No change in income-tax rates

New Delhi: Finance Minister Yashwant Sinha on Tuesday reduced excise duties on a number of raw materials and intermediate goods and gave a boost to Information Technology, knowledge-based and entertainment industries, leaving personal taxation untouched in the Budget.

The prices of kerosene, LPG, laundry soap, cotton yarn and diesel engines will not be affected, while cigarettes have become dearer.

The MODVAT scheme has been rechristened as CENVAT with a replacement of existing plethora of rules by a simple set of transparent regulations.

The Finance Minister has attempted to increase the surcharge on non-corporate tax payers having a total taxable income of above Rs 1.5 lakh a year. Some sops to senior citizens and women have been given, by enhancing the tax rebate level to Rs 15,000.

The income tax rebate level on repayment on housing loan has been enhanced to Rs 20,000 per year. Tax payers investing on a second house have been allowed to claim exemption from capital gains tax. Plastic materials, films, tread rubber, cellular rubber, filament yarn, textile materials for transmission materials, synthetic sacks and bags would be costing less. Certain medicare items and those meant for common use have been exempted.

Cars for physically handicapped have been made cheaper.

Duties on crude oil and petroleum products have been reduced. Cinemotographic cameras and films have become cheaper. So also have platinum and diamond jewellery. Computers and computer parts will also cost less. Concessions have been given to Internet Service Producers.

Taxes on dividends have been increased. Higher taxes have been proposed on income from debt mutual funds, US 64, equity-based UTI and mutuals. However, other mutual funds have been spared.

The Government has extended the 'one by six identifier scheme' to 79 more cities for enlarging the tax net taking the total to 133.

Suitable changes have been mooted in the law to ensure income from farmhouses other than genuine agricultural operations come under the tax net.

It has been decided to phase out tax concessions available to export earnings in five years from March 31, 2001.

Ad valorem rates of basic excise duty have been merged into a single one, while peak rate of customs duty has been reduced. The three ad valorem rates of basic excise duty have been merged into single rate Central Value Added Tax (CENVAT) of 16 per cent. However, special excise of 8, 16 and 24 per cent is proposed to be levied on some items.

Excise duty is to be abolished on items of medicare, medicinal grade oxygen and hydrogen peroxide anathestics, medical and surgical gloves, items like cutlery, knives, household glassware, electrical bulbs, clocks and watches, tooth powder, towels, baby napkins, chicory and soaps for supply through PDS.

Specified cold chain equipment have also been exempted.

The Finance Minister abolished interest tax on banks and financial institutions.

The boost to the IT sector has been given by reducing customs duty on several items. Customs duty on computers has been reduced to 15 per cent from 20 per cent, motherboards from 20 per cent to 15 per cent, and floppy diskettes from 20 per cent to 15 per cent.

Moreover, microprocessors, memory storage devices, CD-RoMs and integrated circuits will attract nil duty, from the existing 5 per cent duty.

For the telecom sector, the minister announced a cut in basic duty on certain items. Duty on specified raw materials for the manufacture of optical fibres have been reduced to 5 per cent from 15 per cent; cellular phones 5 per cent from 25 per cent; battery packs for cellular phones down to 15 per cent from 40 per cent; concession of five per cent for specified equipment for basic telephone service, cellular service, pager services, PMRTS and communication satellites extended upto March 2001.

Similar concessions have been given to ISPs.

There will be continued special addition duty of customs and surcharge on imports.

The peak rate of customs duty has been reduced to 35 per cent from 40 per cent. Besides, the basic customs duty has been raised to 35 per cent on five items -- agricultural goods other than cereals, horticulture and floriculture products, dairy products, processed foods and marine products.

UNI

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