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Tax-free state Budget gives cheap power to farmers
Business Standard
Plastics, electronics, kerosene to be cheaper; stamp duty concessions announced.
Maharashtra Finance Minister Jayant Patil announced in his Budget that farmers who paid their electricity bills regularly would have to pay a tariff of only 25 paise a unit. ...
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Thumbs down for many reforms
Business Standard
CMP puts disinvestment, labour law changes on the backburner, to consider job quota in pvt sector.
Job reservations, cess for education, early introduction of VAT proposed.
The United Progressive Alliance's Common Minimum Programme (CMP) has put on the backburner reforms in at least three crucial areas — disinvestment of profit-making public sector undertakings, labour law changes and privatisation of power utilities.
The 12-party rainbow coalition also proposed a cess on Central taxes to fund education and promised to initiate a national dialogue for job reservation in the private sector.
While promising managerial autonomy to public sector banks, the CMP said steps would be taken to cut the interest rates on farm loans.
The CMP, released by Prime Minister Manmohan Singh today, rejected the idea of automatic hire-and-fire and ruled out labour law changes before full consultation with trade unions.
It called for a review of the Electricity Act 2003, and decided to extend the June 10 deadline for unbundling of state electricity boards.
The CMP also categorically kept the navratnas off the privatisation roster. “Generally, profit-making companies will not be privatised,” the 24-page document said.
Despite opposition from the Left parties, the CMP said foreign institutional investors (FIIs) would continue to be encouraged, but the misuse of double taxation agreements would be stopped.
The vulnerability of the financial system to the flow of speculative capital would also be reduced and new savings avenues would be provided to small investors.
The Securities and Exchange Board of India (Sebi) would be strengthened and market manipulators would be dealt with strictly, the CMP said.
The government would, however, push for an early introduction of value added tax after sorting out issues like tax integration in the service sector and compensation to states.
Committing to the elimination of revenue deficit by 2009, the draft stresses special schemes to unearth black money and assets.
States can also expect to realise more funds with the CMP advocating an increase in their share (29.5 per cent now) in the divisible pool of Central taxes.
The government would immediately enact a National Employment Guarantee Act to provide legal guarantee for at least 100 days of employment. The agricultural sector would benefit given the highest investment, credit and technology priority accorded to it.
The CMP said, to increase the tax-to-GDP ratio, the government would undertake major tax reforms to expand the taxpayer base, increase tax compliance and make the tax administration more efficient.
The tax rates, it said, would be stable and conducive to growth, compliance and investment. It promised enhanced public investment in the infrastructure sector and said subsidies would be made explicit and provided through the Budget.
It has promised a roadmap in 90 days to ensure that all subsidies were targeted sharply at the poor and the needy such as small and marginal farmers, farm labour and the urban poor.
The government would also not cut deficits by reducing or curtailing growth of investment and development outlays, the CMP said.
The UPA government also laid special emphasis on the public sector by promising to devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment.
For pensioners and senior citizens, the CMP promised higher interest rates and said that the employees' provident fund (EPF) interest rate would not be changed without prior consultation and approval of the EPF Board.
For reviving industrial growth, it promised incentives to boost private investment and encouragement of foreign direct investment.
A National Manufacturing Competitiveness Council would be set up to provide a continuing forum for policy dialogue to energise and sustain the growth of sectors like food processing, textiles and garments, engineering, consumer goods, pharmaceuticals, capital goods and IT hardware.
To raise public expenditure in education from less than 2 per cent of GDP now to 6 per cent over the next five years, the government will introduce a cess on all Central taxes.
It will take steps to remove the communalisation of the school syllabus and ensure all institutions of higher learning and professional education like the IIMs retained their autonomy.
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UP plans Rs 200 cr core sector fund
Business Standard
The Uttar Pradesh government will set up an infrastructure development fund with Rs 200 crore corpus under the industrial and service sector investment policy, 2004, likely to be announced soon.
The fund will provide money for preparing surveys, project reports and setting up of integrated transport cum transhipment centre and quality control laboratories.
It will also provide between Rs 50 lakh and Rs 2.50 crore grant for setting up software technology parks, bio-technology centres, multimedia and entertainment complexes, and industrial clusters. The government has earmarked Rs 50 crore for the fund in the Budget for 2004-05.
The new industrial policy, highlights of which are with Business Standard, has set out an elaborate system of concessions and subsidies to promote investment and industrialisation.
Prepared by the UP Development Council, the policy seems to be private sector-oriented and spells ways and means of inviting private investment and strengthening the private sector. It also aims at a faster and transparent disinvestment of public sector undertakings.
The policy promises 24-hour power to industrial areas. Infotech, biotech companies farm-based industries set up with an investment of over Rs 10 crore and other industries involving an investment of Rs 50 crore will be supplied electricity through the dedicated feeder lines and will be exempt from loadshedding.
The state government will also promote captive power generation, gas-based power projects and alternative sources of energy.
The policy envisages concessions on stamp duty and land registration charges. No stamp duty will be charged from small-scale units in seven districts of the Bundelkhand region and 24 districts of the Poorvanachal region.
New investment in these districts will be entitled to a 10 per cent capital subsidy not exceeding Rs 5 lakh a year. Units run by women, Scheduled Caste and Scheduled Tribe entrepreneurs will get a 15 per cent capital subsidy not exceeding Rs 2.5 lakh a year.
New infotech, biotech and food processing units set up with an investment of Rs 10 crore will be recognised as pioneer units. They will be entitled to an interest-free loan for 15 years.
In case of majority of employees being women and SC/ST, the exemption will go up to 20 per cent.They will also be entitled to concessions in terms of stamp duties, bank guarantee and registration and mortgages.
In the service sector, the land for the project, if acquired by the government, will be exempt from acquisition charges. No entry tax will be charged on plant and machinery for the project. They will also not have to pay any electricity duty for the first 10 years and will enjoy exemption from local taxes for five years.
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ANALYSIS - Asian political risk switches from voting to doing
Reuters
SINGAPORE (Reuters) - Can India's new government boost welfare spending without losing control of its budget deficit? Can Taiwan soothe ties with China? Can the Philippines widen its tax base and end Muslim and communist insurgencies?
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CII projects 7 to 8 per cent growth rate
ANI
New Delhi, June 21 (ANI): CII today exuded confidence that the upcoming budget would be more growth oriented with greater focus on rural sector. Newly appointed CII President Sunil Kant Munjal allayed fears that the Leftist influence on the budget would slow down economic growth.
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Thumbs down for many reforms
Business Standard
CMP puts disinvestment, labour law changes on the backburner, to consider job quota in pvt sector.
Job reservations, cess for education, early introduction of VAT proposed.
The United Progressive Alliance's Common Minimum Programme (CMP) has put on the backburner reforms in at least three crucial areas — disinvestment of profit-making public sector undertakings, labour law changes and privatisation of power utilities.
The 12-party rainbow coalition also proposed a cess on Central taxes to fund education and promised to initiate a national dialogue for job reservation in the private sector.
While promising managerial autonomy to public sector banks, the CMP said steps would be taken to cut the interest rates on farm loans.
The CMP, released by Prime Minister Manmohan Singh today, rejected the idea of automatic hire-and-fire and ruled out labour law changes before full consultation with trade unions.
It called for a review of the Electricity Act 2003, and decided to extend the June 10 deadline for unbundling of state electricity boards.
The CMP also categorically kept the navratnas off the privatisation roster. “Generally, profit-making companies will not be privatised,” the 24-page document said.
Despite opposition from the Left parties, the CMP said foreign institutional investors (FIIs) would continue to be encouraged, but the misuse of double taxation agreements would be stopped.
The vulnerability of the financial system to the flow of speculative capital would also be reduced and new savings avenues would be provided to small investors.
The Securities and Exchange Board of India (Sebi) would be strengthened and market manipulators would be dealt with strictly, the CMP said.
The government would, however, push for an early introduction of value added tax after sorting out issues like tax integration in the service sector and compensation to states.
Committing to the elimination of revenue deficit by 2009, the draft stresses special schemes to unearth black money and assets.
States can also expect to realise more funds with the CMP advocating an increase in their share (29.5 per cent now) in the divisible pool of Central taxes.
The government would immediately enact a National Employment Guarantee Act to provide legal guarantee for at least 100 days of employment. The agricultural sector would benefit given the highest investment, credit and technology priority accorded to it.
The CMP said, to increase the tax-to-GDP ratio, the government would undertake major tax reforms to expand the taxpayer base, increase tax compliance and make the tax administration more efficient.
The tax rates, it said, would be stable and conducive to growth, compliance and investment. It promised enhanced public investment in the infrastructure sector and said subsidies would be made explicit and provided through the Budget.
It has promised a roadmap in 90 days to ensure that all subsidies were targeted sharply at the poor and the needy such as small and marginal farmers, farm labour and the urban poor.
The government would also not cut deficits by reducing or curtailing growth of investment and development outlays, the CMP said.
The UPA government also laid special emphasis on the public sector by promising to devolve full managerial and commercial autonomy to successful, profit-making companies operating in a competitive environment.
For pensioners and senior citizens, the CMP promised higher interest rates and said that the employees' provident fund (EPF) interest rate would not be changed without prior consultation and approval of the EPF Board.
For reviving industrial growth, it promised incentives to boost private investment and encouragement of foreign direct investment.
A National Manufacturing Competitiveness Council would be set up to provide a continuing forum for policy dialogue to energise and sustain the growth of sectors like food processing, textiles and garments, engineering, consumer goods, pharmaceuticals, capital goods and IT hardware.
To raise public expenditure in education from less than 2 per cent of GDP now to 6 per cent over the next five years, the government will introduce a cess on all Central taxes.
It will take steps to remove the communalisation of the school syllabus and ensure all institutions of higher learning and professional education like the IIMs retained their autonomy.
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Vala cuts taxes across sectors
Business Standard
Finance minister Vajubhai Vala on Thursday presented the annual Budget 2004-05 in the Gujarat Assembly, showing a Rs 327.25 crore deficit.
Vala is proposing the state Budget for the tenth time.
Vala said the estimated expenditure for the current year is pegged at Rs 30,958.28 crore, of which revenue expenditure is estimated to be Rs 23,786.33 crore and capital expenditure will be Rs 7,171.95 crore.
In a move that is aimed at appeasing the farming community which has had a bitter relationship with the government, Vala announced tax relief for farmers by waiving five per cent duty on power consumed for drawing water by pumps for irrigation. Over 6.50 lakh farmers will be benefited by the waiver.
The government, has, however, proposed a hike in electricity duty on captive power generation for 51 units from the existing rate of 20 paise per unit to 40 paise per unit.
Addressing a long-standing demand for reduction in stamp duty, the minister announced a slash in the stamp duty from 11.20 per cent to 8.40 per cent. In an additional sop for women, Vala said there will be a complete waiver of registration fee on registration of documents of property in favour of women.
The minister announced a relief on sales tax on a whole range of products. As announced earlier, Vala said reduction of sales tax on natural gas from 20 per cent to 12 per cent will take effect from July 11. Appeasing the dyes and chemicals manufacturers, the minister cut the sales tax on chemicals and dyes from six per cent to four per cent.
Aimed at encouraging foreign airlines to introduce direct flights to Gujarat, the government has granted complete exemption of tax on sales of aviation turbine fuel and lubricants.
The required notification in this regard will be issued shortly. Stating that there is no clarity as to whether sales tax is leviable in respect to resale of a used car, Vala said it has been proposed to fix sales tax at the rate of Rs 1,000 on every second-hand car sold.
By introducing this tax, the government will earn revenue and the second-hand car market will become more organised in the state, the minister said.
Cooked food served by hotels and restaurants are at present liable to pay 12 per cent sales tax, but cooked food sold at the price of up to Rs 75 per person is tax-free. The government withdrew the benefit of price limit and hotels and restaurants can now opt for a lump sum amount of tax at four per cent on total turnover of all eatable goods sold.
The government made it clear that despite a change of guard at the Centre, ambitious projects like the Sardar Sarovar project and the Sujallam-Sufallam project, a Rs 6,088 crore irrigation and water conservation project, will continue as per schedule.
The list
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BPCL: An individual story
Equitymaster
BPCL, the oil marketing PSU, will be heaving a sigh of relief after the government's announcement of price hikes in LPG, petrol and diesel along with excise duty cuts. It should be noted that the oil marketing companies suffered a loss to the tune of Rs 36 bn in FY04 on account of a freeze on petrol and diesel prices coupled with an under-recovery of Rs 13 bn on LPG.
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How much insurance do you need?
personalfn.com
Life Insurance has always been a rather neglected area in the mindset of the public. Historically consumers have bought life insurance for reasons of tax saving rather than the core need of providing for one's family in case of death of bread-winner.
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