New Delhi, April 26
Union Finance Minister Yashwant Sinha today rolled back some of the unpopular proposals in the Budget for 2002-03 to assuage the sentiments of the salaried class, sacrificing Rs 2157 crore of revenue in the process.

Announcing the measures while moving the Finance Bill for consideration in the Lok Sabha, a grim Finance Minister said he was partially restoring the income tax rebate under Section 88, scrapping the proposed 5 per cent service tax on life insurance premium and dropping the 4 per cent excise duty imposed on spare parts and accessories of bicyles, hand pumps, toys and umbrellas.

While partially restoring the tax rebate to 15 per cent for incomes between Rs 1.5 lakh and Rs 5 lakh, Mr Sinha raised savings for tax rebate from Rs.80,000 to Rs 1 lakh. This would amount to the restoration of the original 20 per cent rebate. Of the total amount Rs 30,000 would be allowed to be invested in infrastructure bonds.

In the Budget he had proposed a cut in the rebate from 20 per cent to 10 per cent on incomes between Rs 1 lakh and Rs 5 lakh.

While removing service tax on life insurance premium, the Finance Minister accepted the contention that the tax on life insurance services should be confined to only risk premium.

Mr Sinha, who has been under pressure from within the BJP and the allies and the trade and industry to reverse the unfriendly measures, took consolation in the fact that the total give away of Rs 2157 crore in addition to Rs 700 crore already given in slashing the cost of cooking gas cylinders earlier constituted a minor percentage of the overall Budget, which was more than Rs 4 lakh crore.

In a move that would boost telephony in the country, the minister said he was dropping the criterion of owning a telephone under the one-by-six formula for mandatory filing of income tax returns but retained the provision relating to cell phone ownership.

On the proposal to tax income from mutual fund at the hands of the recipients, Mr Sinha said he was allowing deduction in respect of this income under Section 80 L within the overall ceiling of Rs 9,000. This would solve the problems faced by small tax-payers, he added.

He also proposed that tax would be deducted at source only if the amount received from the company or mutual funds exceeded Rs 1000.

Keeping with the demand of the publishing industry that the hike in postal rates was not proper in a year when “Year of the Books” was being celebrated, Mr Sinha said he was restoring the old rates for printed books.

Today’s concessions involved Rs 1,450 crore on indirect taxes, Rs 700 crore on direct taxes and Rs 7 crore on postal item.

Addressing the concerns of the retired people, Mr Sinha announced that a notification would be issued shortly lifting the ceiling of Rs 2 lakh for investment by retired employees of both public and private sector in tax-free government relief bonds which carry an interest rate of 8 per cent.

The minister extended the exemption from inland travel tax for travel to Andaman and Nicobar and Lakshadweep islands and Leh. Earlier, he had given this concession to travel to the North East.

Responding to the demand of the domestic dairy industry seeking protection from cheap imports, Mr Sinha said he was raising the customs duty from 30 per cent to 40 per cent, which is the maximum available under WTO bound rate.

For the Special Economic Zones (SEZs), the minister announced that 100 per cent tax holiday would be available for five years from the date of the commencement of production and 50 per cent concession for the subsequent two years.

Giving details of the excise sops, Mr Sinha said the exemption from 4 per cent duty would also include waste and scrap arising in the course of the manufacture of items that attracted this duty.

To check piracy and to protect genuine interest of cassette producers, he restored the exemption from 4 per cent excise duty on pre-recorded audio cassettes.

Referring to his special package for the textiles industry, the Finance Minister said he now proposed to include padding (including back filling), damping and flannelette raising in the list of exempted processes even if carried on with the aid of power.

He also proposed to reduce the rate of excise duty on hand processed cotton fabrics processed by independent processors using open air stenters from 12 per cent to 8 per cent. With the availability of deemed credit to such processors, the net incidence of duty would be only 4 per cent.

He exempted cotton waste yarn (up to 2 counts) cleared in hank form from this duty.

He proposed to extend the benefit of the small scale sector excise duty exemption scheme to both granite as well as marble. The benefit of excise duty exemption scheme would also be extended to Bengal Lights.

Aviation gas (fuel) would be exempted from special excise duty to reduce the cost of training of pilots in the country.