NEW DELHI: A heavy dose of taxes was imposed Wednesday tonetRs.26.17 billion in the union budget for 1991-92 hiking the prices of motor car color TY air conditioners refrigerators sugar and sugar and host of other luxury items.
A steep hike was also affected in the price of petrol aviation fuel for domestic use and LPG. Diesel and kerosene have been exempted from the increase in the prices of petroleum products. The net realization from the hike in petroleum prices was not indicated in the budget.
As a result of the fresh levies both direct and indirect the Indian finance minister Dr Manmohan Singh has in his Rs.1134.22 billion maiden budget been able to reduce the budgetary deficit to Rs.77.19 billion to bring it within the stipulation of 6.5% of GDP
The finance minister has in one stroke gained Rs.10.10 billion from a hike in special excise duty to 10% from the existing 5%.
He mopped up Rs.21.30 billion from direct taxes without effecting any change in the income tax rate structure and by raising corporate tax for widely held companies from 40% to 45%.
The increased realization from direct taxes is proposed to be brought about by greater stress on compliance and by instituting schemes for mopping up black money.
An effort to reduce the non-development expenditure has been made by reducing the subsidy burden and containing the defence expenditure at Rs.163.50 billion against the revised estimates of Rs.157.50 billion for 1990-91.
Although food subsidies have been stepped up to Rs.26 billion from Rs.18 billion in the interim budget and Rs.24.50 billion in the revised estimates of 1990-91 the fertilizer subsidy is sought to be brought down by raising the prices of most fertilizers by 40% on an average The farmers would be compensated by suitable hikes in the procurement prices.
Taking both direct and indirect taxes into account the net gains to the center in the current year is estimated at Rs.20.05 billion the yield from the direct tax proposal is estimated at Rs.21.39 billion of which Rs.9700 million will accrue to the state and the rest to the center.
Of the total net gain of Rs.20.05 billion a hefty Rs.10.10 billion will come through a 5% increase in special excise duty.
Proposals in regard to customs duty will involve a net revenue loss of Rs.5.10; billion in the current year. With this the budgetary deficit for the current year is estimated at Rs.77.19 billion the revenue deficit at Rs 138.54 billion and fiscal deficit at Rs.377.27 billion.
In a full year however the increase in excise duty will yield a revenue gain of Rs.17.99 billion while the relief amounts to Rs.3.58 billion.
The net impact of the proposal relating to customs duties will be a loss of Rs.7.45 billion in a full year.
The corporate tax for widely held companies had been raised from 40 to 45%. A corresponding increase of five per cent age points from 45 to 50% is proposed in corporate tax rates for closely held companies.
The existing surcharge of 15% for corporate tax payers would continue The finance minister proposed to extend coverage of the tax on ostentatious expenditure introduced in 1987 in the form of a tax of 20% of expenditure incurred in hotels where the room rent is Rs.400 per day.
He proceed that expenditure incurred in restaurant providing superior facilities like air conditioning will be taxed at the rate of 15% of such expenditure.
The budget proposed an increase in excise duties on refrigerators varying from Rs.200 toRs800 depending on the capacity and in the case of air conditioners by amount varying from Rs.2000 to Rs.30, 000.
The excise duty on motor cars is proposed to be increased to 60% against the present rate of 50%. The duty on taxis at 30% will remain unchanged this will yield an additional revenue of Rs.1.5 billion per year.
Excise duties on audio cassette tapes and video cassette have also been increased to net a revenue gain of Rs.2900 million in full year. The duty on color TV and VCR’s will net Rs.6600 million in full year
The finance minister raised prices of motor spirit domestic LPG and aviation turbine fuel for domestic use by 20%. The prices of other petroleum products excluding diesel and kerosene for non-industrial use would be raised by 10%
The excise duty hike in free sale sugar from present level of Rs.S0 to Rs.71 per quintal will yield an additional revenue Rs.1.22 billion in a full year. This would mean an additional burden of 21 paise per kg of free sale of sugar which costs about Rs10 per kg in market.
Dr Singh said in keeping with the ruling Congress-I’s election manifesto he would make every effort to ensure that indirect taxes did not in duly add to the prices of essential commodities. Of the items listed in the main at present there is no excise duty on salt cycles newsprint postcards inland letters and envelope and some varieties of stoves.
He also proposed to reduce the excise duty on mopeds from 20 to 15%.
The baggage allowances including duty free limits for Bonafide gifts have also been raised The general duty free allowances for personal baggage is being raised from Rs2000 to Rs.2400.
The budget proposed to revive the interest tax which would be levied at the rate of 3% of the gross amount of interest earned by banks financial institutions and companies and loans and advances made in India.
Interest received on transactions between various credits institutions will be exempted from the proposed tax. This would operate prospectively and interest accruing before Oct.1 would not be taxed
The govt proposed to reintroduce the Mod vat scheme in respect of aerated water and also extend it to manmade fiber and filament yarn on the basis of inputs. It did not impose any increase duties on the basis of inputs. It did not impose any increase duties on fiber yarns and aerated water.
The proposals would involve a revenue loss of Rs.2.3 billion in a full year
The budget has also announced the introduction of two schemes to attract larger inflow of foreign exchange.
To boost exports several fiscal measures have been proposed. These include reduction in excise duties on the goods permitted to be sold in domestic markets and extension of tax concession for export of computer software and processed minerals.
The budget estimates the total expenditure at Rs.1134.22 billion for 1991-92 against the revised estimates of Rs. 1067.17 billion in 1990-91.
The 1991-92 central plan outlay had been fixedatRs.429.69 billion as against the last year’s outlay of Rs.393.29 billion which is a 79% step up.
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