Saturday, April 27, 2002, Chandigarh, India

National Capital Region--Delhi


M A I N   N E W S

Sinha relents, gives sops to salaried class
Sacrifices Rs 2,157 cr on tax proposals
Tribune News Service

New Delhi, April 26
Union Finance Minister Yashwant Sinha today rolled back some of the unpopular proposals in the Budget for 2002-03 to assuage the sentiments of the salaried class, sacrificing Rs 2157 crore of revenue in the process.

Announcing the measures while moving the Finance Bill for consideration in the Lok Sabha, a grim Finance Minister said he was partially restoring the income tax rebate under Section 88, scrapping the proposed 5 per cent service tax on life insurance premium and dropping the 4 per cent excise duty imposed on spare parts and accessories of bicyles, hand pumps, toys and umbrellas.

While partially restoring the tax rebate to 15 per cent for incomes between Rs 1.5 lakh and Rs 5 lakh, Mr Sinha raised savings for tax rebate from Rs.80,000 to Rs 1 lakh. This would amount to the restoration of the original 20 per cent rebate. Of the total amount Rs 30,000 would be allowed to be invested in infrastructure bonds.

In the Budget he had proposed a cut in the rebate from 20 per cent to 10 per cent on incomes between Rs 1 lakh and Rs 5 lakh.

While removing service tax on life insurance premium, the Finance Minister accepted the contention that the tax on life insurance services should be confined to only risk premium.

Mr Sinha, who has been under pressure from within the BJP and the allies and the trade and industry to reverse the unfriendly measures, took consolation in the fact that the total give away of Rs 2157 crore in addition to Rs 700 crore already given in slashing the cost of cooking gas cylinders earlier constituted a minor percentage of the overall Budget, which was more than Rs 4 lakh crore.

In a move that would boost telephony in the country, the minister said he was dropping the criterion of owning a telephone under the one-by-six formula for mandatory filing of income tax returns but retained the provision relating to cell phone ownership.

On the proposal to tax income from mutual fund at the hands of the recipients, Mr Sinha said he was allowing deduction in respect of this income under Section 80 L within the overall ceiling of Rs 9,000. This would solve the problems faced by small tax-payers, he added.

He also proposed that tax would be deducted at source only if the amount received from the company or mutual funds exceeded Rs 1000.

Keeping with the demand of the publishing industry that the hike in postal rates was not proper in a year when “Year of the Books” was being celebrated, Mr Sinha said he was restoring the old rates for printed books.

Today’s concessions involved Rs 1,450 crore on indirect taxes, Rs 700 crore on direct taxes and Rs 7 crore on postal item.

Addressing the concerns of the retired people, Mr Sinha announced that a notification would be issued shortly lifting the ceiling of Rs 2 lakh for investment by retired employees of both public and private sector in tax-free government relief bonds which carry an interest rate of 8 per cent.

The minister extended the exemption from inland travel tax for travel to Andaman and Nicobar and Lakshadweep islands and Leh. Earlier, he had given this concession to travel to the North East.

Responding to the demand of the domestic dairy industry seeking protection from cheap imports, Mr Sinha said he was raising the customs duty from 30 per cent to 40 per cent, which is the maximum available under WTO bound rate.

For the Special Economic Zones (SEZs), the minister announced that 100 per cent tax holiday would be available for five years from the date of the commencement of production and 50 per cent concession for the subsequent two years.

Giving details of the excise sops, Mr Sinha said the exemption from 4 per cent duty would also include waste and scrap arising in the course of the manufacture of items that attracted this duty.

To check piracy and to protect genuine interest of cassette producers, he restored the exemption from 4 per cent excise duty on pre-recorded audio cassettes.

Referring to his special package for the textiles industry, the Finance Minister said he now proposed to include padding (including back filling), damping and flannelette raising in the list of exempted processes even if carried on with the aid of power.

He also proposed to reduce the rate of excise duty on hand processed cotton fabrics processed by independent processors using open air stenters from 12 per cent to 8 per cent. With the availability of deemed credit to such processors, the net incidence of duty would be only 4 per cent.

He exempted cotton waste yarn (up to 2 counts) cleared in hank form from this duty.

He proposed to extend the benefit of the small scale sector excise duty exemption scheme to both granite as well as marble. The benefit of excise duty exemption scheme would also be extended to Bengal Lights.

Aviation gas (fuel) would be exempted from special excise duty to reduce the cost of training of pilots in the country.

The BJP has welcomed Mr Sinha’s announcement to tack back certain harsh measures affecting the middle classes announced in the Union Budget proposals.



  • Income tax rebate on savings increased to 15 per cent for income slabs of Rs 1.5 to Rs 5 lakh.
  • Savings ceiling for tax rebate increased from Rs 80,000 to
    Rs 1 lakh.
  • Five per cent surcharge on LIC premium dropped.
  • Excise duty on small scale items reduced.
  • Telephone removed from one-by-six criteria for filing IT returns.
  • Investment limit in tax-free bonds for retired persons increased.
  • Dividend income up to Rs 9,000 exempt from tax.
  • Proposals to cost exchequer Rs 2157 crore.
  • Postal rates for printed books brought to pre-Budget level.
  • Sops for cycle, toy and cassette industries.


Not enough, says Congress
Tribune News Service

New Delhi, April 26
The Congress today said the partial rollback of Budget proposals by Union Finance Minister Yashwant Sinha was not enough to bring relief to the middle-class.

Initiating the debate on the Finance Bill moved by Mr Sinha in the Lok Sabha, Congress MP Pawan Kumar Bansal said the concessions announced today were nothing but an eyewash and the tax-payers had not gained anything.

Even after the announcement of a small concession made by the Finance Minister now, a person with an income of above Rs 5 lakh would not get any benefit of rebate.

Earlier, one could save Rs 16,000 by investing an amount upto Rs 80,000. Now the maximum amount that can be saved is only up to Rs 12,000 and there is a net loss of Rs 4000, he said.

“There is nothing in this Finance Bill to cheer about, reduction of Excise duty on tea nothwithstanding.”

CPM member Tarit Baran Topdar expressed concern over the slow growth in the national economy and asked the government to take remedial measures.

There was no direction in the Union Budget to take the country forward and prevent its declining growth in the economy, he said.

Congress leader Mani Shankar Aiyar pleaded with the government to help the dying cotton textile sector and the tea industry by reducing excise duty and giving some other concessions.

Dr Sanjay Paswan (BJP) welcomed the step being taken by the Government to reduce non-plan expenditure and according priority to the construction of houses for the poor.Back

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