Finance Ministry Is In No Mood To Salsh Duties

The finance ministry is in no mood to salsh duties even as it rules out the possibility of a cess. Although the oil deficit predicted at Rs 2,30,000 crore for 2008-09 is threatening to derail the fiscal balance, the finance ministry is reluctant to slash duties given the huge spending ahead, be it the farm loan waiver or the NREG extension or the Sixth Pay Commission suggestions. Finance ministry sources say that at best, there is scope for decrease in Customs duty in the wake of rupee depreciation. The Customs duty for crude is 5%. A decrease in the duty could give relief to the refining companies. The finance ministry''s reluctance to decrease duties stems from the fact that the oil sector is among the biggest contributors to revenues.

Govt Sifting Through Farm Loan Waiver Suggestions: FM

NEW DELHI: Finance Minister P Chidambaram on Wednesday said “every” suggestion made on the ambitious farm waiver scheme is under examination. He said he will discuss the implementation of the scheme with the CEOs of state-owned banks in his meeting on May 1.

“Every suggestion is under examination,” he said replying supplementaries in the Lok Sabha on the farm loan waiver scheme. Members had asked the minister whether the government was considering seeking increasing the land holding limit from two hectares to five hectares for farmers to be eligible for the scheme.

“I can only do what is doable and affordable,” Mr Chidambaram said in reply to demands from several members to consider extending the scheme to farmers with landholdings up to five hectares. “The loans will be waived by June 30, 2008,” he said.

On concerns that banks were not sanctioning loans to farmers citing the scheme, Mr Chidambaram said the banks were being sensitised on the matter. The minister said he has convened a meeting of chairmen and managing directors of all banks in the first week of May to discuss writing off agricultural debts. Mr Chidambaram said that the RBI guidelines on the loan waiver were being formulated.

It may be pointed that Agriculture Minister Sharad Pawar had on April 21 ruled out taking “new responsibilities” like increasing the coverage of farm loan waiver scheme until the present package to write off Rs 60,000 crore agriculture debts is implemented.

Days after the budgetary announcement, Congress General Secretary Rahul Gandhi had specifically suggested that there should not be one landholding ceiling nor should there be a single cut-off date.

The government is also working on expanding the national crop insurance scheme which was introduced by the previous NDA government. Mr Chidambaram said that the agriculture ministry and the Planning Commission are yet to agree on the modifications for the insurance scheme. He said that the government was ready to fund the scheme as soon the Ministry of Agriculture and the Planning Commission agree on the modifications.

“If we receive a modified scheme government will be ready to fund it,” he said intervening in the debate on Finance Bill in the Lok Sabha and added “we want to move from large unit to small unit under the crop insurance.”

A member of the opposition party alleged that though government had announced Rs 60,000 crore farm loan waiver in the budget, yet it was not ready to provide about Rs 10,000 crore for the national crop insurance.

The crop insurance, if implemented at the village level, could save the lives of thousands of farmers who were forced to commit suicide every year due to failure of crop, he said. There were suggestions that the village should be made the unit area under the crop insurance scheme as against the block as per existing rules.

FM In Pier Over Tax Code Delay

The Parliamentary Standing Committee on Finance has passed stenoses against the finance ministry for the delay in bringing in the draft direct tax code for legislation to replace the voluminous Income Tax Act, 1961.

The committee doubts to find that even one year after its recommendation, the amendment Bill is yet to be introduced in Parliament. The Bill will be introduced in Parliament after the feedback and suitable amendments.

The committee thinks that fairly long time has already been taken by the department on this matter. The committee had in 2006-07 suggested that the Bill amending the direct tax laws should be introduced for effective administration of the same laws.

PM, FM Confident Of Bringing Down Inflation Rate

Prime Minister Manmohan Singh and Finance Minister P Chidambaram today expressed confidence that inflation will come down in the wake of Reserve Bank''s decision last night to hike Cash Reserve Ratio (CRR).

"Let us hope so," the Prime Minister said in response to a question on whether inflation would come down following measures taken to contain spiralling prices. Chidambaram, however, had a word of caution, saying miracles should not be expected on the price front. Pointing out that the Government does not have control over prices of imported items, he exuded confidence that international prices would moderate in the next few weeks.

"I am confident that the international prices would also moderate in the next few weeks," he told reporters on the sidelines of a function to release commemorative coins on 1857 War of Independence. Chidambaram said the RBI''s decision to hike CRR would suck out over Rs 18,000 crore, reducing liquidity to that extent. The Reserve Bank yesterday had announced a 0.5 per cent hike in CRR in two phases-- first phase on April 26 and the second on May 10-- to tame the soaring inflation that is hovering above seven per cent. CRR is the mandatory cash deposit that banks keep with the central bank at all times.

FM Likely To Reinstate Tax Holiday On Oil, Gas Production

The finance ministry is likely to continue providing a seven-year income-tax holiday on production of oil and gas. The continuation of the tax holiday will come as a relief to oil and gas companies, which have already infused huge money in exploration of hydrocarbons. It will also assist the petroleum ministry, which has been promising the tax holiday while marketing the auction of oil and gas block under the New Exploration and Licensing Policy (Nelp). Petroleum Minister Murli Deora met Finance Minister P Chidambaram. The proposal to remove the income tax holiday had put in question the auction of oil and gas blocks under Nelp VII.

Bengal FM Proposes Rs 75cr Tax

Kolkata: The West Bengal Finance Minister, Dr Asim Dasgupta, delivering the State Budget for 2008-09 here on March 17 at the Assembly, anticipated a total expenditure of Rs 52,092.73 crore, against total receipts of Rs 52,015.73 crore, leaving an initial deficit of Rs 77 crore. The Finance Minister has also projected a string of measures, by way of revenue-raising effort, to raise Rs 75 crore as additional resources in the next financial year, thus leaving an uncovered deficit of Rs 2 crore. Dr Dasgupta has combined both tax reliefs and other facilities such as attractive medical benefit schemes for State Government employees and their families involving claim reimbursement for treatment in recognised private hospitals in addition to State Government hospitals. The tax on road rollers and shoes with MRP not exceeding Rs 750 has been decreased from 12.5 per cent to four per cent. The tax on tailoring items, kerosene stoves and biscuits not manufactured in factories defined under the Factories Act has been brought down from 12.5 per cent to four cent.

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.

Govt Generous Towards Farm Sector: PM

Dubbing farmers as the ''most important businessmen'', Prime Minister Manmohan Singh on Friday said the government has been generous in its response to deal with the depression in agriculture sector while complimenting Finance Minister P Chidambaram for doing a very good job.

I sincerely believe the government has been generous in its response. It is an unorthodox response. But considering the amount of depression that prevails in the agriculture sector, this is a response mechanism that is justified, Singh said in his post-Budget comments.

Analysing the measures announced by Chidambaram in the Budget, he said the government would list some more Public Sector Undertakings and noted, ''''markets are thirsty for good new chips.

We have to explore all processes of enhancing our resources, including listing the enterprises in the markets, Singh said.

Listing out inflation and international recession as causes for concern, he said, We will have to tackle both worries. There is a worry that international recession will impact the growth process. Rise in commodity prices, petroleum prices will lead to more inflation. So, we have to strike a balance.

The Finance Minister has done a very good job. He has kept the fiscal deficit, the revenue deficit under control. Simultaneously, he has ensured if some adverse wind comes from outside the country, he has used the excise duty reductions, Singh said.

Indirect Taxes Likely To Surpass Budget Targets, Says FM

New Delhi: The Finance Minister, Mr P. Chidambaram, on Feb 24 expressed optimism that the Revenue Department would surpass the budget targets on indirect taxes for 2007-08 and get 1 per cent of excess collections as rewards for this year too. Despite slow growth in excise duty mop ups, this optimism comes on the back of buoyant customs duty collections so far in the current fiscal.

For 2007-08, the Government had pegged the indirect tax collections target at about Rs 2.8 lakh crore. In both 2005-06 and 2006-07, the CBEC exceeded budget targets to the tune of Rs 8,615 crore and Rs 11,300 crore respectively and got a reward of 1 per cent of the excess collections, which amounted close to Rs 200 crore.The Finance Minister''s observations on surpassing budget estimates for 2007-08 came less than a week before he would present the Union budget for 2008-09 on Friday. Achievement of excise duty collections target of Rs 1,30,220 crore for 2007-08 is going to be a major challenge for the Revenue Department if one were to go by the excise duty collections till end-January this fiscal.

FM Likely To Hold Service Tax At 12%

The Finance Minister might hold the service tax rate at the current rate of 12 per cent in the upcoming Budget.With the Centre and States working to move towards a uniform tax system, the Goods and Service tax, a hike in key indirect taxes at this stage could create imbalances between State and central taxes.

But to make good the notional loss of revenue by this step, new service are going to come under the service tax hammer in the Budget.Policy shifts are likely in the way the finance ministry is looking at key indirect taxes just before the Budget and the trigger for this is the pressure to chart out the roadmap for an uniform GST.Although the dateline for GST is April 1, 2010, policy watchers say that the timeframe is not enough considering the fact that all central and State taxes will finally converge at one rate.

Policy makers say that one of the steps most likely in the coming Budget would be to hold the service tax rate at 12 per cent. Reason being that under GST manufacturers might be able to set off the service tax paid against State taxes like VAT.Under those circumstances, service tax would be more of an input tax with VAT being the output tax, as the GST framework cannot permit an inverted duty structure.

FM Extends Tax Refund To Exporters Of 3 More Services

New Delhi: The Finance Ministry on Feb 19, extended the service tax refund scheme for exporters to three more taxable services, taking the overall number of such services to 13. The three services eligible for service tax refund are courier services, goods transport agency services availed for transport of export goods from the place of removal to actual place of export that is inland container depot (ICD)/airport/port and transportation services in containers by rail from the ''place of removal'' to ICD/airport/port.

These three services are not in the nature of input services but could be connected to export goods and hence the decision to permit refund of service tax. Service tax paid by exporters on input services used for export goods is neutralised under various existing schemes like drawback scheme. So far, the Finance Ministry has specified about ten taxable services, which are not in the nature of input service but could be attributable to exports, as services that would qualify for service tax refund. These comprise port services provided for export, transport services on road and rail for movement of goods from ICD to port of export, general insurance services, technical testing and analysis agency services, storage and warehousing services and business exhibition services.

India Can Aim To Grow By Over 9%: FM

Amid growing concerns of a possible impact of US slowdown on Indian economy, Finance Minister P Chidambaram has said that through fiscal prudence, high domestic savings and investment, the country could aim to grow at over 9 per cent. We have to do continue fiscal prudence and ensure that people save and invest and there is enabling environment for investors, both domestic and foreign, Chidambaram said. He also said that the country would have to ensure that these investments are made widely, managed wisely, so that they give a return. If these principles are observed, I do not think it is difficult in India to sustain a growth of no less than 8 per cent, pushing 9 per cent, and aiming to go beyond.

India To Respond To US Rate Cut: FM

Anticipating an indirect impact of the US financial crisis on its economy, India on Jan 24 said it will respond appropriately to a hefty cut in the US interest rates. We will respond (to the rate cut in US) through appropriate fiscal and monetary measures, Finance Minister P Chidambaram said in Davos. The RBI is due to review its monetary policy stance on January 29. The US rate cut was part of efforts to stimulate consumption to keep the world''s largest economy from slipping into a recession - fears of which had led to a meltdown in the global equity markets. We are concerned that it (US Fed rate cut) would lead to high flow of capital to India. But government is not in favour of putting curbs on capital. He said despite fears of global recession, the Indian economy is set to grow in the range of 8.5 per cent to nine per cent. However, high interest rates may have an impact on the growth trajectory.

Indian Economy To Grow At 8.5%: FM

The Indian economy is set to grow at a rate of 8.5 per cent during 2008-09 after factoring in the volatility of the current global financial turbulence, Finance Minister P Chidambaram said at the World Economic Forum on Jan 24. Chidambaram, who is leading the Indian delegation to the annual event, said that India expected the turbulence to continue for a few months but added that the country was not in favour of imposing capital controls to dampen capital inflows. The move by the US government to lower interest rates will increase the differential with the Indian rate, which could see greater capital inflows into the Indian market, he said.

FM Cuts Duty On 539 Items Under Agreement With Singapore

New Delhi: The Finance Ministry has slash customs duty on 539 items as part of an agreed tariff elimination package under the comprehensive economic cooperation agreement (CECA) with Singapore. The duty changes have come into effect from January 15 this year. The 539 items mainly comprise of manufactured goods. In December 2007, both countries inked a Protocol to amend the CECA so as to expand the tariff liberalisation package to 539 additional tariff lines within the trade in the goods chapter. Of the 539 tariff lines, India had agreed to eliminate tariffs on 307 items in five equal cuts between January 15, 2008 and December 1, 2011. These 307 items comprise mainly of base metals, machinery, mechanical appliances, chemicals, textiles and textile articles. For 135 products, tariff reduction to 5 per cent duty is to be got in 9 equal cuts between January 15, 2008 and December 1, 2015.

IPO Response Reflects Confidence, Says FM

The response to mega initial public offer by Anil Ambani group''s Reliance Power seems to reflect the confidence of global investors'' in the future of Indian economy, Finance Minister P Chidambaram said on Jan 15. It is a reflection of world community in the future of India. Investors seem to be confident in the future of Indian economy, said Chidambaram on IPO that hit the Market on Tuesday for mopping up to Rs 11,700 crore.Not only the IPO was fully subscribed within a minute of opening, it generated demand worth over Rs 50,000 crore in less than two hours.