Presenting the Budget in the Lok Sabha, Finance Minister P Chidambaram did not propose changes in the tax laws except to continue the 10 per cent income tax surcharge on 'super- rich' individuals and up to 5 per cent on corporates.
"In keeping with the conventions, I do not propose to make any announcements regarding changes to tax laws," he said in UPA-II's last budget that sought to provide sops in indirect taxes including reliefs in service tax to storage and warehousing of rice and blood banks.
The revenue sacrifice on account of indirect tax concessions would be Rs 300 to Rs 400 crore in the 40 days remaining in the current fiscal and Rs 700 to Rs 800 crore by May. But a 5 per cent pick up in the sales of products in these sectors would make up for the loss of revenue, he said in his post-Budget press briefing.
He also did not agree that today's concessions amount to a stimulus package saying the two are not comparable.
On continuance of the tax on 'super-rich' and corporates, he said he has left it to the new government to review the impost that was slapped in the last budget.
The indirect tax concessions will be valid up to June 30 and can be reviewed by the new Government.
In a major relief to ex-servicemen who have been demanding one-rank-one-pension for long, the Minister announced that the government has accepted it in principle for which an allocation of Rs 500 crore has been made. The scheme is expected to benefit around three million defence pensioners.
The concessions aimed at the middle-class and to boost the automobile sector that has been registering a negative growth, include a slashing of excise duty from 12 to 8 per cent on small cars, motor cycles, scooters and commercial vehicles and 6 per cent cut to 24 per cent on SUVs.
Large and middle segment cars will attract an excise duty of 24/20 per cent, reduced from 27/24 per cent. Appropriate reductions will also be made in the excise duty on chassis and trailers.
A similar duty reduction has been given to capital goods.
The other populist measures include continuation of interest subvention scheme for farm loans and a moratorium period for education loans taken before March 31, 2009 to benefit 9 lakh students. The interest moratorium for students will amount to Rs 2,600 crore.
In view of the dip in current account deficit, the Finance Minister promised to relook at the import restrictions and duties imposed on gold earlier in the fiscal when unchecked shipments of the yellow metal had shot up CAD.
Asked whether the sops were intended to be populist ahead of the elections, Chidambaram said, "My intention was not to please anyone. I wanted to talk to the people directly that we are going through a turbulent phase in the economy."
To a question on continuing curbs on gold, he said, "I can't make any announcement because Parliament is in session. There are pros and cons to relaxing restrictions. We will weigh them carefully and take a decision."
To a question a whether it was a populist, pragmatic or please-all Budget, Chidambaram said, "Your question is populist. You expect a populist answer. My intention is not to please anyone. My intention was to speak plainly to the people of India and tell them (that) these are turbulent years. We are navigating through a turbulent period."
The government has done a lot in last 21 months to stabilise India's economy and it believes that a fair measure of success has been achieved, he said.
The allocation for Defence for the coming year has been enhanced by 10 per cent from Rs 2,03,672 crore in Budget estimate of 2013-14 to Rs 2,24,000 crore in 2014-15.
Non-plan expenditure estimated at Rs 12,07,892 crore. Of this expenditure on food, fertiliser and fuel subsidy will be Rs 2,46,397 crore, which will be slightly more than the revised estimate of Rs 2,45,452 crore in 2013-14.
Giving Budget estimates, the Minister said the current financial year will end on a satisfactory note with the fiscal deficit at 4.6 per cent, below the red line of 4.8 per cent, and the revenue deficit at 3.3 per cent.
The fiscal deficit for 2014-15 has been pegged at 4.1 per cent, which will be below the target of 4.2 per cent set by the new fiscal consolidation path. Revenue deficit is estimated at 3 per cent.
With the economy reviving, Chidambaram expressed confidence of achieving a 6 per cent GDP growth next fiscal.
Justifying the excise duty reliefs, Chidambaram said, "The current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost."
To encourage domestic production of mobile handsets, he restructured the excise duty for all categories fixing it at 6 per cent with CENVAT credit or 1 per cent without CENVAT credit.
Customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has been pegged at 7.5 per cent to encourage to domestic production of soaps and oleo chemicals.
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