Pranab announces a slew of tax concessions

Rollback of petrol prices ruled out

Holding firm on not rolling back the hike in prices of petrol and diesel, Union Finance Minister Pranab Mukherjee on Thursday announced a debt relief package for coffee growers and marginal changes in tax proposals to benefit sectors such as construction and encourage the setting up of new hospitals.

Alongside, however, he rejected the demand for waiving the service tax on air travel saying that the levy on domestic travellers would only be Rs. 100 per ticket, while international travel would attract a maximum tax of Rs. 500.

In a stout defence of his tax proposals in his reply to discussions on the Finance Bill 2010 in the Lok Sabha, Mr. Mukherjee pointed out that while the fresh concessions would mean a revenue loss of about Rs. 300-400 crore during the fiscal, a rollback in the prices of petroleum products and fertilizer was not affordable in view of the economic compulsions.

Following this, the entire Opposition walked out in stages, starting with the BJP, and the House later passed the Bill by voice vote after including the relevant official amendments.

Seeking the cooperation of all parties in containing food inflation and sustaining the growth momentum, Mr. Mukherjee sought to explain why he could not concede to the Opposition's demand for a roll-back in prices. The financial position of the exchequer, he said, was such that apart from the huge outgo on account of food and fertilizer subsidies, interest payments and other liabilities, the oil marketing companies (OMCs) would be faced with an under-recovery of Rs. 85,000 crore during the year.

“Any additional burden at this juncture could indulge in financial profligacy that I cannot afford to do...oil price is so volatile...when will it go up...nobody knows,” Mr. Mukherjee told newspersons later.

In keeping with the government's programme of improving healthcare facilities, Mr. Mukherjee said construction of hospitals with at least 100 beds in any part of the country would qualify for tax concessions based on their investment.

He also restored the customs duty concessions for ‘ostomy' appliances which are used to treat cancer patients while reducing the basic customs duty on 11 drugs to five per cent. These include two anti-cancer drugs and one for AIDS.

Likewise, to render tax relief to the construction sector, Mr. Mukherjee announced that by providing higher abatement, the newly imposed service tax would be levied only on 25 per cent of the total value of the property, including land, instead of on 33 per cent, as was proposed in the budget.

For the benefit of the urban poor, the Finance Minister also waived the service tax on low-cost housing under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and the Rajiv Gandhi Awas Yojna.

Among other relief measures, Mr. Mukherjee announced a cut in customs duty on stainless steel scrap from five per cent to 2.5 per cent along with an export duty on iron ore lumps to 15 per cent from 10 per cent so as to augment the supply of steel within the country and contain prices.

The Finance Minister also reduced excise on hand-rolled cheroots priced up to Rs. 3 per stick, extended the duty exemption to scented supari, and provided relief to manufacturers of cartons from corrugated paper or paperboard.

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Printable version | May 24, 2020 6:18:22 PM |

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