M A I N   N E W S

Budget: tax sops on the cards

New Delhi, February 27
Raising the income tax exemption limit to Rs 70,000-80,000 and retaining standard deduction along with tax sops for small savings and housing loans, the General Budget to be presented tomorrow is expected to carry out a “clean up” operation of tax administration, besides measures to spur growth.

The maiden Budget to be presented by Finance Minister Jaswant Singh in Parliament is likely to carry out the roadmap laid out by Kelkar on indirect taxes and implement the suggestions of the Rajnath Committee on direct taxes which has dumped some of the proposals made by Kelkar, official sources said.

The Budget, widely expected to carry forward reforms to widen the tax base, is also expected to make an attempt to control expenditure by cutting unmerited subsidies and lowering interest rates on small savings to contain the whopping fiscal deficit, that is crowding out investment.

The pre-Budget Economic Survey has given clear signals in this direction by asserting that there is an imperative need to address the issues of infrastructure, regulatory and tax reforms and fiscal consolidation to establish the foundations of robust 8 per cent growth on a sustained basis.

The sources said though the Finance Minister was likely to indulge in some populism in the face of stiff resistance from the BJP to the Kelkar panel recommendations, the Budget may contain measures that would ensure that the revenue loss that may occur was more than made up by widening service tax base. Service tax collections target may be doubled next fiscal from this year’s figure of Rs 6,250 crore.

On indirect taxes, the broad suggestions of the Kelkar panel are likely to be implemented, the sources said, adding that the average customs duty on the finished products may be brought down to 25 per cent while that of raw material to 15 per cent.

There may be a reduction in special additional excise duty by 4 per cent, making consumer durables, automobiles that much cheaper.

While corporation tax is likely to be retained at the present 35, per cent the 5 per cent surcharge on it might be lifted, the sources said, adding that the recommendations of the Kelkar panel to abolish minimum alternate tax, dividend tax and long-term capital gains tax were likely to be carried forward to spur investment.

The loss of revenue as a result of this abolition would not be much as this is expected to generate the feel-good factor at a time when there are signs of industrial recovery, the sources said, adding that with growth picking up, the revenue collections from excise and customs are expected to go up.

Mr Jaswant Singh’s hands may be tied to implement the Kelkar panel suggestion to raise the income tax exemption limit to Rs 1 lakh because of the opposition by the Rajnath Committee to lifting of exemptions and tax sops on personal income tax, they added.

The Budget is expected to spell out the measures to further liberalise foreign direct investment regime on the lines of suggestions made by Mr N K Singh.

With external debt crossing the 4 100-billion mark and debt servicing accounting for about 50 per cent of revenue collections, Mr Jaswant Singh may announce pre-payment of some of the high-cost foreign debt with foreign exchange reserves swelling at over $ 74 billion, the sources said.

Deviating from the past practice, the Budget speech is expected to be much shorter than the 72 pages of Part A and Part B of the Budget last year. PTI

Jaswant to present Budget at 11 a.m.

New Delhi, February 27
Finance Minister Jaswant Singh will present the Union Budget for 2003-04 in the Lok Sabha tomorrow at 11 a.m.

This will be the first time Mr Jaswant Singh will present the Union Budget.

As soon as the Budget presentation is over, the Rajya Sabha will assemble briefly and a copy of the Budget will be laid on the table of the House. Both Houses will be adjourned after the Budget is presented. UNI