2007 Indian Budget
A MID-TERM REPORT CARD ON THE ECONOMY
Improvement in GDP growth rate from 7.5% in 2004-05 to 9% (Quick
Estimate) in 2005-06 and to 9.2% (Advance Estimate) in 2006-07; average
growth rate in the three years of the UPA Government at 8.6%; growth target
for the Tenth Plan of 8% will be nearly achieved; during three year period,
acceleration in growth rate in manufacturing from 8.7% to 9.1% and further
to 11.3%; and in services sector from 9.6% to 9.8% and further to 11.2%.
Average growth in agriculture during Tenth Plan estimated at 2.3%.
Income and Savings: Per capita income in 2005-06, in real terms, increased
by 7.4%, savings rate estimated at 32.4% and the investment rate at 33.8%.
Inflation: Growth in bank credit, year on year, by 29.6%; expansion in money
supply (M3) by 21.3%; foreign exchange reserves at US$ 180 billion; pressure
on domestic prices by global commodity prices; and supply constraints in
some essential commodities - consequently, average inflation in 2006-07
estimated at between 5.2 and 5.4% vis-a-vis 4.4% last year.
BHARAT NIRMAN AND FLAGSHIP PROGRAMMES
In 2006-07, additional irrigation potential of 2,400,000 hectares to be created;
until December 2006 - drinking water provided to 55,512 habitations, 12,198
kilometres of rural roads completed and 783,000 rural houses constructed
with 914,000 houses under construction; 19,758 villages covered so far under
the Rajiv Gandhi Grameen Vidyutikaran Yojana; 15,054 villages provided
with telephone against target of 20,000 villages, and balance to be covered
by the end of the year.
ELEVENTH FIVE YEAR PLAN
Objectives: "Faster and More Inclusive Growth"; growth rate of approximately
10% by the end of plan period; growth of 4% in the agriculture sector, faster
employment creation, reducing disparities across regions and ensuring access
to basic physical infrastructure and health and education services to all.
Allocations for Major Sectors: Increase in provision for Bharat Nirman by
31.6% from Rs.18,696 crore to Rs.24,603 crore, for education by 34.2% to
Rs.32,352 crore & for health and family welfare by 21.9% to Rs.15,291 crore.
Sarva Shiksha Abhiyan (SSA) and Mid-day Meal Scheme: Increase in
allocation for school education by 35% from Rs.17,133 crore to Rs.23,142
crore, of which Rs.10,671 crore for SSA, provision for strengthening of
teachers training institutions to be increased from Rs.162 crore to Rs.450
crore with 200,000 more teachers to be appointed and 500,000 more class
rooms to be constructed. Mid-day Meal Scheme to be provided Rs.7,324
crore; children in upper primary classes in 3,427 educationally backward
blocks to be also covered; transfer to Prarambhik Shiksha Kosh to increase
from Rs.8,746 crore to Rs.10,393 crore; provision for secondary education
to double from Rs.1,837 crore to Rs.3,794 crore.
Means-Cum-Merit Scholarships: National Means-cum-Merit Scholarship
Scheme to be introduced to arrest drop out ratio; selection through a national
test from among students who have passed class VIII; each student to be
given Rs.6,000 per year; 100,000 scholarships to be awarded every year; a
corpus fund of Rs.750 crore to be created this year, and augmented by a like
amount annually over the next three years.
Drinking Water and Sanitation: Allocation for Rajiv Gandhi Drinking Water
Mission to be increased from Rs.4,680 crore to Rs.5,850 crore and for Total
Sanitation Campaign from Rs.720 crore to Rs.954 crore.
Health Sector; National Rural Health Mission: All districts to complete
preparation of District Health Action Plans by March 2007; major emphasis
to be on mother and child care and on prevention and treatment of
communicable diseases; convergence sought to be achieved among various
programmes such as immunization, ante natal care, nutrition and sanitation
through Monthly Health Days (MHD) organised at Anganwadi centres;
320,000 Associated Social Health Activists (ASHAs) recruited with over
200,000 given orientation training; 90,000 link workers selected by the States;
AYUSH systems being mainstreamed into health delivery system at all levels;
increase in allocation for NRHM from Rs.8,207 crore to Rs.9,947 crore.
HIV/AIDS: NACP-III, starting in 2007-08, to target high risk groups; access
to condoms to be expanded and universal access to blood screening and safe
blood to be ensured; more hospitals to provide treatment to prevent
transmission of HIV/AIDS from mother to child; provision for AIDS control
programme to be Rs.969 crore.
Polio: Number of polio rounds to be increased, monovalent vaccine to be
introduced, with intensive coverage in the 20 high risk districts of Uttar
Pradesh and 10 districts of Bihar; provision of Rs.1,290 crore in 2007-2008.
Integrated Child Development Services: To cover all habitations and
settlements during Eleventh Plan and to reach out to pregnant women,
lactating mothers and all children below the age of six; allocation to be
increased from Rs.4,087 crore to Rs.4,761 crore.
National Rural Employment Guarantee Scheme: Allocation of Rs.12,000
crore for NREGS; coverage to expand from 200 districts to 330 districts;
Rs.2,800 crore provided for Sampoorna Gramin Rozgar Yojana in districts
not covered by NREGS; allocation for Swaranjayanti Gram Swarozgar Yojana
to promote self employment among rural poor to increase from Rs.1,200 to
Urban Unemployment: Increase in allocation for Swarna Jayanti Shahari
Rojgar Yojana from Rs.250 crore to Rs.344 crore.
Jawaharlal Nehru National Urban Renewal Mission: 538 projects with a
cost of Rs.23,950 crore sanctioned; allocation to increase from Rs.4,595 crore
to Rs.4,987 crore.
Targeted PDS and Antyodaya Anna Yojana: Scheme for evaluation,
monitoring, management and strengthening of targeted PDS to be
implemented, will include computerisation of PDS and an integrated
information system in Food Corporation of India.
Scheduled Castes and Scheduled Tribes: Allocation of Rs.3,271 crore in
respect of schemes benefiting only SCs and STs and Rs.17,691 crore in respect
of schemes with at least 20% of benefits earmarked for SCs and STs; increase
in allocation for Rajiv Gandhi National Fellowship Programme from Rs.35
crore to Rs.88 crore; Post-Matric Scholarships: provision to be increased
from Rs.440 crore to Rs.611 crore; a separate provision of Rs.91 crore
proposed for similar scholarships to students belonging to socially and
educationally backward classes.
Minorities: Increase in share capital of National Minorities Development
and Finance Corporation to Rs.63 crore; provision of Rs.108 crore for a multisector
development programme in districts with a concentration of minorities;
allocation for Pre-matric scholarships at Rs.72 crore, Post-matric scholarships
at Rs.90 crore and Merit-cum-Means scholarships at graduate and postgraduate
levels at Rs.48.60 crore.
Women: Outlay for 100% women specific programmes is Rs.8,795 crore and
for schemes where at least 30% allocation is for women specific programmes
is Rs.22,382 crore.
North Eastern Region (NER): Allocation increased from Rs.12,041 crore to
Rs.14,365 crore; new industrial policy for NER, with suitable fiscal incentives,
to be in place before March 31, 2007.
Supplement to GBS: Allocations under Plan ‘A’ at Rs.205,100 crore; under
Plan ‘B’, additional resources to the extent of Rs.7,000 crore to be found
through better tax administration during the course of the year; under Plan
‘C’ resources available outside Budget to be leveraged for investment,
especially in infrastructure.
Farm credit: Target of Rs.225,000 crore for 2007-08 with an addition of 50
lakh new farmers to the banking system; provision of Rs.1,677 crore for 2%
interest subvention for short-term crop loans; a special plan being
implemented over a period of three years in 31 especially distressed districts
in four States involving a total amount of Rs.16,979 crore; of this, about
Rs.12,400 crore to be on water related schemes; special plan includes a scheme
with proposed provision of Rs.153 crore for induction of high yielding milch
animals and related activities.
Mission for Pulses: Integrated Oilseeds, Oilpalm, Pulses and Maize
Development programme to be expanded with sharper focus on scaling up
the production of breeder, foundation and certified seeds; Government to
fund the expansion of Indian Institute of Pulses Research, Kanpur, and offer
other producers a capital grant or concessional financing to double production
of certified seeds within a period of three years.
Plantation Sector: financial mechanisms for re-plantation and rejuvenation
to be put in place for coffee, rubber, spices, cashew and coconut.
Accelerated Irrigation Benefit Programme: 35 projects likely to be completed
in 2006-07 and additional irrigation potential of 900,000 hectares to be
created; outlay to be increased from Rs.7,121 crore to Rs.11,000 crore
including grant component to State Governments of Rs.3,580 crore, an
increase from Rs.2,350 crore.
Rainfed Area Development Programme: Proposed allocation of Rs.100 crore
for the new Rainfed Area Development Programme.
Water Resources Management: Restoring Water Bodies: World Bank loan
agreement signed with Tamil Nadu for Rs.2,182 crore to restore 5,763 water
bodies having a command area of 400,000 hectares; agreement for Andhra
Pradesh expected to be concluded in March 2007 to cover 3,000 water bodies
with a command area of 250,000 hectares.
Ground Water Recharge: 100% subsidy to small and marginal farmers and
50% subsidy to other farmers to be given to divert rain water into 'dug wells';
Rs.1,800 crore to be transferred to NABARD.
Training of Farmers: Indian Council of Agricultural Research (ICAR) to set
up one teaching-cum-demonstration model of water harvesting in each of
32 selected State Agricultural Universities and ICAR institutes; each
institution to train 100 trainers and 1,000 farmers every year; interest free
loan of Rs.3 crore to be provided to each institution to create a corpus fund.
Extension System: New programme to be drawn up that will replicate earlier
Training and Visit (T&V) programme; Agriculture Technology Management
Agency (ATMA) now in place in 262 districts to be extended to another 300
districts; provision for ATMA to increase from Rs.50 crore to Rs.230 crore.
Fertiliser Subsidies: Based on study to be conducted, a pilot programme to
be implemented for delivering subsidy directly to farmer.
Agricultural Insurance: National Agricultural Insurance Scheme to be
continued for Kharif and Rabi 2007-08 with a provision of Rs.500 crore; a
weather based crop insurance scheme to be started by Agricultural Insurance
Corporation on a pilot basis as an alternative to NAIS; allocation of Rs.100
crore to be made in 2007-08.
National Bank for Agriculture and Rural Development: To augment its
resources for refinancing rural credit cooperatives, NABARD to issue
Government guaranteed rural bonds to the extent of Rs.5,000 crore with
suitable tax exemption.
Rural Infrastructure Development Fund: Corpus of RIDF-XIII to be raised
from Rs.10,000 crore to Rs.12,000 crore; separate window for rural roads to
continue with a corpus of Rs.4,000 crore.
Social Security: New scheme called 'Aam Admi Bima Yojana' to be introduced
for death and disability insurance cover through LIC to rural landless
households which enjoy no cover at all today; head of family or one earning
member in family to be insured; Government to bear 50% of premium of
Rs.200 per year per person; Rs.1,000 crore to be placed in a fund to be
maintained by LIC.
Gross domestic capital formation in 2005-06 grew by 23.7 per cent; in April-
January, 2006-07, foreign direct investment amounted to US$12.5 billion
and outpaced portfolio investment of US$6.8 billion; Central Public Sector
Enterprises to invest Rs.165,053 crore through internal and extra budgetary
resources in 2007-08; Government to provide equity support of Rs.16,361
crore and loans of Rs.2,970 crore.
Power: Seven more Ultra Mega Power Projects under process and at least
two to be awarded by July, 2007; other initiatives include facilitating setting
up of merchant power plants by private developers and private participation
in transmission projects; Accelerated Power Development and Reforms
Project being restructured to cover all district headquarters and towns with a
population of more than 50,000; budgetary support for APDRP to increase
from Rs.650 crore to Rs.800 crore; Rajiv Gandhi Grameen Vidyutikaran
Yojana: allocation to increase from Rs.3,000 crore to Rs.3,983 crore.
Coal: 26 coal blocks with reserves of 8,581 million tonnes and four lignite
blocks with reserves of 755 million tonnes allotted to Government companies
and approved end users; definition of specified end use to be enlarged to
include underground coal gasification and coal liquefaction.
National Highways: Provision for National Highway Development
Programme to increase from Rs.9,945 crore to Rs.10,667 crore; road-cumrail
bridge at Bogibeel, Assam, over Brahmaputra, to be taken up as a national
Public Private Partnership and Viability Gap Funding: Revolving fund with
a corpus of Rs.100 crore to be set up to quicken project preparation; fund to
contribute up to 75% of preparatory expenditure in the form of interest free
loan to be recovered from the successful bidder.
Petroleum and Natural Gas: 162 production sharing contracts awarded;
investment of Rs.97,000 crore made in exploration; 23 coal bed methane
blocks awarded for exploration.
Textiles: Provision for Scheme for Integrated Textiles Parks to increase from
Rs.189 crore to Rs.425 crore; Technology Upgradation Fund scheme to
continue with provision of Rs.911 crore.
Handlooms: Additional 100-150 clusters to be taken up in 2007-08; health
insurance scheme to be extended to more weavers and also to be enlarged to
include ancillary workers; allocation for the sector to be enhanced from Rs.241
crore to Rs.321 crore.
Small & Medium Enterprises: Increase in outstanding credit from Rs.135,200
crore to Rs.173,460 crore at end December 2006.
Coir Industry: Scheme for modernisation and technology upgradation with
special emphasis to major coir producing States announced with a proposed
provision of Rs.22.50 crore.
Foreign Trade: Merchandise exports expected to cross US$125 billion by
the end of the current fiscal.
Tourism: Provision for tourist infrastructure to increase from Rs.423 crore
to Rs.520 crore.
Banking: Under Differential Rate of Interest scheme providing finance at a
rate of 4% to weaker sections of the community engaged in gainful
occupations, limit of loan to be raised from Rs.6,500 to Rs.15,000 and limit
of housing loan to be raised from Rs.5,000 to Rs.20,000 per beneficiary.
Regional Rural Banks: To open at least one branch in 80 uncovered districts
in 2007-08; Securitisation and Reconstruction of Financial Assets and
Enforcement of Securitisation of Interest (SARFAESI) Act to be extended to
loans advanced by RRBs; to be permitted to accept NRE/FCNR deposits;
and those which have a negative net worth to be recapitalized.
Housing Loans: National Housing Bank to introduce 'reverse mortgage' under
which a senior citizen who is owner of a house can avail of a monthly stream
of income against mortgage of his/her house, while remaining the owner and
occupying the house throughout his/her lifetime, without repayment or
servicing of the loan; regulations to be put in place to allow creation of
mortgage guarantee companies.
Insurance: Exclusive health insurance scheme for senior citizens offered by
National Insurance Company; other three public sector insurance companies
to offer a similar product to senior citizens; Micro Financial Sector
(Development and Regulation) Bill and a comprehensive Bill to amend
insurance laws to be introduced in Budget Session.
Financial Inclusion: A Financial Inclusion Fund to be established with
NABARD for meeting cost of developmental and promotional interventions;
a Financial Inclusion Technology Fund to be also established to meet costs
of technology adoption; each fund to have an overall corpus of Rs.500 crore,
with initial funding to be contributed by Government, RBI and NABARD.
Capital Markets: PAN to be made sole identification number for all
participants in securities market with an alpha-numeric prefix or suffix to
distinguish a particular kind of account; idea of Self Regulating Organisations
(SRO) to be taken forward for different market participants under regulations
to be made by SEBI; mutual funds to be permitted to launch and operate
dedicated infrastructure funds; individuals to be permitted to invest in overseas
securities through Indian mutual funds; short selling settled by delivery, and
securities lending and borrowing to facilitate delivery, by institutions to be
allowed; enabling mechanism to be put in place to permit Indian companies
to unlock a part of their holdings in group companies for meeting their
financing requirements by issue of Exchangeable Bonds.
Innovative Financing for Infrastructure: Funds from National Small Savings
Fund may also now be borrowed by India Infrastructure Finance Company
Limited; suggestions of Deepak Parekh Committee to be examined for
establishment of two wholly-owned overseas subsidiaries of IIFCL with
objectives to (i) borrow funds from RBI and lend to Indian companies
implementing infrastructure projects in India, or to co-finance their ECBs
for such projects, solely for capital expenditure outside India; and (ii) borrow
funds from the RBI, invest such funds in highly rated collateral securities
and provide 'credit wrap' insurance to infrastructure projects in India for raising
resources in international markets.
Defence Expenditure: Allocation to increase to Rs.96,000 crore.
Information Technology: Allocation for e-governance to increase from Rs.395
crore to Rs.719 crore and for e-governance action plans at State levels to
increase from Rs.300 crore to Rs.500 crore; Rs.33 crore to be provided for a
new scheme of manpower development for software export industry.
Backward Regions Grant Fund: Allocation to increase from Rs.5,000 crore
to Rs.5,800 crore.
Mumbai as a Financial Centre: Report of High Powered Expert Committee
to be placed in public domain to obtain feedback.
Vocational Education Mission: An initial provision of Rs.50 crore proposed
for beginning work on a Vocational Education Mission; approach to be based
on public-private partnership.
Upgradation of ITIs: 1,396 ITIs to be upgraded into centres of excellence in
specific trades and skills under public-private partnership; Government to
provide financial assistance by way of seed money; an interest free loan up
to Rs.2.5 crore to be granted to each ITI for upgradation and revision of
courses; Rs.750 crore set aside for this purpose.
Employment for Physically Challenged: To incentivise employers in organised
sector to provide regular employment to physically challenged persons, a
scheme proposed to reimburse employer's contribution to Employees
Provident Fund and Employees State Insurance for first three years; to support
creation of about 100,000 jobs every year for physically challenged persons
with a salary limit of Rs.25,000 per month; Rs.1,800 crore earmarked.
Debt Management Office: An autonomous DMO to be set up with a Middle
Office in first phase to facilitate transition to a full-fledged DMO.
Development Cooperation: Activities relating to development cooperation
to be brought under one umbrella; India International Development
Cooperation Agency (IIDCA) to be set up.
Climate Change: An expert committee to be appointed to study impact of
climate change on India and identify measures to be taken.
Commonwealth Games: Provision of Rs. 150 crore to Ministry of Youth
Affairs and Sports and Rs.350 crore to Delhi Government for Commonwealth
Games 2010 in Delhi and of Rs.50 crore for Commonwealth Youth Games
2008 to be held in Pune.
History and Culture: Rs.30 crore to be provided for Sabarmati Ashram,
Ahmedabad; Sevagram Ashram, Wardha; Bhandarkar Oriental Research
Institute, Pune; and Rajendra Smriti Sanghrahalaya, Patna; Rs.20 crore to be
provided to reposition Nehru Memorial Museum and Library, Delhi, as a
major centre of intellectual activity; scholars from Indian and foreign
institutions to be engaged to work on specific projects and an initial grant of
Rs.5 crore to be made to encourage this effort.
Institutions of Excellence: Special grant of Rs.50 crore each to be made to
Govind Ballabh Pant University of Agriculture & Technology, Pantnagar
and Tamil Nadu Agricultural University, Coimbatore.
Rs.110,268 crore of States' debt has been consolidated; twenty States have
availed of benefit of debt waiver of Rs.8,575 crore; States’ share of taxes &
duties to increase from Rs.120,377 crore to Rs.142,450 crore; grants & loans
to States and UTs to increase from Rs.90,521 crore to Rs.106,987 crore.
VAT, CST and a Roadmap towards GST: Agreement reached with State
Governments to phase out CST; rate to be reduced from 4% to 3% with
effect from April 1, 2007; Rs.5,495 crore provided for compensation for
losses, if any, on account of VAT and also on account of CST; a roadmap for
introducing a national level Goods and Services Tax (GST) with effect from
April 1, 2010 to be prepared.
BUDGET ESTIMATES FOR 2007-08
Plan expenditure at Rs.205,100 crore; Non-Plan Expenditure (net of the SBI
share acquisition) at Rs.435,421 crore with increase over 2006-07 of only
6.5%; Revenue deficit estimated at Rs.71,478 crore (1.5% of GDP) and
fiscal deficit at Rs.150,948 crore (3.3% of GDP).
Reduction in peak rate for non-agricultural products from 12.5% to 10%.
Reduction in duty on most chemicals and plastics from 12.5% to 7.5%; on
seconds and defectives of steel from 20% to 10%.
All coking coal irrespective of ash content to be fully exempt.
Reduction in duty on polyester fibres and yarns from 10% to 7.5% and on
raw-materials such as DMT, PTA and MEG from 10% to 7.5%; on cut and
polished diamonds from 5% to 3%; on rough synthetic stones from 12.5%
to 5%; and on unworked corals from 30% to 10%.
Dredgers to be fully exempt from import duty.
To augment irrigation facilities and processing of agricultural products,
reduction in duty on drip irrigation systems, agricultural sprinklers and
food processing machinery from 7.5% to 5%.
Reduction in general rate of import duty on medical equipment to 7.5%.
To make edible oils more affordable, crude and refined edible oils to be
exempt from additional CV duty of 4%; reduction in duty on sunflower
oil, both crude and refined, by 15 percentage points.
Reduction in duty on pet foods from 30% to 20%; on watch dials and
movements and umbrella parts from 12.5% to 5%; to promote research
and development, concessional rate of 5% duty to be extended to all research
institutions registered with the Directorate of Scientific and Industrial
Research; reduction in duty from 7.5% to 5% on 15 specified machinery
for pharmaceutical and biotechnology sector.
Duty of 3% (WTO bound rate) to be levied on all private import of aircraft
including helicopters; such import to also attract countervailing duty and
additional customs duty.
Duty of Rs.300 per metric tonne to be levied on export of iron ores and
concentrates and Rs.2,000 per metric tonne on export of chrome ores and
Reduction in ad valorem component of excise duty on petrol and diesel
from 8% to 6%.
Relief to deserving cases especially job creating sectors: exemption limit
for small scale industry (SSI) to be raised from Rs.1 crore to Rs.1.5 crore;
to encourage food processing sector, biscuits whose retail sale price does
not exceed Rs.50 per kilogram and all kinds of food mixes including instant
mixes to be fully exempt; reduction in duty on umbrellas and parts of
footwear from 16% to 8%; on plywood from 16% to 8%; biodiesel to be
To provide access to pure drinking water, water purification devices
operating on specified membrane based technologies and domestic water
filters not using electricity to be fully exempt; exemption on pipes used for
carrying water from a water supply plant to a storage facility to be extended
to all pipes of diameter exceeding 200 mm used in water supply systems.
Reduction in the rate of duty from Rs.400 per metric tonne to Rs.350 per
metric tonne on cement sold in retail at not more than Rs.190 per bag; rate
of Rs.600 per metric tonne on cement that has a higher MRP.
Specific rates of duty on cigarettes to be increased by about 5%; duty
(excluding cess) on biris to be raised from Rs.7 to Rs.11 per thousand for
non-machine made biris and from Rs.17 to Rs.24 per thousand for machine
made biris; duty on pan masala not containing tobacco to be reduced from
66% to 45%; withdrawal of exemption for pan masala containing tobacco
and other tobacco products given to units in the North Eastern States.
Service tax :
Exemption limit for small service providers to be raised from Rs.400,000
Extension of service tax to: services outsourced for mining of mineral, oil
or gas; renting of immovable property for use in commerce or business
(residential properties, vacant land used for agriculture and similar purposes,
and land for sports, entertainment and parking purposes & immovable
property for educational or religious purposes to be excluded); development
and supply of content for use in telecom and advertising purposes; asset
management services provided by individuals; design services; services
involved in execution of a works contract with an optional composition
scheme under which tax will be levied at only 2% of the total value of
Exemption to: Services provided by Resident Welfare Associations to their
members who contribute Rs.3000 or less per month for services rendered,
services provided by technology business incubators, their incubatees whose
annual business turnover does not exceed Rs.50 lakhs to be exempt for
first three years; clinical trial of new drugs to make India a preferred
destination for drug testing.
Department of Telecommunications to constitute a committee to study the
present structure of levies on telecom industry.
Threshold limit of exemption in the case of all assessees to be increased by
Rs.10,000 thus giving every assessee a relief of Rs.1,000; in the case of a
woman assessee, threshold limit to be increased from Rs.135,000 to
Rs.145,000 and in case of a senior citizen from Rs.185,000 to Rs.195,000
giving him or her a relief of Rs.2,000; deduction in respect of medical
insurance premium under section 80D to be increased to a maximum of
Rs.15,000 and, in case of a senior citizen, a maximum of Rs.20,000.
Surcharge on income tax on all firms and companies with a taxable income
of Rs.1 crore or less to be removed.
Benefit of Section 36(1)(viii) to be available to cooperative banks; to be
also allowed deduction in respect of provision for bad and doubtful debts
under section 36(1)(viia); amalgamation and de-merger of banking
companies is tax neutral - benefit to be extended to cooperative banks.
Concessions under section 80IA for infrastructure facilities to be extended
to cross country natural gas distribution network, including gas pipeline
and storage facilities integrated to the network; and to navigation channel
in the sea.
To facilitate creation of urban infrastructure, issue of tax-free bonds through
State Pooled Finance Entities formed for raising funds for a group of urban
local bodies to be allowed.
A benign assessment procedure to be introduced for assessees engaged in
diamond manufacturing and trading who declare profits from such activities
at 8% or more of turnover.
A five year income tax holiday for two, three or four star hotels and for
convention centres with a seating capacity of not less than 3,000; they
should be completed and begin operations in National Capital Territory of
Delhi or in the adjacent districts of Faridabad, Gurgaon, Ghaziabad or
Gautam Budh Nagar during April 1, 2007 to March 31, 2010.
Concession under section 35(2AB) to be extended for five more years until
March 31, 2012.
Tax holiday to undertakings in Jammu & Kashmir to be extended for another
five years up to March 31, 2012.
Minimum Alternate Tax (MAT) to be extended to income in respect of
which deduction is claimed under sections 10A and 10B; deduction under
section 36(1)(viii) to be restricted to 20% of profits each year
Pass-through status to be granted to venture capital funds only in respect of
investments in venture capital undertakings in biotechnology; information
technology relating to hardware and software development;
nanotechnology; seed research and development; research and development
of new chemical entities in the pharmaceutical sector; dairy industry; poultry
industry; and production of bio-fuels, and hotel-cum-convention centres
of a certain description and size.
Limit of Rs.50 lakh per investor per year with respect to capital gains bonds
issued by NHAI and REC under section 54EC to continue.
Rate of dividend distribution tax to be raised from 12.5% to 15% on
dividends distributed by companies; and to 25% on dividends paid by money
market mutual funds and liquid mutual funds to all investors.
Expenditure on free samples and on displays to be excluded from the scope
of Fringe Benefit Tax (FBT); ESOPs to be brought under FBT.
Cash withdrawals by Central and State Governments to be excluded from
the scope of Banking Cash Transactions Tax (BCTT); exemption limit for
individuals and HUFs to be raised from Rs.25,000 to Rs.50,000.
An additional cess of 1% on all taxes to be levied to fund secondary
education and higher education and the expansion of capacity by 54% for
reservation for socially and educationally backward classes.
List of declared goods under section 14 of the CST Act to be amended to
cover all small aircraft with minimum takeoff mass of less than 40,000 kgs
operated by scheduled airlines.