Finance minister P Chidam-baram left the essentials of his dream budget untouched while announcing a package of duty concessions worth Rs 111 crore yesterday.
Moving the 1997 Finance Bill for the Lok Sabhas consideration, the finance minister deferred the move to extend the scope of service tax to new sectors like transport.
Cruise ships, boats and cargo ships were exempted from excise duty, while alterations were proposed in the excise duties for aluminium.
The minister announced a reduction in excise duties on a range of mass consumption goods. He also proposed amendments to the Modvat rules to plug the loophole which was being exploited by several users of petro-goods which come under Modvat to unfairly claim credit.
Chidambaram did not roll back direct tax rate cuts, resisting severe pressure from the Left as well as the Congress.
The changes proposed include restoration of tax exemption on aircraft lease rentals, extending minimum alternate tax (MAT) concessions to software exporters, advancing the telecom licence fee amortisation to April 1996 and restricting disclosure under the Voluntary Deposit Scheme to the Income Tax Act.
An amendment was also announced to the UTI Act which corrected the exclusive benefits accorded to the institution after the changes in dividend taxation laws announced in the budget. The minister said the relevant section would be omitted and UTI brought on par with other mutual funds.
While concessions on the customs side would involve a net revenue loss of about Rs 55 crore, the excise give-aways would amount to Rs 56 crore in a full year, said Chidambaram.
The finance minister announced two new initiatives to increase the budgetary support for power in the 1997-98 central plan by about Rs 900 crore. This is aimed at expediting commissioning of about 6,000 mega watts (MW) of generating capacity in the next two to three years.
In an apparent reference to the transport sectors apprehensions about imposition of a service tax, the minister said he did not propose to levy the tax immediately. In each case, an opportunity will be given to the industry concerned to make their representations about the manner in which the tax should be collected and exemptions, if any, which deserve to be granted, he said, adding that the rules would be made thereafter and made effective from a prospective date.
The minister reduced customs duties on CNC systems from 30 to 20 per cent, on ferro nickel from 20 to 10 per cent and on litharge used in producing glass shells and parts for colour picture tubes from 20 to 10 per cent.
Similarly, the minister reduced the excise duties on silicon from 13 to 8 per cent, on fruit juice-based non-alcoholic beverages from 18 to 8 per cent, on synthetic sewing thread from 18 to 15 per cent and on switches and plugs from 18 to 13 per cent.
The demand put up by retail business regarding computation of presumptive tax was accepted by the finance minister.
The profits of a firm will now be computed excluding salary and interest paid to partners, in accordance with the limits laid down in Section 40 (b) of the Income Tax Act.
Chidambaram also accepted the plea of retail businessmen that there was no need for them to be compulsorily scrutinised by an assessing officer.
Service tax on transport, other sectors deferred Corporate, income-tax rate cuts retained
MAT concessions extended to software exporters
Tax exemption on aircraft lease rentals restored
No changes in import duties on capital goods
Disclosures under Wealth Tax excluded from VDS
Telecom licence fee amortisation date advanced to April 1996
Anomaly in according UTI exclusive benefits corrected; UTI brought on par with other mutual funds
Cruise ships, boats, cargo ships exempted from excise
Rules amended to plug misuse by users of modvatable petro-products
Excise duties on some mass consumption goods lowered
Concessions in presumptive tax levied on retail business