Finance Minister, P Chidambaram, in his Budget speech presented before the Parliament today, confidently assured that India would maintain its GDP growth at 8.8%. He added that the keeping inflation under check has been the cornerstone of the Government policy. The FM pointed out that the country has seen 8% GDP growth in 12 successive quarters.
Capital inflows:
The global markets are weak since August, Mr. Chidambaram observed, adding that the impact on local markets is yet unclear. The Government will monitor foreign fund inflows, he said. He said that there is a need to take steps on foreign inflows to ensure stable markets. The current capital inflows are in excess of economic deficit, the FM informed. The Government and the RBI will jointly take temporary steps to manage capital inflows, he said. There is a need to be vigilant on global risks, he added.
Health:
Mr. Chidambaram has proposed to allocate Rs16,534 crore for the health sector for FY09. He has also hiked the allocation to the National Rural Health Mission by 15% and has announced a health cover of Rs 30,000 for every worker in the BPL category.
In his budget speech for FY07-08, the Finance Minister had said that the healthcare sector will contribute around 7-8% by the next five years, if considerable importance was given to the sector. He had hiked the allocation to health sector by 21.9% to Rs 15,291crore.
Agriculture & farm growth:
The FY08 farm growth is seen at 2.6%, the FM informed. Agricultural credit doubled in the first two years of UPA government, he stated. The Bharat Nirman programme has got an allocation of Rs 31,280 crore.
The agricultural credit target has been set at Rs 2,80,000 crore for 2008-09. The government aims to hike farm contribution to GDP to 1.6% in the 11th plan. Around 75% farm credit is by scheduled commercial banks, said Chidambaram.
In Union Budget 2007, the target set for farm credit was Rs 2,25,000 crore. There was a provision of Rs 1,677 crore for short-term crop loans. A special plan was announced which was to be implemented over a period of three years involving an amount of Rs16,979 crore. Of that amount, Rs12,400 crore was to be spent on water-related schemes. The special plan included a scheme with proposed provision of Rs 153 crore for induction of high yielding milch animals and related activities.
Education:
Mr Chidambaram has upped the education and health allocation by 20% at Rs 34,400 crore. The Midday-Meal Scheme has been extended to upper primary classes in all blocks.
The Finance minister has proposed to setting up 16 central universities and 6,000 high quality schools which will be built by FY09.
3 IITs will be set up in in Andhra Pradesh, Bihar and Rajasthan. He has also setting up of 3 IISCs in Bhopal and Trivandrum.
The Government will also allot Rs 100 crore to IT Ministry to Link Knowledge Institutes.
Women Welfare:
The FM has offered Rs 500 crore for a corpus fund to subsidise all women Self Helf Groups, or SHGs, for LIC cover for permanent disability.
Power:
The FM has created a plan worth Rs 800 crore for accelerating power reform in FY09. There would be a national fund for power transmission and distribution. A coal regulator would be established and there would be more reforms in coal and electricity, Mr. Chidambaram said. The FM has urged for an open bidding for five more Ultra Mega Power Projects (UMPP).
Oil & Natural Gas:
The Finance Minister estimated that the NELP-VII would attract investments worth USD 5-8 billion.
PAN/Securities:
In the 2007 budget, The FM made PAN mandatory for all security transactions and the sole identification for all participants in the securities markets. He also made it mandatory for all high value transactions to be supported by PAN identification numbers.
In his Budget 2008-09 speech, the FM has proposed the launch of an excange traded Forex and a rate derivative market. He added that PAN would continue to be the sole identification in the securities market. He has also extended PAN requirements to all financial markets.
The FM has also asked states to help develop a National Securities Market. He added that differences in state duties and levies are hampering the securities market.
Excise duty
India has one of the highest incidences of indirect tax on goods, where most of the manufactured products attract 16% excise duty and 12.5% VAT.
In Budget 2008-09, the excise duty on buses and chassis has been cut from 16% to 12%, on 2-wheeler and small cars, it has been cut from 16% to 12%. Meanwhile, the excise duty on some paper types has been cut from 12% to 10% and the excise duty on all Pharma good is down to 8% from the prevalent 16%. The FM also reduced excise duty on bulk cement to Rs 400/tonne.
Customs duty
There is no change in peak customs duty. Customs duty on steel scrap has been cut to 0% versus 5% and the customs duty on project imports has been cut to 5% versus 7.5%.
The customs duty on a few bulk drugs have been cut to 5% versus 10% while the duty on life saving drugs has been cut from 10% to 5%.
CENVAT has been reduced from 16% to 14% on all goods.
Customs exemptions will continue only for Naptha for fertilizers. The duty on crude/unrefined sulphur has been cut to 2% versus 5%.
Union Budget 2007 reduced peak rate for non-agricultural products from 12.5% to 10% and duty on chemicals and plastics from 12.5% to 7.5%.
The previous Budget had reduced peak rate for non-agricultural products from 12.5% to 10%. The duty on most chemicals and plastics was reduction from 12.5% to 7.5%. There was also a reduction in the general rate of import duty on medical equipment to 7.5%.
Corporate Tax:
The FM has not tinkered with the corporate tax levels in Budget 2008. Corporates will be paying the same rates of tax this year as well, additionally there is no change in surcharge on corporate tax. Surcharge also did not see any change; as per the current norms, corporate income has been levied a flat surcharge of 10% in the case of domestic companies and 2.5% for foreign companies.
Income tax:
the FM has hiked the personal income tax exemption limit to Rs 1.5 lakh from the prevalent Rs 1.10 lakh. The personal income tax exemption limit for women is up from Rs 1.45 lakh to Rs 1.8 lakh and for senior citizens, it’s up from Rs 1.95 lakh to Rs 2.25 lakh.
Income above Rs 5 lakh will attract 30% income tax and income in the range of Rs 1.5 lakh to Rs 3 lakh will attract 10% income.
He has however, left unchanged corporate tax and the surcharge on corporate tax.
DTT/ STT:
The Finance Minister, P Chidambaram has left the Dividend Distribution Tax or DDT rates unchanged at 15%. While presenting the Union Budget before the Parliament today, he also announced that the Government would introduce commodities transaction tax, like the Securities Transaction Tax, or, STT.
The STT rates have also been left unchanged. Mr. Chidambaram said that the levy of STT would only on option premiums.
Short-term capital gains:
The short-term capital gains have been hiked to 15%, the FM announced.
CST:
Mr. Chidambaram has reduced the the Central Sales Tax, or CST, rates to 2% from 3%.
Other tax announcements:
The Finance Minister has withdrawn the banking cash transaction tax. He has also given a five-year tax holiday for setting up hospitals in non-urban cities.
The global markets are weak since August, Mr. Chidambaram observed, adding that the impact on local markets is yet unclear. The Government will monitor foreign fund inflows, he said. He said that there is a need to take steps on foreign inflows to ensure stable markets. The current capital inflows are in excess of economic deficit, the FM informed. The Government and the RBI will jointly take temporary steps to manage capital inflows, he said. There is a need to be vigilant on global risks, he added.
Health:
Mr. Chidambaram has proposed to allocate Rs16,534 crore for the health sector for FY09. He has also hiked the allocation to the National Rural Health Mission by 15% and has announced a health cover of Rs 30,000 for every worker in the BPL category.
In his budget speech for FY07-08, the Finance Minister had said that the healthcare sector will contribute around 7-8% by the next five years, if considerable importance was given to the sector. He had hiked the allocation to health sector by 21.9% to Rs 15,291crore.
Agriculture & farm growth:
The FY08 farm growth is seen at 2.6%, the FM informed. Agricultural credit doubled in the first two years of UPA government, he stated. The Bharat Nirman programme has got an allocation of Rs 31,280 crore.
The agricultural credit target has been set at Rs 2,80,000 crore for 2008-09. The government aims to hike farm contribution to GDP to 1.6% in the 11th plan. Around 75% farm credit is by scheduled commercial banks, said Chidambaram.
In Union Budget 2007, the target set for farm credit was Rs 2,25,000 crore. There was a provision of Rs 1,677 crore for short-term crop loans. A special plan was announced which was to be implemented over a period of three years involving an amount of Rs16,979 crore. Of that amount, Rs12,400 crore was to be spent on water-related schemes. The special plan included a scheme with proposed provision of Rs 153 crore for induction of high yielding milch animals and related activities.
Education:
Mr Chidambaram has upped the education and health allocation by 20% at Rs 34,400 crore. The Midday-Meal Scheme has been extended to upper primary classes in all blocks.
The Finance minister has proposed to setting up 16 central universities and 6,000 high quality schools which will be built by FY09.
3 IITs will be set up in in Andhra Pradesh, Bihar and Rajasthan. He has also setting up of 3 IISCs in Bhopal and Trivandrum.
The Government will also allot Rs 100 crore to IT Ministry to Link Knowledge Institutes.
Women Welfare:
The FM has offered Rs 500 crore for a corpus fund to subsidise all women Self Helf Groups, or SHGs, for LIC cover for permanent disability.
Power:
The FM has created a plan worth Rs 800 crore for accelerating power reform in FY09. There would be a national fund for power transmission and distribution. A coal regulator would be established and there would be more reforms in coal and electricity, Mr. Chidambaram said. The FM has urged for an open bidding for five more Ultra Mega Power Projects (UMPP).
Oil & Natural Gas:
The Finance Minister estimated that the NELP-VII would attract investments worth USD 5-8 billion.
PAN/Securities:
In the 2007 budget, The FM made PAN mandatory for all security transactions and the sole identification for all participants in the securities markets. He also made it mandatory for all high value transactions to be supported by PAN identification numbers.
In his Budget 2008-09 speech, the FM has proposed the launch of an excange traded Forex and a rate derivative market. He added that PAN would continue to be the sole identification in the securities market. He has also extended PAN requirements to all financial markets.
The FM has also asked states to help develop a National Securities Market. He added that differences in state duties and levies are hampering the securities market.
Excise duty
India has one of the highest incidences of indirect tax on goods, where most of the manufactured products attract 16% excise duty and 12.5% VAT.
In Budget 2008-09, the excise duty on buses and chassis has been cut from 16% to 12%, on 2-wheeler and small cars, it has been cut from 16% to 12%. Meanwhile, the excise duty on some paper types has been cut from 12% to 10% and the excise duty on all Pharma good is down to 8% from the prevalent 16%. The FM also reduced excise duty on bulk cement to Rs 400/tonne.
Customs duty
There is no change in peak customs duty. Customs duty on steel scrap has been cut to 0% versus 5% and the customs duty on project imports has been cut to 5% versus 7.5%.
The customs duty on a few bulk drugs have been cut to 5% versus 10% while the duty on life saving drugs has been cut from 10% to 5%.
CENVAT has been reduced from 16% to 14% on all goods.
Customs exemptions will continue only for Naptha for fertilizers. The duty on crude/unrefined sulphur has been cut to 2% versus 5%.
Union Budget 2007 reduced peak rate for non-agricultural products from 12.5% to 10% and duty on chemicals and plastics from 12.5% to 7.5%.
The previous Budget had reduced peak rate for non-agricultural products from 12.5% to 10%. The duty on most chemicals and plastics was reduction from 12.5% to 7.5%. There was also a reduction in the general rate of import duty on medical equipment to 7.5%.
Corporate Tax:
The FM has not tinkered with the corporate tax levels in Budget 2008. Corporates will be paying the same rates of tax this year as well, additionally there is no change in surcharge on corporate tax. Surcharge also did not see any change; as per the current norms, corporate income has been levied a flat surcharge of 10% in the case of domestic companies and 2.5% for foreign companies.
Income tax:
the FM has hiked the personal income tax exemption limit to Rs 1.5 lakh from the prevalent Rs 1.10 lakh. The personal income tax exemption limit for women is up from Rs 1.45 lakh to Rs 1.8 lakh and for senior citizens, it’s up from Rs 1.95 lakh to Rs 2.25 lakh.
Income above Rs 5 lakh will attract 30% income tax and income in the range of Rs 1.5 lakh to Rs 3 lakh will attract 10% income.
He has however, left unchanged corporate tax and the surcharge on corporate tax.
DTT/ STT:
The Finance Minister, P Chidambaram has left the Dividend Distribution Tax or DDT rates unchanged at 15%. While presenting the Union Budget before the Parliament today, he also announced that the Government would introduce commodities transaction tax, like the Securities Transaction Tax, or, STT.
The STT rates have also been left unchanged. Mr. Chidambaram said that the levy of STT would only on option premiums.
Short-term capital gains:
The short-term capital gains have been hiked to 15%, the FM announced.
CST:
Mr. Chidambaram has reduced the the Central Sales Tax, or CST, rates to 2% from 3%.
Other tax announcements:
The Finance Minister has withdrawn the banking cash transaction tax. He has also given a five-year tax holiday for setting up hospitals in non-urban cities.
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