.562 crore in B.E. 2009-10.
· Special one-time grant of Rs.100 crore given to Indian Council of Forestry Research and Education, Dehradun.
· Rs.15 crore each
to be allocated to Botanical Survey of India and Zoological Survey of
India. An additional amount of Rs.15 crore to be allocated for
Geological Survey of India.
BUDGET 2009 TOWARDS BUILDING ACOUNTABLE INSTITUTIONS
Improving Delivery of Public Services
· Unique
Identification Authority of India (UIDAI) to set up online data base
with identity and biometric details of Indian residents and provide
enrolment and verification services across country. Provision of Rs.120
crore made for this in the Budget.
· First set of unique identity number to be rolled out in 12 to 18 months.
National Security
· Additional amount of Rs.430 crore provided over Interim B.E. 2009-10 to modernise police machinery in the States.
· Additional amount
of Rs.2,284 crore proposed over Interim B.E. 2009-10 for construction
of fences, roads, flood lights on the international borders.
· Programme for
housing to create 1 lakh dwelling units for Central Para-military
Forces personnel to be launched through innovative financing model.
One Rank One Pension for Ex-servicemen (OROP)
· Based on the
recommendation of the Committee headed by the Cabinet Secretary on
OROP, government has decided to substantially improve the pension of
pre 01.01.2006 defence pensioners below officer rank and bring pre
10.10.1997 pensioners on par with post 10.10.1997 pensioners. The
decisions to be implemented from 01st July, 2009 and will cost more
than Rs.2,100 crore annually.
Education
· Provision for the
scheme ‘Mission in Education through ICT’ substantially increased to
Rs.900 crore and the provision for setting up and up-gradation of
Polytechnics under the Skill Development Mission enhanced to Rs.495
crore.
· Rs.827 crore allocated for opening one Central University in each uncovered State.
· Rs.2,113 crore allocated for IITs and NITs which includes a provision of Rs.450 crore for new IITs and NITs.
· The overall Plan budget for higher education is to be increased by Rs.2,000 crore over Interim B.E. 2009-10.
· Rs.50 crore
allocated for Punjab University, Chandigarh. Plan allocation for
Chandigarh to be suitably enhanced during the year to provide better
infrastructure to the people of Chandigarh.
Commonwealth Games, 2010
· Outlays to be stepped up from Rs.2,112 crore in Interim Budget to Rs.3,472 crore in regular Budget 2009-10.
Srilankan Tamils
· Rs.500 crore
allocated for rehabilitation of internally displaced persons and
reconstruction of the northern and eastern areas of Sri Lanka. Ministry
of External Affairs to work closely with the Sri Lankan Government.
Cyclone Aila
Rs.1,000 crore allocated for programme for rebuilding the damaged infrastructure caused due to cyclone Aila in West Bengal.
BUDGET 2009 BUDGET ESTIMATE 2009-10
Budget Estimates
provide for a total expenditure of Rs.10,20,838 crore consisting of
Rs.6,95,689 crore under Non-plan and Rs.3,25,149 crore under Plan
registering an increase of 37 per cent in Non-plan expenditure and 34
per cent in Plan expenditure over B.E. 2008-09.
· Total expenditure in B.E. 2009-10 increased by 36 per cent over B.E. 2008-09.
· Increase in
Non-plan expenditure is mainly due to implementation of Sixth Central
Pay Commission recommendations, increased food subsidy and higher
interest payment arising out of larger fiscal deficit in 2008-09.
· Interest
payments estimated at Rs.2,25,511 crore constituting about 36 per cent
of Non-plan revenue expenditure in B.E. 2009-10.
· Subsidies up from Rs.71,431 crore in B.E. 2008-09 to Rs.1,11,276 crore in B.E.
2009-10.
· Outlay for Defence up from Rs.1,05,600 crore in B.E. 2008-09 to Rs.1,41,703 crore in B.E. 2009-10.
· Gross Budgetary Support for Annual Plan 2009-10 enhanced by Rs.40,000 crore over Interim B.E. 2009-10.
· State Governments
to be permitted to borrow additional 0.5 per cent of their GSDP by
relaxing the fiscal deficit target under FRBM from 3.5 per cent to 4
per cent of their GSDP. This will enable the States to borrow Rs.21,000
crore additionally over Interim B.E. 2009-10.
· Gross tax receipts budgeted at Rs.6,41,079 crore in B.E. 2009-10 compared to Rs.6,87,715 crore in B.E. 2008-09.
· Non-tax revenue receipts estimated at Rs.1,40,279 crore in B.E. 2009-10 compared to Rs.95,785 crore in B.E. 2008-09.
· Revenue deficit
projected at 4.8 per cent of GDP in B.E. 2009-10 compared to 1 per cent
in B.E. 2008-09 and 4.6 per cent as per provisional accounts of
2008-09.
· Fiscal deficit
as a percentage of GDP is projected at 6.8 per cent compared to 2.5 per
cent in B.E. 2008-09 and 6.2 per cent as per provisional accounts
2008-09.
BUDGET 2009 TAX PROPOSALS
· Tax reform, like
all reforms, is a process and not an event. Thrust of reforms has been
to improve the efficiency and equity of our tax system. This is sought
to be achieved by eliminating distortions in the tax structure,
introducing moderate levels of taxation and expanding the base and
accompanied by requisite re-engineering of key business processes
coupled with automation.
· Recent
initiative, on direct taxes side, of the setting up of a Centralized
Processing Centre (CPC) at Bengaluru where all electronically filed
returns, and paper returns filed in entire Karnataka, will be
processed.
· Centre’s Tax-GDP
ratio has increased to 11.5 per cent in 2008-09 from a low of 9.2 per
cent in 2003-04. Share of direct taxes in the Centre’s tax revenues has
increased to 56 percent in 2008-09 from 41 percent in 2003-04,
reflecting sharp improvement in equity of our tax system.
· Structural
changes in direct taxes to be pursued by releasing the new Direct Taxes
Code within the next 45 days and in indirect taxes by accelerating the
process for the smooth introduction of the Goods and Services Tax (GST)
with effect from 1st April, 2010.
· The Direct Taxes
Code, along with a Discussion Paper, to be released to the public for
debate. The Direct Taxes Code Bill will be finalised for introduction
in Lok Sabha sometime during the Winter Session based on the inputs
received.
· The Authorities for Advance Rulings on Direct and Indirect Taxes to be merged by amending the relevant Acts.
· Agreement has
been reached on the basic structure of GST in keeping with the
principles of fiscal federalism enshrined in the Constitution. Broad
contour of the GST Model envisages dual GST comprising of a Central GST
and a State GST.
· The Centre and the States will each legislate, levy and administer the Central GST and State GST, respectively.
BUDGET 2009 Direct Taxes
· No changes made in the Corporate Tax rates.
· Exemption limit
in personal income tax raised by Rs.15,000 from Rs.2.25 lakh to Rs.2.40
lakh for senior citizens; by Rs.10,000 from Rs.1.80 lakh to Rs.1.90
lakh for women tax payers; and by Rs.10,000 from Rs.1.50 lakh to
Rs.1.60 lakh for all other categories of individual taxpayers.
· Deduction under
section 80-DD in respect of maintenance, including medical treatment,
of a dependent who is a person with severe disability being raised from
the present limit of Rs.75,000 to Rs.1 lakh.
· Surcharge on
various direct taxes to be phased out; in the first instance, by
eliminating the surcharge of 10 percent on personal income-tax.
· Sun-set clauses
for deduction in respect of export profits under sections 10A and 10B
of the Income-tax Act being extended by one more year i.e. for the
financial year 2010-11.
· Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees to be abolished.
· Scope of
provisions relating to weighted deduction of 150% on expenditure
incurred on in-house R&D to all manufacturing businesses being
extended except for a small negative list.
· Businesses to be
incentivised by providing investment linked tax exemptions rather than
profit linked exemptions. Investment linked tax incentives to be
provided, to begin with, to the businesses of setting up and operating
‘cold chain’, warehousing facilities for storing agricultural produce
and the business of laying and operating cross country natural gas or
crude or petroleum oil pipeline network for distribution on common
carrier principle. Under this method, all capital expenditure, other
than expenditure on land, goodwill and financial instruments to be
fully allowable as deduction.
· Minimum
Alternate Tax (MAT) to be increased to 15 per cent of book profits from
10 per cent. The period allowed to carry forward the tax credit under
MAT to be extended from seven years to ten years.
· New Pension
System (NPS) to continue to be subjected to the Exempt-Exempt- Taxed
(EET) method of tax treatment of savings. Income of the NPS Trust to be
exempted from income tax and any dividend paid to this Trust from
Dividend Distribution Tax. All purchase and sale of equity shares and
derivatives by the NPS Trust also to be exempt from the Securities
Transaction Tax. Self employed persons to be enabled to participate in
the NPS and to avail of the tax benefits available thereto.
· Alternative
dispute resolution mechanism to be created within the Income Tax
Department for the resolution of transfer pricing disputes. Central
Board of Direct Taxes (CBDT) to be empowered to formulate ‘safe
harbour’ rules to reduce the impact of judgemental errors in
determining transfer price in international transactions.
· Commodity Transaction Tax (CTT) to be abolished.
· Donations to electoral trusts to be allowed as a 100 percent deduction in the computation of the income of the donor.
· Deduction under
section 80E of the Income-tax Act allowed in respect of interest on
loans taken for pursuing higher education in specified fields of study
to be extended to cover all fields of study, including vocational
studies, pursued after completion of schooling.
· To mitigate the
practical difficulties faced by charitable organisations, anonymous
donations received by charitable organisations to the extent of 5
percent of their total income or a sum of Rs.1 lakh, whichever is
higher, not to be taxed.
· Scope of
presumptive taxation to be extended to all small businesses with a
turnover upto Rs. 40 lakh. All such taxpayers to have option to declare
their income from business at the rate of 8 percent of their turnover
and simultaneously enjoy exemption from the compliance burden of
maintaining books of accounts. As a procedural simplification, they are
also to be exempted from advance tax and allowed to pay their entire
tax liability from business at the time of filing their return. This
new scheme to come into effect from the financial year 2010-11.
· Tax holiday
under section 80-IB(9) of the Income Tax Act, which was hitherto
available in respect of profits arising from the commercial production
or refining of mineral oil, to be extended to natural gas. This tax
benefit to be available to undertakings in respect of profits derived
from the commercial production of mineral oil and natural gas from oil
and gas blocks which are awarded under the NELP-VIII round of bidding.
The section to be retrospectively amended to provide that “undertaking”
for the purposes of section 80-IB(9) will mean all blocks awarded in
any single contract.
BUDGET 2009 Indirect Taxes
· Proposals on
indirect taxes to seek to achieve stable framework by maintaining the
overall rate structure for customs and central excise duties as well as
service tax.
· Customs duties
· Customs duty of 5% to be imposed on Set Top Box for television broadcasting.
· Customs duty on LCD Panels for manufacture of LCD televisions to be reduced from 10% to 5%.
· Full exemption from 4% special CVD on parts for manufacture of mobile phones and accessories to be reintroduced for one year.
· List of specified
raw materials/inputs imported by manufacturer-exporters of sports goods
which are exempt from customs duty, subject to specified conditions, to
be expanded by including five additional items.
· List of
specified raw materials and equipment imported by
manufacturer-exporters of leather goods, textile products and footwear
industry which are fully exempt from customs duty, subject to specified
conditions, to be expanded.
· Customs duty on unworked corals to be reduced from 5% to Nil.
· Customs duty on
10 specified life saving drugs/vaccine and their bulk drugs to be
reduced from 10% to 5% with Nil CVD (by way of excise duty exemption).
· Customs duty on
specified heart devices, namely artificial heart and PDA/ASD occlusion
device, to be reduced from 7.5% to 5% with Nil CVD (by way of excise
duty exemption).
· Customs duty on
permanent magnets for PM synchronous generator above 500 KW used in
wind operated electricity generators to be reduced from 7.5% to 5%.
· Customs duty on bio-diesel to be reduced from 7.5% to 2.5%.
· Concessional
customs duty of 5% on specified machinery for tea, coffee and rubber
plantations to be reintroduced for one year, upto 06.07.2010.
· Customs duty on
‘mechanical harvester’ for coffee plantation to be reduced from 7.5% to
5%. CVD on such harvesters has also been reduced from 8% to nil, by way
of excise duty exemption.
· Customs duty on
serially numbered gold bars (other than tola bars) and gold coins to be
increased from Rs.100 per 10 gram to Rs.200 per 10 gram. Customs duty
on other forms of gold to be increased from Rs.250 per 10 gram to
Rs.500 per 10 gram. Customs duty on silver to be increased from Rs.500
per Kg. to Rs.1000 per Kg. These increases also to be applicable when
gold and silver (including ornaments) are imported as personal baggage.
· Customs duty on cotton waste to be reduced from 15% to 10%.
· Customs duty on wool waste to be reduced from 15% to 10%.
· Customs duty on rock phosphate to be reduced from 5% to 2%.
· CVD exemption on Aerial Passenger Ropeway Projects to be withdrawn. Such projects will now attract applicable CVD.
· Customs duty
exemption on concrete batching plants of capacity 50 cum per hour or
more to be withdrawn. Such plants will now attract customs duty of
7.5%.
· On packaged or
canned software, CVD exemption to be provided on the portion of the
value which represents the consideration for transfer of the right to
use such software, subject to specified conditions.
· Customs duty on
inflatable rafts, snow-skis, water skis, surf-boats, sail-boards and
other water sports equipment to be fully exempted.
Central excise duties
· Excise duty rate on items currently attracting 4% to be raised to 8% with following major exceptions:
o Specified food items including biscuits, sharbats, cakes and pastries
o Drugs and pharmaceutical products falling under Chapter 30
o Medical equipment
o Certain varieties of paper, paperboard and articles thereof
o Paraxylene
o Power driven pumps for handling water
o Footwear of RSP exceeding Rs.250 but not exceeding Rs.750 per pair
o Pressure cookers
o Vacuum and gas filled bulbs of RSP not exceeding Rs.20 per bulb
o Compact Fluorescent Lamps
o Cars for physically handicapped
· Specific
component of excise duty applicable to large cars/utility vehicles of
engine capacity 2000 cc and above to be reduced from Rs. 20,000/- per
vehicle to Rs.15,000 per vehicle.
· Excise duty on
petrol driven trucks/lorries to be reduced from 20% to 8%. Excise duty
on chassis of such trucks/lorries to be reduced from ‘20% + Rs.10000’
to ‘8% + Rs.10000’.
· Excise duty on Special Boiling Point spirits to be reduced to 14%.
· Excise duty on naphtha to be reduced to 14%.
· Duty paid High Speed Diesel blended with upto 20% bio-diesel to be fully exempted from excise duties.
· The ad valorem
component of excise duty of 6% on petrol intended for sale with a brand
name to be converted into a specific rate. Consequently, such petrol
would now attract total excise duty of Rs.14.50 per litre instead of
‘6% + Rs.13 per litre’.
· The ad valorem
component of excise duty of 6% on diesel intended for sale with a brand
name to be converted into a specific rate. Consequently, such diesel
would now attract total excise duty of Rs.4.75 per litre instead of ‘6%
+ Rs.3.25 per litre’.
· Excise duty on manmade fibre and yarn to be increased from 4% to 8%.
· Excise duty on PTA and DMT to be increased from 4% to 8%.
· Excise duty on polyester chips to be increased from 4% to 8%.
· Excise duty on acrylonitrile to be increased from 4% to 8%.
· The scheme of optional excise duty of 4% for pure cotton to be restored.
· Excise duty for
man-made and natural fibres other than pure cotton, beyond the fibre
and yarn stage, to be increased from 4% to 8% under the existing
optional scheme.
· An optional
excise duty exemption to be provided to tops of manmade fibre
manufactured from duty paid tow at par with tops manufactured from duty
paid staple fibre.
· Suitable
adjustments to be made in the rates of duty applicable to DTA
clearances of textile goods made by Export Oriented Units using
indigenous raw materials/ inputs for manufacture of such goods.
· Full exemption
from excise duty to be provided on goods of Chapter 68 of Central
Excise Tariff manufactured at the site of construction for use in
construction work at such site.
· Excise duty
exemption on ‘recorded smart cards’ and ‘recorded proximity cards and
tags’ to be made optional. Manufacturers have the option to pay the
applicable excise duty and avail the credit of duty paid on inputs.
· EVA compound manufactured on job work for further use in manufacture of footwear to be exempted from excise duty.
· Benefit of SSI
exemption scheme to be extended to printed laminated rolls bearing the
brand name of others by excluding this item from the purview of the
brand name restriction.
· On packaged or
canned software, excise duty exemption to be provided on the portion of
the value which represents the consideration for transfer of the right
to use such software, subject to specified conditions.
· Excise duty on branded articles of jewellery to be reduced from 2% to Nil.
Service tax
· Service Tax to be imposed on the following services:
o Service provided in relation to transport of goods by rail
o Service provided in relation to transport of coastal cargo; and goods through inland water including National Waterways
o Advice,
consultancy or technical assistance provided in the field of law (this
tax would not be applicable in case the service provider or service
receiver is an individual).
o Cosmetic and plastic surgery service
· Exemption from
service tax being provided to inter-State or intra-State transportation
of passengers in a vehicle bearing ‘Contract Carriage Permit’ with
specified conditions.
· Exemption from
service tax (leviable under Banking and other financial services or
under Foreign exchange broking service) being provided to inter-bank
purchase and sale of foreign currency between scheduled banks.
· Two taxable
services, namely, ‘Transport of goods through road’ and ‘Commission
paid to foreign agents’ to be exempted from the levy of service tax, if
the exporter is liable to pay service tax on reverse charge basis.
However, present cap of 10% on commission agency charges is retained.
Thus there would be no need for the exporter to first pay the tax and
later claim refund in respect of these services.
· Export Promotion
Councils and the Federation of Indian Export Organizations (FIEO) to be
exempt from service tax on the membership and other fees collected by
them till 31st March 2010.
· Tax proposals on
direct taxes to be revenue neutral. On indirect taxes, estimated net
gain to be Rs.2,000 crore for a full year.
· For other
services received by exporters, service tax exemption to be operated
through the existing refund mechanism based on self-certification of
the documents where such refund is below 0.25 per cent of FOB value,
and certification of documents by a Chartered Accountant for value of
refund exceeding the above limit.
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