Pre-poll tax sops target middle class
New Delhi, January 8
The announcements would not only provide relief from filing tax returns for those earning less than Rs 1.5 lakh per annum, but also reduce the cost of various consumable items and even make air travel cheaper.
The salary certificate furnished by the employer to the Income Tax Department would be treated as return for persons having annual income up to Rs 1.5 lakh. While pensioners have been exempted from the purview of the one-by-six scheme, and therefore would not have to file any income tax return, the overall customs duty structure has also been significantly restructured. The peak rate of customs duty on non-agricultural goods is being reduced from 25 per cent to 20 per cent.
The special additional duty (SAD) of customs of 4 per cent has been abolished.
While the change in indirect tax rates will come into effect from tomorrow, the new norms for direct taxes will be implemented from April 1, 2004.
Air travel may become cheaper as the excise duty on aviation turbine fuel (ATF) has been reduced from 16 to 8 per cent. Besides, inland air travel tax (IATT) of 15 per cent and the foreign travel tax (FTT) of Rs 500 per passenger have been abolished.
The measures, which may be politically correct in the context of ensuing elections, may not necessarily turn out to be economically prudent, the air of “feel good” in the economy notwithstanding.
Experts familiar with the budget-making exercise of the Union Government point out that lowering of the indirect tax rates mid-way through a fiscal year could have significant consequences as the budgeted revenue projections now would have to be re-estimated.
In fact, the import duty structure has been reduced for a number of sectors, including electricity, information technology, health and civil aviation.
Mobile handsets could also become cheaper, as also computers. While the customs duty on cell phones has been reduced from 10 per cent to 5 per cent, the excise duty on computers is being reduced from 16 to 8 per cent.
In addition, specified infrastructure equipment for basic/ cellular/ Internet, V-SAT, radio paging and public mobile radio trunk services and parts of such equipment are being exempted from basic customs duty.
Moreover, laptops brought as part of baggage have been exempted from customs duty and the quantity of alcoholic liquor/wines allowed duty free under baggage has been increased from 1 litre to 2 litres.
Duty on VCD/VCR, washing machines, personal computers, laptops, refrigerators of capacity up to 300 litres, and cooking ranges under the Transfer of Residence Rules have been made duty free.
The customs duty on project imports with investment of at least Rs 5 crore in plant and machinery is being reduced from 25 to 10 per cent.
On coal, the customs duty has been reduced from 25 to 15 per cent and on nickel and articles thereof from 10 to 5 per cent, while that on power transmission and distribution projects has been reduced from 25 to 10 per cent. The import duty on electricity meters has been reduced from 25 per cent to 15 per cent.
The customs duty on specified raw materials and inputs used for the manufacture of electronic components or optical fibres and cables has been reduced from 15 per cent to 5 per cent and 5 per cent to nil, respectively.
The customs duty on specified capital goods used for the manufacture of electronic goods has been reduced from 15 per cent and 10 per cent, respectively, to nil.
On the front of direct taxes, for perquisite valuation, rates of interest for housing loans, etc., will be reduced to bring them in line with the prevailing market rates.
In addition, infrastructure projects to be granted one-time approval for purpose of exemption under Section 10 (23G) will replace the present system of seeking periodical renewals.
Furthermore, salaried taxpayers, professionals such as doctors, accountants, etc, will be able to file paperless income-tax returns by way of direct filing through Internet under digital signatures.
On the service tax front, e-filing of returns has been allowed in respect of all the 58 taxable services and single registration and single return will suffice in the case of a service provider who is providing more than one taxable service.