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Saturday, July 18, 1998

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More relief in taxes
Sweets, 'namkeen', tea cheaper
Tribune News Service
NEW DELHI, July 17 — The Finance Minister, Mr Yashwant Sinha, today yielded further on the original Budget proposals for the current financial year and restored excise duty exemption on branded ghee, skimmed milk powder, butter and cheese and withdrew the excise duty imposed on sweetmeats and namkeens and branded spices. The new concessions will cost the government Rs 263 crore.
The minister’s announcement marked the completion of the Budget exercise and the Lok Sabha passed the first Finance Bill, 1998, of the BJP-led coalition government by a voice vote. Though attendance at the Opposition benches was poor, the ruling coalition took no chances and their members were present in full strength to see the Bill through after three days of debate.

The majority of the concessions announced by the minister today pertained to indirect taxes. On direct taxes, Mr Sinha said: "Much as I would like to positively respond to all representations for tax exemption, the economic compulsions of a moderate tax regime for better compliance by the tax payers and bringing about a higher tax-GDP ratio to bridge the fiscal deficit, restrain me in contributing further to the complications in the fiscal management."
The minister, however, addressed specific representations related to direct taxes and restored the status of "not ordinarily resident" for returning NRIs. He also restored the exemption in respect of interest paid on external commercial borrowings.
The minister clarified that the banks would not insist on PAN numbers for new account-holders who were not income tax assessees but they have to give a declaration to that effect. However, those who held PAN or GIR numbers would have to submit the same.
Mr Sinha said senior citizens, who owned a telephone, would not be required to file tax returns under the one by six criteria. The minister’s clarification came to a specific observation that freedom fighters owning telephones were being forced to file returns under this rule. It was also pointed out that the freedom fighters paid subsidised tariff.
The Finance Minister said the

Highlights

INDIRECT TAXES
— Excise duty exemption on branded ghee, skimmed milk powder, butter and cheese and branded spices to be restored.
— Excise duty on sweetmeats and namkeens withdrawn.
— Excise duty exemption to coir mattresses, writing ink and spectacle lenses. Spectacle frames costing more than Rs 500 to be charged 8 per cent excise duty.
— Packaged tea up to 100 gm exempted from excise duty. Packaged tea above 100 gm and up to 20 kg to attract a duty of 8 per cent.
— Excise duty exempted on prefabricated buildings.
— Excise duty on specified tyres for animal-drawn vehicles withdrawn.
— Fireworks to cost less with excise duty reduction from 18 to 13 per cent.
— Basic customs duty exempted on glazed newsprint and four specified drugs for AIDS treatment.

DIRECT TAXES
— Assessees who don’t have PAN/GIR numbers can carry out cash transactions on the basis of declaration.
— Senior citizens owning telephones to be exempted from one by six criteria.
— Status of "not ordinarily resident" for NRIs to stay.
— Proposal to tax the value of gifts as the income of the recipient withdrawn.
— Educational and medical institutions run by the government to be exempt from tax. Other institutions have to apply for exemption.
— Tax holiday extended to trunk services and EDI services.
— Proposal to calculate capital gains tax on the basis of circle rates of stamp duty withdrawn.
— PAN/GIR criteria for stock exchanges modified. Limit extended from Rs 50,000 to Rs 10 lakh.

application of the one by six criteria would increase the total number of people who filed their income tax returns by 50 per cent in a period of three years. The mandatory application of PAN, the de-clogging of system to realise revenue locked up in innumerable litigations and better relations between the assessees and the tax authorities would help increase the direct tax — GDP rations from 2.91 per cent in the revised estimate of 1997-98 (excluding VDIS collections) to 3.03 per cent in the current year.
The other announcements relating to direct taxes included withdrawal of the proposal to tax the value of gifts as the income of the recipient.
All educational and medical institutions financed and managed by the government would continue to enjoy the benefit of exemption. Other institutions whose annual receipts did not exceed Rs 1 crore would continue to avail of this exemption as in the past. Other institutions would be required to make an application to the prescribed authority for grant of exemption. To enable these institutions to shift their investments to specified investments, the minister proposed to give them time up to March, 2001.
In the Finance Bill several tax benefits proposed for the housing sector have been modified on the suggestions of the Ministry of Urban Affairs.
The tax holiday proposed for radio-paging services and domestic satellite owners is being extended to trunk services and EDI services.
The proposal to calculate capital gains tax on the basis of circle rates of stamp duty stands withdrawn.
The minister announced that with regard to the Kar Vivad scheme, the lack of clarity with regard to waiver of interest and penalty in relation to settlement of tax arrears under indirect tax enactments was being taken care by rewording the relevant clauses of the Finance bill.
The Minister also announced the setting up of a committee to examine the issue of business reorganisation in its totality. The recommendations of the committee would be examined before the next Budget.
Regarding the proposal to make it mandatory to quote the permanent account number, the minister said there had been representations from members of stock exchanges that the limit of Rs 50,000 for transactions in shares was too low. The limit was being raised to Rs 10 lakh in the notification to be made in this regard.
The minister also announced modification with regard to Section 10(23G) and the said income from infrastructure capital funds, including capital gains, would continue to be exempt if the investee company was wholly dedicated to infrastructure. This exemption would also be applicable in respect of secondary market transactions. There would be no restriction on lending institutions and the provision for a three-year lock-in period for venture capital funds was proposed to be removed.
Regarding indirect taxes, the minister said there was criticism that the Budget was inflationary and anti-poor. The proposals for additional resource mobilisation were too meagre to cause any serious inflationary pressure on the economy. Mr Sinha said he had avoided raising duty on items consumed by poorer sections of the society.
Apart from the concessions announced for milk products, the minister restored the exemption on coir mattresses and writing ink. Spectacle lenses would be exempt from excise duty as before. However, users of costlier varieties of spectacle frames, would have to pay duty of 8 per cent. In respect of spectacle frames the exemption would stand restored only for frames of value below Rs 500 per frame.
Mr Sinha proposed to reduce the excise duty on medical furniture from 13 per cent to 8 per cent.
On the demands of the members for withdrawal of excise duty on packaged tea, the Minister went half way to meet their demand. Henceforth, tea packed in packages up to 100 gm would enjoy exemption from excise duty. Tea packed in packages above 100 gm and up to 20 kg would attract an excise duty of 8 per cent. Defending the retention of excise duty on tea, Mr Sinha pointed out that despite duty exemption in 1991, the price of tea had gone up by 100 per cent. There was no reason why the government should not get its share of revenue.
Regarding his original proposal to levy excise duty on marble slabs and tiles from Rs 30 to Rs 40 per square metre, Mr Sinha modified the proposal to confine the higher rate to slabs and tiles valued above Rs 400 per sq metre.
The minister also announced further concessions for the textile industry, including raising of duty-free exemption for shoddy fabrics and shoddy blanket from Rs 100 to Rs 150 per sq metre. Fabrics produced in 100 per cent EOUs from indigenous raw material and sold for domestic consumption would, henceforth, be charged excise duty at a nominal excise rate and not at the rate related to customs duty on imported fabric.
He also reduced the rate of compounded levy for embroidered fabrics from Rs 60 to Rs 45 per metre length of the machine per shift.
He proposed to reduce the customs duty on carpet grade wool and nylon tyre yarn by 5 per cent ad valorem.
As a single exception, he proposed that the general restriction of 5 per cent in the availability of modvat credit would not apply to POY used as input for making textured yarn and to removal of yarn and fabrics from one factory to another by multi-locational composite mills.
In order to encourage the use of prefabricated buildings, the minister exempted such buildings and their parts from the levied excise duty.
The excise duty proposed on specified tyres for animal drawn vehicles stands withdrawn.
The minister also announced that he had made certain changes in the scheme of excise duty exemption on specified copper alloys in order to help deserving sectors of the user industry.
He also proposed reduction in the rate of excise duty applicable to fireworks from 18 per cent to 13 per cent.
Since India would be observing "Visit India" year next year, the minister said the service tax on tour operators, which yields a revenue of Rs 20 crore in a year, would be withdrawn for this year and next year.
Customs duty on glazed newsprint would be exempted and a similar concession would be made for four specified drugs for AIDS treatment.
The duty burden on aluminium scrap, which is energy saving, was being reduced and, henceforth, it would be subjected to basic customs duty at the concessional rate of 10 per cent.
The customs duty on carbon black feedstock and methanol was being reduced by 5 per cent ad valorem in each case.
In order to reduce the cost of production of paper and newsprint, the minister proposed to exempt waste paper imported by actual users from the special duty of customs.
The customs duty of 32 per cent on kerosene imported for parallel market would not be collected on the quantity of kerosene actually consumed for such purpose. On the remnant no duty would be payable if it was sold to the public sector company for PDS.
The proposals relating to excise duties are estimated to result in a revenue loss of Rs 192 crore in one year. The customs duty changes are estimated to result in a revenue loss of Rs 71 crore in a year.
The proposals relating to changes in the excise and customs duties would be given effect from tomorrow, except for the one relating to kerosene for which notification would be issued in due course.

Reservation Bill: Women activists hold up traffic
NEW DELHI, July 17 (UNI) — Vowing to continue their struggle for 33 per cent reservation, hundreds of women activists held a "rasta roko’’ and "dharna’’ outside Parliament House at noon and demanded that the government introduced the women’s reservation Bill in its present undiluted form.
Forming a human chain on the busy Red Cross Road-Rafi Marg roundabout, the slogan-shouting activists held up traffic for about an hour today, causing a major disruption in vehicular movement.
One activist, identified as Deepa Mehta, suffered minor injuries as the police pushed back the demonstrators in a bid to unclog the traffic jam.
The activists from a number of women’s organisations said they would not accept any move to dilute the women’s quota of 33 per cent in Parliament and state assemblies.
In a resolution passed at a meeting following the "rasta roko’’, the women’s groups condemned the deferring of the Bill.
"The sordid farce being enacted in Parliament is a sad reflection on the premier democratic institution of our country. The fact that a small minority could hijack legislation affecting at least half the country’s population and that the government was reduced to a helpless witness to this hijacking is not only a matter of serious concern but also indicates a degree of complicity,’’ the resolution added.
The women’s groups demanded that the government put an immediate end to all uncertainty regarding the future of the Bill. "It is quite clear that any talk of trying to build a consensus around the Bill where none exists is only an attempt to stall the Bill indefinitely".
"We demand that the government muster up courage to introduce the Bill in its present and undiluted form and put it to vote. If any party or member wishes to introduce amendments, it can be done at that stage. We, on our part, will not rest until the Bill is placed before Parliament and voted upon,’’ they added.
Those participating in today’s agitation included activists from the All- India Democratic Women’s Association, All-India Women’s Conference, Centre for Women’s Development Studies, Joint Women’s Programme, Mahila Dakshita Samiti, National Federation of Indian Women, YWCA, Women’s Political

Watch, Saheli, Jago Ri, Shakti Shalini and Nirantar.
Members of the National Commission for Women were also present. Others participating in the stir included former MP Suhasini Ali (AIDWA), Ms Ranjana Kumari (Mahila Dakshita Samiti), Ms Veena Nayar (Women’s Political Watch) and Ms Kunti Paul (AIWC).
Parliamentary Affairs Minister Madan Lal Khurana informed the Lok Sabha today that the Prime Minister had taken a fresh initiative for concensus on the Bill.
Responding to inquiries by Mrs Geeta Mukherjee (CPI), Mr Somnath Chatterjee (CPM) and Mr P. Shiv Shanker (Cong) on the status of the Bill during zero hour, Mr Khurana said the government wanted early introduction and passing of the Bill. There was no consensus at the meeting convened by the Speaker yesterday on the issue, he said. Mr Khurana said he had conveyed to the Prime Minister the feelings of some members who attended yesterday’s meeting.
Mr Khurana also made it known that the government did not want to face the same situation as witnessed by the House early this week when the Bill was about to be introduced. "If there is no concensus, the same situation will continue," he said.
Meanwhile, the chairperson of the National Commission for Women (NCW), Ms Mohini Giri, has announced the formation of a "national coalition of women’’ which will field candidates for all Lok Sabha seats in the next elections.
Terming the coalition as an alternative strategy to the Women’s Reservation Bill whose introduction was deferred in the Lok Sabha recently, Ms Giri said at a press conference here today "Whether the Bill is tabled or not, the NCW will support the proposed coalition.’’
"This network will field women candidates for 542 Lok Sabha seats in the next elections,’’ she said, adding, "The candidates will be selected from the constituency represented by the group of villages where the women get linked up.’’
"The network will generate funds with the contribution of Re 1 every month by the members,’’ she said.

Defection: EC seeks power to disqualify MPs
NEW DELHI, July 17 (PTI) — In a decision of significant political importance, the Election Commission today demanded that the power to disqualify MPs and MLAs under anti-defection law, now with the Speaker, should be given to it and revoked its stand in support of a statutory backing to the model code of conduct.
In its wide-ranging views and proposals on electoral reforms, the Commission saw considerable merit in the suggestion that the legal issue of disqualification arising out of the Tenth Schedule of the Constitution should be left to the President or the Governor like the cases of other post-election disqualification of sitting MPs and MLAs under the constitution.
"The Commission is now a multi-member commission. It is a completely neutral and an impartial body and renders its opinion to the President and Governors after giving full opportunities to the parties concerned, with expedition.
"If the decisions relating to anti-defection matters are rendered by the President or the Governors, on the opinion of the Commission, the same would receive more respect and acceptability from the common people. Apart from being arrived at more quickly and expeditiously," said the Commission’s proposals released by the Chief Election Commissioner, Mr M.S. Gill here.
The CEC said though the anti-defection law was allright, its application was "faulty".
On rescinding the Commission’s position on the model code, Mr Gill told newspersons it may not be correct to take the view that each and every ill, that impinges on the election process, can or should be corrected only through judicial process.
"Corrective executive action, resulting from the well considered opinion of the multi-member Commission after weighing fully the pros and cons of the situation, has its own place in the scheme of elections," Mr Gill said.
The CEC said any person who is accused of any offence punishable with imprisonment for five years or more should be disqualified, even when his trial is pending, provided that the competent court of law has taken cognisance of the offence and framed the charges against him.
The commission sought powers to countermand elections even otherwise than on a report from the returning officer.

"Instances are not wanting where certain returning officers have not been candid or forthright in reporting full facts to the Commission about the extent of booth capturing in their constituencies". He said proposing that Section 58A of the Representation of the People Act, 1951, should be amended in this regard.
Opposing the decision of an all party meeting to lower the age limit of Lok Sabha and Rajya Sabha candidates, the Commission said the present age limit for Member of Parliament and state legislatures should be allowed to remain unchanged.
The Commission was of the view that in a democracy companies may be allowed to contribute for political causes. However, such contributions should be limited to a reasonable level and all transactions in this regard must be made in a completely transparent manner, the CEC said.
On lowering the age of candidates contesting elections to the legislative Assembly and the Lok Sabha from 25 years to 21 years and legislative councils and councils of states from 30 years to 25 years, Mr Gill said the EC was not in favour of reducing the age qualification.
Stating under the parliamentary system of governance, Parliament and state legislatures have been entrusted with the most crucial and vital role and responsibility of laying down the policies and programmes and leaving the destiny of millions of people in "immature" hands would not be a safe proposition and should not be experimented with, Mr Gill said.
The present age limits for membership of Parliament and state legislatures should, therefore, be allowed to remain unchanged, he said.
The Commission felt the existing restriction limiting the contest by a candidate to two constituencies of the same class may continue, Mr Gill said.
On the issue of automatic disqualification of a person found guilty of corrupt practice, the CEC said the Commission was in the best position to decide on the gravity of the corrupt practice and the period of disqualification it attracted.
"It is suggested that the Commission, on receipt of the judgement from the high court, may straight away tender its opinion to the President, instead of the long circuitous route presently provided. Where a reference, first to the President by the Secretary of the House concerned and then a further reference from the President’s secretariat to the Commission", he said.
There was an inordinate delay in the reference to emanate from the secretaries of the Houses concerned at present, he said.
Among other things the Commission also gave its views on compulsory maintenance of accounts by political parties, state funding of elections, empowering the Commission to frame disciplinary rules in respect of election officers, Mr Gill said.
Stating that the government’s view on "criminalisation of politics" was silent, he said the Commission suggested that any person who was accused of any offence punishable with imprisonment for five years or more should be disqualified, even when his trial was pending, provided that the competent court of law had taken cognisance of the offence and framed the charges against him.

Police picked up Khalra case eyewitness
From Our Correspondent
AMRITSAR, July 17 — The SSP, Mr Paramjit Singh, has categorically stated that Rajiv Randhawa, an eyewitness in the Khalra case, has been picked up by the police.
However, Mr Gill refuted the allegations that Rajiv was picked up in connection with the Khalra case, in which the next hearing is scheduled for July 25. "I have got nothing to do with the Khalra case. In fact, the operation is related with militancy and how they had planned to carry out subversive activities in the city but the timely efforts have foiled their plan", he added.
Mr Gill further disclosed that Rajiv and his associate, Rashpal Singh, who has also been picked up by the police, had links with militants and that they had planned terrorist acts. They had formed a new militant outfit comprising eight members. Rajiv was known as "Bhau" in this circle and had fake registrations of scooters giving the fake name and address, Rajiv Randhawa, 36, Kabir Park, though his actual name is Rajiv Sharma. Interestingly, 36, Kabir Park, is the address of the Deputy Chairman, PHRO (Punjab Human Rights Organisation headed by Justice Bains), who has denied any links with Rajiv Randhawa.
The SSP claimed that this was the first conspiracy of its kind after 1992. A huge amount of weapons and fake documents had been recovered from these two persons. "When we picked him up, we were not aware that he had any connection with the Khalra case as no one was aware of his actual identity even in the gang", Mr Gill added.
There were reports that these two were having secret meetings with those militants who were out on bail and indulging in underground activities. They had even posed as reporters of a Punjabi newspaper published from Chandigarh.
An inquiry was in process against the two and the DGP, Punjab police, Mr P.C. Dogra, was likely to address a press conference tomorrow to give more details of the case. A case had been registered against the two, the SSP added.