India: Budget relief for I-T payers ; Petrol, TV, AC costlier

Consumers will have to pay more for petrol, diesel, cars, TVs, cigarettes, tobacco, air-conditioner, gold and silver as the Indian government on Friday announced hike in excise duty as part of a partial roll back of stimulus measures announced for reviving the economy.

Petrol and diesel prices will go up by Rs 2.67 a litre and Rs 2.58 per litre, respectively, after Finance Minister Pranab Mukherjee raised customs and excise duties on the two.

On the other hand, mobile accessories, medical equipment energy efficient CFL lamps, set top boxes, compact disc, toys and books will be cheaper on account of some tax concessions offered on these items by Pranab Mukherjee in the Union Budget for 2010-11.

"Symptoms of economic recovery are widespread and more clear now," he said. Before announcing the tax measures, Mukherjee substantially cut income tax rates along with other direct tax concessions that would result in a net loss of Rs 26,000 crore (Rs 260 billion) to the exchequer.

The Budget provided considerable relief to Income Tax payers by raising the slabs at two levels. The entire Opposition walked out of the Lok Sabha during the presentation of Budget by Pranab Mukherjee, dubbing it 'highly inflationary' as he partially rolled back the stimulus by hiking the ad velorum component of excise duty on large cars and multi-utility vehicles by two per cent to 22 per cent.

The Budget also raised the specific rates of duty on portland cement and cement clinker. The basic duty of 5 per cent on crude petroleum, 7.5 per cent on diesel and petrol and 10 per cent on other refined products is being enhanced. The proposals relating to customs and central excise are estimated to result in a net revenue gain of Rs 43,500 crore (Rs 435 billion) for the year. The proposals for service tax, in which government plans to bring in some more services, will result in a net revenue gain of Rs 3,000 crore (Rs 30 billion) for the year.

While direct tax proposals are expected to result in a loss of Rs 26,000 crore (Rs 260 billion) for the year, those relating to indirect tax are estimated to result in a net revenue gain of Rs 46,500 crore (Rs 465 billion). Taking into account the concessions and measures to mobilise additional resources, the overall revenue gain is estimated to be Rs 20,500 crore (Rs 205 billion) for the year. The basic threshold limit for income tax exemption will remain at Rs 1,60,000.

Mukherjee also gave another relief to individual tax payers by raising the existing limit of Rs 1,00,000 on tax savings by an additional amount of Rs 20,000 for investments in long-term infrastructure bonds.

The Budget also proposed a hike in defence expenditure from Rs 1,41,703 crore (Rs 1,417.03 billion) to Rs 1,47,344 crore (Rs 1,473.44 billion), including Rs 60,000 for capital expenditure.
Terming as "exceedingly good", Prime Minister Manmohan Singh on Friday said the Budget would help the economy to return to nine per cent growth while allaying the fears that it would fuel "inflationary" expectation. "A job well done" was how Singh summarised Pranab Mukherjee's Union Budget for 2010-11.

-Asian Tribune -