NDA attacks tax proposals in Finance Bill

The National Democratic Alliance (NDA) today demanded changes in a number of tax proposals in the Finance Bill.

Among other things, the Opposition sought the raising of the income tax exemption limit to Rs 1 lakh from Rs 50,000, a rollback of the service tax on shamiana contractors and outdoor caterers, and an exemption on payment made by airlines for aircraft acquisition.

Setting the tone for a confrontation with the government in Parliament tomorrow, the NDA took strong exception to Prime Minister Manmohan Singh's "regrettably impolite and discourteous" behaviour, when he refused to meet an NDA delegation earlier in the day.

It also pressed for restoring the interest rate on the Employees' Provident Fund to 9.5 per cent and making the 9 per cent special savings scheme for senior citizens tax-free.

The NDA termed the move to tax gifts above Rs 25,000 from unrelated persons as "retrograde". It pointed out that any sum received by an individual or Hindu Undivided Family (HUF) by way of consideration for goods or services was proposed to be treated as income and taxed accordingly. It feared that loans, repayments of loans and political donations would fall under the tax net.

Describing the proposal to insert a new Section 277A for punishing people indulging in falsification of books of accounts or documents with imprisonment and a fine as "draconian" and "entirely unnecessary", the NDA said innocent mistakes by an assessee or anyone connected with his tax proceedings could land him in jail without his being proved guilty.

It also said the proposal to amend Section 285BA, seeking information on specified financial transactions where the annual expenditure was above Rs 50,000 on an item, would bring back the "inspector raj".

It also pointed out that the move to impose a 2 per cent education cess, increase in the service tax rate to 10 per cent from 8 per cent and a excise duty hike on steel to 12 per cent from 8 per cent had led to spiralling inflation.

In a press conference later in the day, former Finance Minister Yashwant Sinha said, "The Budget is in a mess."

He said Finance Minister P Chidambaram had presented a sloppily and casually prepared Budget. Even before a discussion on the Finance Bill, the government had made several changes including the rollback of the securities transaction tax, cut in Customs duties on petroleum products and on steel.