The government today announced a Krishi Kalyan Cess of 0.5 per cent on all taxable services effective from June 1 this year to fund farm initiatives.
It also proposed cut in excise duty on irrigation pumps and soil nutrients besides slashing import duty on cold storage related equipments.
"I propose to impose a Cess, called the Krishi Kalyan Cess, at 0.5 per cent on all taxable services, proceeds of which would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers," Finance Minister Arun Jaitley said while presenting the Budget for 2016-17.
He said the cess would come into force with effect from June 1, 2016. "Input tax credit of this cess will be available for payment of this cess," he added.
Jaitley also proposed to amend section 35AD of the Income-tax Act so as to reduce the deduction from 150 per cent to 100 per cent in the case of a cold chain facility, warehousing facility for storage of agricultural produce, production of fertiliser among others effective from April 1.
For expenditure on agricultural extensions project, he proposed to amend section 35CCC of the Income-tax Act to restrict the deduction to 100 per cent from financial year 2017-18 (Assessment Year 2018-19).
To encourage cold storage facilities in the farm sector, Jaitley exempted service tax on all facilities provided by the state-run National Centre for Cold Chain Development effective from April 1.
At present, the service tax rate is 14 per cent.
To facilitiate import of some cold chain equipment, the
government also extended concessional 5 per cent basic customs duty for pre-cooling units, pack houses, sorting and grading lines and ripening chambers also.
It also proposed to reduce the duty on such equipment to 5 per cent from 10 per cent.
Basic customs duty on refrigerated containers has also been reduced to 5 per cent from the current 10 per cent. That apart, the excise duty on refrigerated containers has also been reduced to 6 per cent from 12.5 per cent.
On fertiliser products, the government has reduced the excise duty on micro nutrients, which are covered under the Fertiliser Control Order, 1985 and manufactured by registered entities, to 6 per cent from the existing 12.5 per cent.
Also, the excise duty has been exempted on physical mixture of fertilisers -- made out of chemical fertilisers on which duty of excise has been paid -- by co-operative societies and those holding certificate of manufacture for mixture of fertilisers under the Fertiliser Control Order 1985 for supply to the members of such co-operative societies.
To ensure irrigation equipment are made available at cheaper price, the government has reduced the excise duty on on electric motor, shafts, sleeve, chamber, impeller, washer required for the manufacture of centrifugal pump being reduced to 6 per cent from 12.5 per cent.
