Interest subvention retained, rice storage exempt from service tax

Lauding the “stellar performance” of the agriculture sector, Union Finance Minister P. Chidambaram on Monday announced a farm growth of 4.6 per cent in the current year, up from 3.1 per cent achieved during UPA-I.

He said the government set an agriculture credit target of Rs. 8 lakh crore for 2014-15, against Rs.7.35 lakh crore expected this year.

The interest subvention scheme for farm credit, introduced in 2006-07, would continue in the next fiscal. At present, interest rate on farm loan is 7 per cent, while it is 4 per cent for those who repay on time.

“There is a subvention of 2 per cent and an incentive of 3 per cent for prompt payment.” Thus, the effective rate of interest on farm loans reduced to 4 per cent, “so far Rs. 23,924 crore has been released… I propose to continue the scheme in 2014-15,” he said.

In a bonanza for millers, Mr. Chidambaram exempted the loading, unloading, packing, storage and warehousing of rice from service tax.

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