FM leaves taxes unchanged

The 10% surcharge on 'super-rich' having income above Rs 1 crore in a year will continue

Leaving direct taxes untouched, Finance Minister P Chidambaram today slashed excise duty on cars, SUVs and two-wheelers, and capital goods and consumer durables to boost manufacturing and growth.

Presenting the Interim Budget for 2014-15, he also provided service tax exemption for storage and warehousing of rice like it was done in case of paddy last year. Also, blood banks have been exempted from its purview.

The 10% surcharge on 'super-rich' having income above Rs 1 crore in a year, and the up to 5% surcharge on corporates imposed last year, will continue.

"In keeping with the conventions I do not propose to make any announcements regarding changes to the tax laws," he said.

The Budget document does not give figures of the indirect tax concessions, which are valid up to June 30, 2014 and could be reviewed later. They will be notified later in the day.

He justified the excise duty reliefs saying, "However, 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% with CENVAT credit or 1% 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% to encourage to domestic production of soaps and oleo chemicals.

Similarly, a concessional customs duty of 5% on capital goods imported by Bank Note Paper Mill India Pvt Ltd has been provided to encourage to indigenous production of security paper for printing currency notes.

Giving Budget estimates, the Minister said the current financial year will end on a satisfactory note with the fiscal deficit at 4.6%, below the redline of 4.8%, and the revenue deficit at 3.3%.

The fiscal deficit for 2014-15 has been pegged at 4.1%, which will be below the target of 4.2% set by the new fiscal consolidation path. Revenue deficit is estimated at 3%.

Plan expenditure for the coming fiscal has been fixed at Rs 555,322 crore, unchanged from current year, and non-Plan expenditure at Rs 12,07,892 crore, marginally higher than 2013-14.