Budget in 2 minutes

INTERIM BUDGET & THE ECONOMY/TAXATION

Indirect taxes

• No tax on foreign companies if their outsourced services are ancillary and auxiliary in nature and adequate remuneration is paid to the Indian call centre
• Free baggage allowance being raised from Rs 12,000 to Rs 25,000
• Customs duty on such baggage being reduced from 50 to 40 per cent, effective from February 3
• Finance and commerce ministries examining the feasibility of extending deemed export status to domestic capital goods manufacturers making goods competing with duty-free imports
• Countervailing duty for the power sector may be Cenvattable
• Excise breaks on residual fuel oils to generating units licensed under the 1948 Electricity Supply Act may be applied retrospectively where electricity is supplied to state boards or under power purchase agreements

Direct Taxes

• Existing stamp duty halved on all central government stamp paper

(RECOMMENDATIONS)

• Threshold for payment of stamp duty to be increased from Rs 500 to Rs 50,000
• Standard deduction should be revisited
• Fiscal benefits to new power projects be extended to 2012, instead of 2006. Should also be available to cases of take-over from State Electricity Boards
• Exemption of listed equities acquired on or after March 1, 2003 from long-term capital gains tax be extended for three more years
• Tonnage tax scheme for shipping, with notional income at a fixed rate, on the basis of net registered tonnage to be considered
• Land acquired by government from farmers should be exempt from tax deduction at source on the interest earned on enhanced compensation