Tax reliefs of Rs.400 crore announced

New Delhi, Apr 29 (PTI) India's Finance Minister Pranab
Mukherjee Thursday announced changes in tax proposals that
will benefit coffee growers, new hospitals and construction
sector while making it clear that service tax on domestic
travellers would be Rs 100 per domestic journey and a maximum
of Rs 500 for international travel.

Mukherjee announced these concessions that would cost the
exchequer Rs 300-400 crore a year but did not touch the demand
for rolling back the hike in petroleum and fertiliser prices
on which the entire opposition walked out before Lok Sabha
(Lower House of Indian Parliament) passed the Finance Bill,
2010.
Explaining the reasons for his inability to concede the
opposition's demand, he said the financial position was such
that oil marketing companies faced an under recovery of Rs
85,000 crore this year apart from heavy outgo on account of
subsidies, interest and other payments.
On account of the new coffee-debt relief package, the
outgo from Government kitty will be Rs 241.33 crore, but
benefit to farmers will be worth Rs 362.82 crore.
Replying to the debate on the Finance Bill that was
passed by voice vote with official amendments, Mukherjee said
with a view to giving an impetus to the health sector,
construction of hospitals with at least 100 beds anywhere in
the country would qualify for tax concessions based on their
investment.
The Government has also provided tax relief to the
construction sector by levying the newly imposed service tax
only on 25 per cent of the total value of the property,
including land, compared to 33 per cent proposed in the
Budget.
Mukherjee also exempted from service tax low cost
housing for the urban poor under the Jawahar Lal Nehru
National Urban Renewal Mission (JNNURM) and under Rajiv Awas
Yojna.
To augment supply of steel in the growing economy, the
Government announced cut in customs duty on stainless steel
scrap from five per cent to 2.5 per cent and increase in
export duty on iron ore lumps to 15 per cent from 10 per cent
Referring to the imposition of service tax on domestic
and international air passengers, he said he has received a
number of representations expressing concerns that this levy
would affect the aviation sector and make air travel
prohibitive.
"I would like to clarify that it would not be so. The
effective rates of levy, when they come into effect, would be
a maximum of Rs 100 per travel for domestic journey in any
class and a maximum of Rs 500 per travel for international
journey for economy class.
"Further domestic travel to and from the North Eastern
sector would be exempt even from this moderate tax," he said.
With the passage of the Bill, the three-stage budgetary
process has been completed in the Lok Sabha. The Bill will go
to Rajya Sabha for being returned.

Later, revenue secretary Sunil Mitra said the changes
made in the Finance Bill will have revenue implications of Rs
300-400 crore this fiscal.
On the issue of duty hike on petrol and diesel, Mukherjee
later told reporters that he couldn't afford taking additional
burden by rolling back excise and customs duties on fuels.
"Any additional burden at this juncture could indulge in
financial profligacy that I cannot afford to do... oil price
is so volatile...when will it go up...nobody knows," he said.
Replying to the debate on the Finance Bill, the finance
minister restored customs duty concessions to the Ostomy
appliances, used to treat cancer patients. In another move,
he reduced basic customs duty on 11 drugs, including two
anti-cancer ones and one for AIDS to 5 per cent.
To promote faster development of slum rehabilitation
project, Mukherjee announced tax rebates on the basis of
investment to developing and building of housing projects
under the slum rehabilitation scheme.
On the educational front, the minister extended service
tax exemption to vocational courses provided by the training
institutes registered under Skill Development Scheme of the
labour ministry.
In another dole-out, Mukherjee reduced excise duty on
hand-rolled cheroots priced up to Rs 3 per stick to 10 per
cent and additional excise duty to 1.6 per cent. He also
extended excise duty exemption to scented supari.
Mukherjee also reduced excise duty to 4 per cent from 8
per cent on units that manufacture cartons from corrugated
paper or paperboard, besides excise duty on waste paper from
10 per cent to 4 per cent. Exemption from excise duty was
extended to all types of packaging materials manufactured by
SSIs that bear the brand name of another persons.
To help contain the soaring cotton prices, he left a
space to increase export duty on raw cotton from Rs 2,500 per
tonne to Rs 10,000 per tonne in future to disincentivise their
exports and curb abnormal price rise of the commodity. But
currently, the duty is retained at the existing level
While he brought components that are used for
earthmoving machinery like loaders, excavators under excise
duty on their retail sale price, just like automobile
components, the minister extended the customs duty exemption
to parts and components of tunnel boring machines, which are
currently available to the such full-machines.
He exempted acetate rayon tow, used in manufacturing
cigarette filter rods, from special countervailing duty of 4
per cent. He also removed basic customs duty on optical
disc drives, flax fibre and yarn.
On the corporate front, Mukherjee announced tax
exemption on the transfer of shares by shareholders in case a
company converts itself to Limited Liability Partnership
structure, the new kind of business entity introduced in the
country a year ago. PTI TEAM
MRD