v Budget strives for fiscal consolidation by increasing revenue and not by spending said Finance Secretary R.S. Gujaral. Oil & fertilizer subsidy would be capped at 2% of GDP on assumptions that the year would see reforms. Government has planned divestment of Rs 30,000 crore & expectedly it would also earn 40,000 crore from telecom spectrumà70,000 crore are in the basket.
v MGNREGS allocation has been reduced from Rs 40,000 crore to 35,000 crore & Jairam Ramesh further got it reduced by convincing FM to Rs 33,000 crore. He said opening balance of states is 6,000 crore & state’s share comes to be 3300 crore so there would be funds of the order of 42,300 crore.
v 5.3% of the Union budget is the budget for children with increase of 0.3% over last years.
v Service Tax - Finance Minister has conceded to fiscal problems and raised central indirect tax by 20% (from existing 10% to 12%) & approach to negative list for taxing services (only 17 services are exempted which include services by government or local authority, services related to agriculture, trading of goods, transmission & distribution of electricity and primary & vocational education)
v Duty on manufacture of large cars (above 1500 cc) increased from 22% to 27% while basic custom duties on specified diesel SUVs increased from 60% to 75%.
v Housing - The National Housing Bank has been allowed to float tax-free bonds upto a limit of Rs 5,000 crore. This would increase the funding source for housing finance firms at lower interest rate. Also he has opened External Commercial Borrowing (ECB) for low-cost housing projects. This would lower borrowing cost and also facilitate availability of long term debt funds.
v The Government has introduced General Anti-Avoidance Rule (GAAR) for tax transactions on a ‘substance over form’ basis. The GAAR is a set of rules formulated to frustrate the intention of person to get tax benefit as a result of an impermissible avoidance transaction or arrangement.
v Proposal of amendment to section 9 of IT Act 1962. Proposal reads amendment to section 9 as “For the removal of doubts, it is hereby clarified that an asset or capital asset being any share or interest in a company or entity registered or incorporate outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives directly or indirectly, its value substantially from the assets located in India”.
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