Duty Cuts Impact Govt Indirect Tax - Feb 20, 2009

The government on Feb 19 said the indirect tax collections in this financial year was affected by the excise duty cuts announced in the last year''s Budget along with the slowdown in some sectors. According to S S Palanimanickam, Minister of State for Finance, "The Central excise duty rates were reduced in the Budget 2008 ... These reductions along with some slowdown in specific sectors affected the revenue (indirect tax) collections".

He also added that central excise duty rates on motor spirit as well as the high-speed diesel oil were also reduced subsequent to the Budget. He pointed out that that government has taken a number of administrative steps to plug the loopholes in law procedures and improve the revenue position as well as the data collection and analysis, audit and anti-evasion measures. Regarding the duty evasion in the export-oriented units, he said that persuasive action is being taken by the government to receive duties along with initiation of penal proceedings.

Budget By The Government Is Likely To Step Up The Expenditure - Feb 16, 2009

The interim budget by the UPA government is likely to step up the expenditure on its flagship programmes along with rural development and housing that doubling the fiscal deficit to 5% in 2009-10. The interim budget is to be presented by External Affairs Minister Pranab Mukherjee who is currently holding the charge of Finance Ministry. The government in the last Budget has fixed the fiscal deficit for the current fiscal at 2.5 per cent of GDP, which is likely to be raised to 5 per cent for the next fiscal, primarily on the back of higher allocations towards the government''s flagship schemes like the Bharat Nirman and the National Rural Employment Guarantee Scheme.

The government to provide focus on the urban infrastructure may expand the ambit of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to include more districts. Besides this, the other focus of the Budget is likely to be on rural development which may witness some more allocations. The interim Budget may also provide a token allocation for kick starting the Unique Identification (UID) scheme to provide a specific number to every citizen.

In line with this, the infrastructure finance company IIFCL may be authorized to raise money through tax-free bonds. With the last two-stimulus package announced by the government due to slowdown, the fiscal deficit has already crossed four per cent till December. The total gross budgetary support (GBS), which represents the expenditure towards Plan schemes and transfer of resources to states, may be increased.

Gujarat Mulls Performance Budget - Aug 05, 2008

The state government has determined to take into account the quality of expenditure rather than mere physical numbers while preparing the budget for the year 2009-10.

The government has determined to treat the budget as an instrument for reforms at grassroots level or in other words linking outlays with outcomes at grassroots level. The challenge before the government is to determine what outcomes citizens value the most and rethink the manner in which the department and agencies go on to attain the results. It likely to be noted that the state will be celebrating its Golden Jubilee Year on May 1, 2010.

This exercise is being done to ensure that goals for 2009-10 also become Golden Goals for all departments. The target behind this move is not only the convergence of schemes but also the convergence of resources in a more effective manner since inter-departmental issues are likely to come up while setting performance indicators.

Industry Body Welcomes Karnataka Budget

Chennai/ Bangalore: The Bangalore Chamber of Industry and Commerce (BCIC) has appreciated the emphasis on the development of human capital by further enhancing investment in education, health and social welfare.

This, along with the measures to improve productivity of the agricultural sector, which is the need of the hour along with farm growth, is critical to maintain economic growth, the industry body noted. The move to increase the outlay to the state''s annual plan by 22 per cent and continued support to B-Trac as well as the creation of SPV on connectivity to BIAL was also well received.

Trade And Industry Bodies Hail Kerala Budget

Kochi: The trade and industry here have hailed the State Budget, saying that it is in the right direction by giving several welfare schemes for various sections of the society. Mr Umang Patodia, Chairman, CII, Kerala State Council, said that efforts to promote public-private partnership in infrastructure development, restructuring of PSUs, financial support for KSRTC, and BIFR model institutional set up for SME sector will go a long way in improving and promoting an efficient administration.

Mr Jose Dominic, President of the Cochin Chamber of Commerce and Industry, said that though the government''s purpose to promote infrastructure development is a welcome measure, much more needed to be done in the State to keep pace with the times. Mr R. Mohandas, President of the Indian Chamber of Commerce and Industry, said that the Finance Minister has positively reacted to the Chamber''s suggestion to introduce an amnesty scheme for disposing of arrears of all taxes to be collected by the Commercial Taxes Department under the KGST Act up to the assessment years right from 1991-92 to 2004-05; to conduct this setting up of a fast track adalat on the Ernakulam model; and to extent the decreased rate of 4 per cent tax for cashew kernels to roasted and salted cashew nuts etc.

FM Says No Rollback Of Budget Proposals

New Delhi: The Finance Minister, Mr P. Chidambaram, on March 4 said that there will be no rollback on any Budget proposals even as he assured industry that any inadvertent errors will be corrected. But if any inadvertent error someone noticed pesticides, any inadvertent error. So, there is no rollback, Mr Chidambaram said captains of industry at a post Budget meeting organised by the Confederation of Indian Industry (CII). On interest rates, Mr Chidambaram felt that there was scope for deposit and lending rates to drop, but the matter was in the domain of RBI. He also refused the tyre industry''s demands that the existing inverted duty structure on rubber be corrected. There are 20 Members of Parliament from Kerala who are opposed to duty cut on natural rubber.

Budget To Stimulate Investment, Growth: Chidambaram

New Delhi: Finance Minister P Chidambaram on Feb 29 said the Union Budget for 2008-09 would stimulate investment and consequently growth, while pointing out that he had done the best through the budgetary exercise by providing credit facilities to the farm sector. Credit is only one element of the story in the farm sector. I provided more credit. Budget can only address credit side and the farm sector has not done too bad this year, he said in his post-Budget comments. The Finance Minister had announced debt waiver and relief worth Rs 60,000 crore to small and marginal farmers in the Budget, the last full financial statement before the general elections in 2009. This Budget will stimulate investment and growth and that growth will create wealth. The economy is growing by eight per cent, people have become more tax compliant and they are willing to pay taxes, he said on the buoyancy in government''s revenues.

Tiruchi SSI Association Welcomes Budget

Tiruchi: The Tiruchi District Tiny and Small Scale Industries'' Association has hailed the Union Budget, saying it is tilting towards savings and infrastructure development. Removal of customs duty on scrap will help in infrastructure development and decrease of excise duty will lead to progress of the automobile sector. Decrease in personal income tax will result in higher savings and encourage willing compliance in tax payment, thereby augmenting revenue for the Government, the association said adding that the Budget has lined way for conversion of hidden income into income generating assets.

Left, Opposition Pick Holes In Budget Proposals

New Delhi: In the biggest ever one-time sop in independent India, Union Finance Minister P Chidambaram on Friday waived off farm loans worth Rs 60,000 crore to 4 crore small and marginal farmers.

United Progressive Alliance Chairperson Sonia Gandhi congratulated the government for the loan waiver package for farmers announced in the Union Budget.

"Hamare UPA sarkar ne jo kisano ke liye kiya hai, jo karz ki mafi ker rahe hain woh ek krantikari kadam hai. Ek aithihasik kadam hai. Mein Prime Minister badhai deti hoon aur hamare sabhi kisan bhaiyon ko bhi badhai deti hoon (UPA government has done a commendable job by announcing the loan waiver for farmers. This is an historic step. I congratulates the Prime Minister and the farmers)," Sonia said after the presentation of the Budget in Parliament.

The Communist Party of India-Marxist (CPI-M) is not entirely happy with the Budget. Its Politburo member Sitaram Yechury said the loan waiver package won't be of much help to farmers.

"This loan waiver is concerned only with those farmers who have taken loans from nationalised banks, cooperatives or governmental institutions. This is unfortunately only 1/3rd of the overall farming community. Two thirds of them are victims of private moneylenders. While 1/3 rd will get relief, which is welcome, but no measures have been taken for relief for the others. The bulk of suicides of the farmers are taking place in those sections," he said.

But Prime Minister Manmohan Singh justified the waiver.

"Our farmers are our biggest businessmen. They produce some of the most essential commodities and if they are depressed then it is not good for the country. I sincerely believe that our government has been generous in terms of its response. It is also an unorthodox response but considering the amount of depression that prevails in the agricultural sector, this is in response that is fully justified," the Prime Minister said.

The Opposition, too, looked to drill holes in the UPA's last Budget. Janata Dal (United) leader Digvijay Singh said that the Budget is an election-oriented one and does not help the common man.

"The same things which they have done today could have been done fours years back also. Of course we could have done the same thing. We did not do it so we paid the price. It is not at all a good Budget. I consider it a samvedaanheen (without compassion) Budget because 25,000 farmers have lost their lives. Had this waiver come earlier their lives would have been saved. It is not too late. It is a question of vote since you are looking for vote you are doing all this. But you are not concerned with the common man," Digvijay Singh said.

Budget Good, But Important To Deliver: Swraj Paul

LONDON: Lord Swraj Paul, founder chairman of the Caparo Group of Industries, praised Friday's budget as "very good" but said the need to deliver to the farmer was even more important than the promised loan waiver.

"P Chidambaram is a very experienced finance minister and he has done a very good job," said Paul, who is a leading Britain-based NRI industrialist.

He particularly praised the budget's focus on what he called "India's two most pressing problems - how to reach the ordinary man and attend to education".

"But at the end of the day, writing off debt is never going to be a solution to the problem of farmers," he told IANS.

"We still have to find long-term solutions. The government will need to deliver to the people. Enough attention needs to be placed to delivery," said Paul, who is also a well-known philanthropist in Britain.

Budget Inclusive And Balanced One: CII

PUDUCHERRY: The Confederation of Indian Industry (CII) Puducherry, has described the union budget as `an inclusive and balanced` one.

In a press release here today, CII chairman C Chinnasamy said that the budget has focussed on growth in crucial sectors like Agriculture, education, health and defence. The increased allocation of funds for these sectors and announcement of new schemes and projects would boost the economy, he said.

The hike in exemption limit in Income tax and also cut in excise duties imposed on cars would improve the lifestyle of the people, he said.

Vice Chairman of CII (Puducherry) Sriram Subramany however pointed out that the industry's expectation on some reduction in corporate tax in the budget had been belied.

He said all export companies also anticipated concessions in view of the rupee appreciation and global recession. This had not come true.

Shriram Subramany said waiver of loans from farmers to the extent of Rs 60,000 crore was most welcome and also necessary. The raising of exemption limit for Income Tax assessees was also a step in the right direction as it would help the urban middle class people across the country, he said.

Budget May Cut Excise Duties To Boost Manufacturing

Concerned over the slump in industrial production and to maintain inflation around 4 per cent, the Government is likely to provide relief to the manufacturing sector by marginally cutting excise duty rates or sector-specific duties in the Budget 2008-09. Finance Minister P Chidambaram may announce cut in excise duty rates across the board from 16 per cent to 14 per cent or sector-specific duty cuts in the budget to be presented on February 29, official sources said. Sectors like pharmaceutical, textile machinery, food processing, paper and auto including two wheelers, tyres are expected to get relief in excise duty, but like last year Chidambaram could also prune excise duty exemptions to maintain revenue collections, sources said.

According to Finance Ministry, due to various excise duty exemptions the estimated revenue foregone touched Rs 9,690 crore in 2006-07 as against Rs 66,760 crore in the previous year. It includes area-specific tax exemptions of Rs 7,000 crore in 2006-07. With the approval of over 400 special economic zones, the revenue foregone figures could be much higher for 2007-08, although some tax exemptions were withdrawn in the last budget.

Budget Wishlist: Excise Duty Drop On Steel

First came the price rollback and now India''s steel lobby wants the Finance Minister P Chidambaram to do his bit to bring down the price even more, a relief not just for the aam admi but also for the industry. The Union Steel Minister Ram Vilas Paswan has already flagged off the agenda seeking to halve the excise duty to 8 per cent but expectations don''t stop here.Tax cuts The steel minister proposes to reduce excise duty on steel to half from 8 per cent, export tax to be up on iron ore and Import duty on iron ore to be nil besides cut in import tax on coking coal to nil from 5 per cent.The steel lobby also wants hike tax on iron ore exports and a simultaneous cut in customs on ore imports. The industry is also demanding to coke coal imports duty free and cut in customs duty on other raw materials like zinc, nickle, LNG.

The iron ore exports should be banned. Declining profits The steel sector has seen many ups and downs in one year since the last budget. Looking at the ups, yes the steel prices have gone up but they have not been able to catch up with the raw material price hikes and this has squeezed the margins of the steel players but those feeling the heat the most are the smaller steel producers.

Budget Likely To Give Relief To Income Tax Payers

Income tax payers are likely to get a major relief in the Budget 2008-09, as the government prepares itself to please the middle class in the election year.Finance Minister P Chidambaram can give a marginal but visible relief to personal income tax assessees this year, as tax collections have substantially improved over the past three years. With buoyant tax collections in 2007-08, there is significant pressure on Chidambaram to reduce the effective rates. The Minister himself has acknowledged that with better tax compliance, there could be a case for cut in rates. The minimum income threshold limit for income tax payer could be raised from Rs 1,10,000 to Rs 1,25,000 or Rs 1,30,000, sources said. Similarly, the income threshold for 30 per cent tax rate could be raised from the current Rs 2,50,000 per annum, sources said, adding that this had been kept constant since fiscal year 2005-06.

Budget May Roll Tax Sops For Power Sector

The Union Budget is an opportunity both for populist as well as meaningful measures to kickstart various sectors and power is one such area, which could do with more incentives. Finance Minister P Chidambaram is all set to announce a new set of measures to add capacity in the sector. According to sources, there may be an excise cut on power equipments from 16 per cent to 10 per cent. The income tax exemption for investment of up to Rs 50,000 in power bonds may be allowed, sources said, adding that CFLs and Energy efficient ACs may get excise cut by 5-6 per cent. The appreciation of rupee may hold FM from making any change in customs duty currently at 5 per cent for non-mega power projects but the cut in excise duty rates may be sufficient for the industry as the cut will translate into lower operational cost for the companies in the business.

The power sector also feels there is a strong case for rationalization in duties as that will make the sector more attractive. There is a case for excise duty cut, said Ravi Uppal, Chairman, ABB India. The electrical equipment companies have grown at a rapid pace in the last few years. However, going by the order inflows of these companies and with the sops expected in the budget, we can expect a much higher growth in the sector. With spiraling fuel prices, there is an urgent need to give incentive to renewable and non-conventional energy and the finance minister may do exactly the same.

India Likely To Lower Import Duties In Budget

India''s upcoming budget for 2008-09 may see some tweaking in the import duty structure, a top official of the Commerce and Industry Ministry said on Feb 16 in New Delhi. Import duties need to be cut in certain areas such as raw material and inverted duties. Inverted duties have to be addressed at this time as lot of trade agreements are coming, the official said. The inverted duty structure has to be dealt with now and we are looking at addressing it seriously. The Indian industry has also been pressing for a considerable reduction in the import duties for a long time now. The import duty reduction as a result of various bilateral agreements has adversely affected sectors such as textiles.

Other sectors like chemicals, electronics, auto components, tyres and electrical equipment have also been affected due to various bilateral trade agreements signed by India. The inverted duty structure impacts the domestic industry adversely as it has to pay a higher price for the raw material in terms of duty, the finished product on the other hand lands at lower duty and costs less. The government had in 2006 set up a committee under Anwar-ul Hoda to examine the inverted duty structure.

Small Investors Expect Populist Budget

The UPA''s Finance Minster is expected to deliver a populist budget and so the demands are running high. The small investors are hopeful of a tax cut. At present, income up to Rs 1,10,000 for men and Rs 1,45,000 for women attracts no tax. Experts feel that this threshold can be increased by another Rs 40,000. Since incomes have also risen significantly, the highest tax rate of 30 per cent should be applicable to salaries above Rs five lakh against the current Rs 2,50,00. This could translate into a cool saving of Rs 40,000.

Another way to save on tax is to invest up to Rs one lakh into tax saving instruments. Investors want their limit to be hiked but they are also demanding that the government should extend tax saving sops to a wide variety of options. Investors are also demanding that interest on fixed deposit savings should become tax free and MFs across the board should get a tax saving waiver instead of restricting this option only to ELSS schemes.

Even if you increase tax slab, it will definitely help. Secondly, mutual fund as a method of saving is becoming more popular. It is an opportunity to create wealth and not just an avenue for savings or short-term speculation. Having burnt their fingers in the recent market correction, small investors would be looking for a silver lining in this year''s budget. A cut in income tax rates is what everyone is expecting but at the same time, more money in the hands of investors, whether invested or spent, will also help spur growth.

Budget Session Of Parliament From Feb 25

The Budget session of Parliament will commence on February 25, it was officially announced in New Delhi on Feb 12. The session will start with President Pratibha Patil''s address to the joint sitting of both the Houses at 11 AM on February 25.While Railway Minister Lalu Prasad would present the Rail Budget for 2008-09 on February 26, Finance Minister P Chidambaram would present the General Budget for 2008-09 on February 29.The three-month session will witness a total 35 sitting with a break from March 21 to April 14.

Budget With ET: India Inc May Get FBT Breather

NEW DELHI: Bruised by the fringe benefit tax (FBT) on stock option plans for their employees in the previous budget, corporates may expect some good news in the forthcoming one. The finance ministry is toying with a proposal to provide some relief to companies on FBT in the coming budget.

The move is in sync with finance minister P Chidambaram’s concern over slowdown in production of fast moving consumer goods (FMCG). There is a strong thinking that FBT on certain items, like sales promotion, should be pared or done away with completely to mitigate the pressures industrial sectors are witnessing due to a slowdown, sources said.

At present, sales promotion, travel and even gifts to customers in sectors like readymade garments, white goods, FMCG, small accessories and automobiles are under the FBT ambit. These expenses attract 30% FBT on 20% of the total amount spent. The industry has time and again demanded excluding these expenses from the tax ambit. If the proposal goes through, then companies may have to pay less FBT on certain items classified as fringe benefits.

Similarly, FBT on dealer meetings could be tweaked. Such meetings, industry has argued, are crucial in these sectors to promote sales. FBT is leviable even when a company does not have an income-tax liability. There is also a view that some exemption limit in terms of turnover should be prescribed for FBT levy.

Fringe benefits, as outlined in Section 115 WB of the Finance Bill, mean any privilege, service, facility or amenity directly or indirectly provided by an employer to his employees (including former employees) by reason of their employment.

The tax was introduced in the 2005-06 budget. FBT collections reflected the buoyancy in other direct taxes and grew by 64.79% to Rs 5,121 crore in April 2007 to January 15, 2008 against Rs 3,108 crore in the corresponding period last year.

Mr Chidambaram had excluded expenditure on free samples and displays from FBT even as he had brought Esops under the tax ambit.