FM proposes no new taxes

NEW DELHI: Finance Minister P Chidambaram today presented the Union Budget 2006-'07 in Parliament.

Finance Minister P Chidambaram started the presentation by expressing satisfaction over the economic performance of the country, which he said has grown by 7.5 percent, with the manufacturing sector contributing 8.1 percent.

On the budget he is presenting, the finance minister said, “FY 06 prospects good, if not better” than budget 05.

He also expressed happiness over the country accepting his call to move forward with “honour and courage.”

Chidambaram estimated the GDP to grow 8.1 percent in this fiscal year. The government is targeting an economic growth of 10 percent.

All sectors, barring mine are doing well, the minister stated.

The budget seems to give importance to infrastructure development also. Ninety-six percent of the Golden Quadrangle project will be completed by June this year, the finance minister said.

The allocation to Bharat Nirman has been increased by 54 percent. Gross Budgetary support for FY 07 is Rs 1,72,720 crore, up 21 percent from a year ago. Flagship projects have been allocated Rs 50,000 crore in the budget.

The budget proposed an increase of 31.5 percent on allocation to education to Rs 24115 crore.

The government also proposed to infuse Rs 16901 crore through equities and Rs 2789 crore through cash to public sector units.

The government will consider taking up Hyderabad Metro under NURM project, Chidambaram said.

Under the 10th plan, a record 34,000MW would be added. The government expects 'continued buoyancy' in capital formation.

Chidambaram has proposed an outlay of Rs 4595 crore for National Urban Mission in FY'07.

Services SMEs would be treated on par with manufacturing SMEs, the budget said.

Cluster model would be adopted for manufacturing and industrial townships, Chidambaram said.

The government would set up EGoM for cluster development, the finance minister added.

Non-plan expenditure for FY2006 has been estimated at Rs 3,91,263 crore. The revenue deficit is at 2.6 percent as against the estimated 2.7 percent.

Excise duty on software purchased over the counter has been fixed at 8 percent. Software downloaded from the net has been exempted from excise duty.

The finance minister has imposed an excise duty of 12 percent on computers, and 16 percent on set-top boxes. The customs duty on set-top boxes has been scrapped. Currently it was 15 percent.

In a bid to make India the manufacturing hub for “small and fuel-efficient cars”, Chidambaram reduced the excise duty on small cars to 16 percent from the current 24 percent.

The Finance Minister justified the Fringe Benefit Tax (FBT) on the principle of equity. However, he slashed the FBT on tours, travel and boarding to five percent from 20 percent.

However, the budget for 2006-'07 has not imposed any direct tax. The personal/corporate income tax rates have been left untouched.

The service tax has been raised to 12 percent from 10 percent.

The Finance Minister recounted various steps, which have been taken to modernize tax administration through Business Process Reengineering (BPR) and setting up of nationwide networking of Departments of Income Tax and Customs & Central Excise.

Creation of national data bases and facilities like jurisdiction-free filing of returns, online tracking of status of accounts and refunds of income tax through an increasing use of technology, e-payment of customs and excise duty and introduction of a risk management system in the customs department will go along with in facilitating tax administration.

Finance Minister Chidambaram ended his budget speech cautioning today's youth against building castles in the air.

He concluded his speech quoting Swami Vivekananda: “We reap what we sow. We are the makers of our own fate. None else has the blame, none has the praise.”

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