| Financial Bill, 2006-2007...Government of IndiaThe | | | | of age.19.Allocation for it put at Rs 1430 crore (Rs |
| following are the proposals announced by Union | | | | 14.3 billion) from the Centre and the state |
| Finance Minister of India, in the Parliament on 28th | | | | government to provide matching contribution.20.Rajiv |
| Feb. 2006. | | | | Gandhi drinking water program to get Rs 4680 crore |
| Changes in Fringe Benefit Tax...as compare to | | | | (Rs 46.8 billion) next year as against Rs 3645 crore |
| Financial Bill, 2005-2006Fringe Benefit Tax introduced | | | | this year.21.National Health Mission allocation increased |
| last year as a revenue raising measure; justified on | | | | to Rs 8207 crore (Rs 82.07 billion) in next fiscal from |
| the principles of horizontal equity and vertical equity; | | | | Rs 6,553 crore (Rs 65.53 billion) this |
| on review, following changes being proposed:B)Value | | | | year.22.Government plans to eradicate polio by |
| the benefit in the form of 'tour and travel' at 5 per | | | | December 2007, Chidambaram said.23.The Finance |
| cent instead of 20 per cent;C)Value benefit in the | | | | Minister said that Rs 14,300 crore (Rs 143 billion) for |
| form of 'hospitality' and 'use of hotel boarding and | | | | rural employment program would be scheduled during |
| lodging facilities', in case of airline companies and | | | | 2006-07, out of which Rs 11,300 crore (Rs 113 billion) |
| shipping industry, at 5 per cent instead of 20 per | | | | for NREG program and Rs 3,000 crore (Rs 30 billion) |
| cent;D)Exclude expenses on free samples of | | | | for SGRY.24.New towns to be established on specific |
| medicines and of medical equipment distributed to | | | | themes.25.For gender budgeting under various heads, |
| doctors;E)Exclude expenses incurred on brand | | | | Rs 28,737 crore (Rs 297.37 billion) has been |
| ambassador and celebrity endorsement; | | | | allocated.26.Special schemes to be announced for STs |
| andF)Prescribe a threshold of Rs 100,000 under | | | | and SCs for their development.27.India to be made a |
| section 115WB(1)(c) so that only a contribution by an | | | | manufacturing hub for textiles, steel, metals and |
| employer to an approved superannuation fund in | | | | petroleum products.28.Maulana Azad Educational |
| excess of Rs 100,000 per year per employee to | | | | Foundation corpus doubled to Rs 200 crore (Rs 2 |
| attract FBT.G)Under section 80C there is already | | | | billion) for greater financial support to organizations |
| exemption up to Rs 100,000 for contribution by an | | | | involved in minority welfare.29.Allocation for national |
| employee to an approved superannuation | | | | Urdu education program increased to Rs 13 crore (Rs |
| fund.H)Effective FBT rate on hospitality reduced to | | | | 130 million) from Rs 10 crore (Rs 100 million) this |
| 1.68% from 6.73%.I)Free sample exclusion from FBT | | | | year.30.One thousand schools for girls of SCs, STs, |
| to benefit pharma companies.Proposals on Direct | | | | OBCs and minorities to be set up.31.A girl child will get |
| (Income) -TaxA)No changes in the rates of personal | | | | Rs 3,000 deposited in a bank account after she |
| income tax, which will remain as they are | | | | enrolls for eighth class examination and the amount |
| currently.B)No change in corporate income tax | | | | would be given when she becomes a |
| rate.C)No new taxes on income.D)One by six scheme | | | | major.32.Separate window for tenant farmers to |
| for filing of income tax returns has been | | | | ensure loan share. Agri credit proposed to be |
| abolished.E)Services tax net to be increased which | | | | increased to Rs 175,000 crore (Rs 1750 billion) next |
| include ATM operations, maintenance and | | | | year as against Rs 1,41,500 crore (Rs 1415 billion), |
| management, share transfers, registration, | | | | covering additional 50 lakh farmers.33.Farmers to |
| international air travel excluding economy class, | | | | receive short term credit at 7 per cent.34.Budgetary |
| sponsorship other sports events, auctioneers, ship | | | | loan for PSEs has been fixed at Rs 16901 crore (Rs |
| management and travel on cruise.F)25 per cent | | | | 169.01 billion) including Rs 2791 crore ( Rs 27.91 billion) |
| across the board increase in securities transaction | | | | for Railways.35.Ninety-six per cent of the golden |
| tax.G)Cooperative lending banks and rural | | | | quadrilateral would be completed by June 2006 and |
| development banks to be exempted from taxes | | | | the corridor would be completed by the end of |
| under Section 80(B).H)Fixed deposits in scheduled | | | | 2008.36.Six lakh hectares of irrigation potential |
| commercial banks with at least five year maturity will | | | | expected to be created this year. Rupees nine |
| get tax exemption for savings under section 80C of | | | | hundred and forty-four crore (Rs 9.44 billion) released |
| Income Tax Act.I)The Rs 10,000 exemption limit for | | | | this year under the Accelerated Irrigated Benefit |
| investment in pension funds under Section 80CCC | | | | Program.37.Allocation on education increased by 31.5 |
| has been removed but these investments would be | | | | per cent to over Rs 24,150 crore (Rs 241.5 billion) |
| brought under Sec.80C subject to a ceiling of Rs 1 | | | | and that for healthcare raised by 22 per cent to Rs |
| lakh.J)Donations to only religious institutions will be | | | | 12, 546 crore (Rs 125.46 billion).38.Entire Rs 1,100 |
| exempted from tax.K)Minimum alternative tax on | | | | crore (Rs 11 billion) for rural electrification released this |
| corporates increased from 7.5 per cent to 10 per | | | | year and 10,366 villages to be electrified.39.Five lakh |
| cent.L)More transactions to come under | | | | additional class rooms to be constructed and 150,000 |
| PAN.M)Constituency allowances of MLAs to be | | | | additional teachers to be appointed.40.Larger |
| treated as constituency allowances of MPs for | | | | budgetary support will be given to Bharat Nirmal |
| income tax purposes.N)Banking cash transaction tax | | | | Programme: Rs 18696 crore (Rs 186.96 billion) to be |
| introduced last year will continue.O)Fringe Benefit Tax | | | | given which represents a hike of 54 per cent.41.Total |
| modified. Threshold limits raised, but FBT will remain | | | | budget for north-eastern region will be Rs 12,041 |
| as it is justified for ensuring horizontal | | | | crore (Rs 120.41billion) including Rs 1,350 crore (Rs 13.5 |
| equity.P)Minimum alternative tax on corporates | | | | billion) for the ministry of north-east |
| increased from 7.5 per cent to 10 per cent.Proposals | | | | development.42.A massive immunization program will |
| on Indirect -TaxA)Excise duty on cigarettes | | | | be launched to eradicate polio completely by |
| increased by five per cent.B)Many tax exemptions in | | | | 2007.43.Allocation for mid-day meal scheme to be |
| customs and excise to be removed barring | | | | enhanced to Rs 4813 crore (Rs 48.13 billion) next |
| SSI.C)April 1,2010 has been fixed as the date for | | | | fiscal as against Rs 3014 crore (Rs 30.14 billion) this |
| introduction of goods and services tax.D)Peak | | | | year.44.Gross budgetary support for annual plan |
| customs duty for non agriculture products reduced | | | | expenditure has been raised to Rs 1,74,725 crore (Rs |
| from 15 to 12.5 per cent.E)Customs Duty on primary | | | | 1747.25 billion) for 2006-07 as against Rs 1,43,497 |
| and non-primary steel and alloy products reduced | | | | crore (Rs 1434.97 billion), an increase of 20.4 per |
| from 10 per cent to 7.5 per cent.F)Duties on mineral | | | | cent.45.Likewise for the central plan increased to Rs |
| products reduced from 15 to five per cent, barring | | | | 1,31,285 crore (Rs 1312.85 billion) next fiscal.46.Eight |
| some items.G)Duty on ores and concentrates | | | | flagship program of the UPA including Sarva Shiksha |
| reduced from five to two per cent.H)Duty on | | | | Abhiyan and Mid-Day Meal Scheme will get a total |
| refractories reduced to 7.5 per cent.I)Customs duty | | | | allocation of Rs 60,015 crore (Rs 600.15 billion) in |
| reduced on ten anti-AIDS drugs and 14 anti-cancer | | | | 2006-07 as against Rs 34,927 crore (Rs 349.27 billion) |
| drugs to five per cent.J)Customs duty on packaging | | | | in the current year.47.Metro in Hyderabad to be |
| machines reduced from 15 per cent to five per | | | | considered.48.Old age pension to be increased to Rs |
| cent.K)Four per cent countervailing duty on all imports | | | | 200 per month for above 75 years of |
| to be levied with few exceptions.L)Customs duty on | | | | age.49.Allocation for it put at Rs 1430 crore (Rs 14.3 |
| bulk plastics reduced from 10 per cent to five per | | | | billion) from the Centre and the state government to |
| cent.M)To protect vanaspati industry, customs duty | | | | provide matching contribution.50.Rajiv Gandhi drinking |
| to be increased to 80 per cent on its | | | | water programme to get Rs 4680 crore (Rs 46.8 |
| imports.N)Import duty on all man made fiber has | | | | billion) next year as against Rs 3645 crore this |
| been reduced from 15 per cent to 10 per | | | | year.51.National Health Mission allocation increased to |
| cent.O)Excise duties on man-made fibers and filament | | | | Rs 8207 crore (Rs 82.07 billion) in next fiscal from Rs |
| yarn reduced from 16 per cent to eight 8 per cent, | | | | 6,553 crore (Rs 65.53 billion) this year.52.Government |
| since it provides growth and employment.P)Eight per | | | | plans to eradicate polio by December 2007, |
| cent special additional duty on aerated soft drinks | | | | Chidambaram said.53.The Finance Minister said that Rs |
| and small cars withdrawn and they will attract only 16 | | | | 14,300 crore (Rs 143 billion) for rural employment |
| per cent CENVAT excise duty instead of 24 per cent | | | | programme would be scheduled during 2006-07, out |
| earlier.Q)Reduction of duty on footwear priced | | | | of which Rs 11,300 crore (Rs 113 billion) for NREG |
| between Rs 250 and Rs 750 from 16 per cent to | | | | programme and Rs 3,000 crore (Rs 30 billion) for |
| eight per cent.R)Duty on specialized writing paper | | | | SGRY.54.New towns to be established on specific |
| reduced form 16 to 12 per cent.S)Excise duty on | | | | themes.55.For gender budgeting under various heads, |
| compact fluorescent lamps reduced from 16 to eight | | | | Rs 28,737 crore (Rs 297.37 billion) has been |
| per cent.T)Cess on domestically produced petroleum | | | | allocated.56.Special schemes to be announced for STs |
| crude has been raised from Rs.1800 per tonne to | | | | and SCs for their development.57.India to be made a |
| Rs.2500 per tonne but the entire amount to be | | | | manufacturing hub for textiles, steel, metals and |
| absorbed by oil producing companiesOther Highlights | | | | petroleum products.58.Maulana Azad Educational |
| of General Budgets...Others Proposals1.The defence | | | | Foundation corpus doubled to Rs 200 crore (Rs 2 |
| budget raised to Rs 89,000 crore (Rs 890 billion) in | | | | billion) for greater financial support to organizations |
| 2006-07 from Rs 83,000 crore (Rs 830 billion) in the | | | | involved in minority welfare.59.Allocation for national |
| current year. Of this Rs 37,458 crore (Rs 374.58 | | | | Urdu education programme increased to Rs 13 crore |
| billion) would be capital expenditure.2.Rs 100 crore | | | | (Rs 130 million) from Rs 10 crore (Rs 100 million) this |
| special grant for Punjab Agricultural University as a | | | | year.60.One thousand schools for girls of SCs, STs, |
| centre of excellence for its commendable work in | | | | OBCs and minorities to be set up.61.A girl child will get |
| agricultural research.3.500 ITIs to be upgraded in five | | | | Rs 3,000 deposited in a bank account after she |
| years. Work has already started in 100 ITIs and | | | | enrolls for eighth class examination and the amount |
| would be taken up in the remaining 400 institutes | | | | would be given when she becomes a |
| soon. Rs 97 crore (Rs 970 million) allocated in | | | | major.62.Separate window for tenant farmers to |
| 2006-07.4.Special assistance of Rs 848 crore (Rs 8.48 | | | | ensure loan share. Agri credit proposed to be |
| billion) for Jammu and Kashmir for its reconstruction | | | | increased to Rs 175,000 crore (Rs 1750 billion) next |
| fund, including Rs 230 crore (Rs 2.30 billion) for | | | | year as against Rs 1,41,500 crore (Rs 1415 billion), |
| Baglihar project. This will be in addition to 2006-07 | | | | covering additional 50 lakh farmers.63.Farmers to |
| state plan of Rs 2,300 crore (Rs 23 billion).5.Rs 10 | | | | receive short term credit at 7 per cent.64.Budgetary |
| crore (Rs 100 million) allocated for preparatory work | | | | loan for PSEs has been fixed at Rs 16901 crore (Rs |
| for celebrating the 150th anniversary of the First War | | | | 169.01 billion) including Rs 2791 crore ( Rs 27.91 billion) |
| of Independence of 1857 in a befitting manner.6.To | | | | for Railways.What they have to say about the |
| safeguard old art forms, Vedic chanting and Ram Lila | | | | Financial Bill, 2006-2007Saroj K Poddar, President, |
| have been declared UNESCO heritage and will be | | | | FICCI: The most significant points in the Budget are |
| granted Rs 5 crore (Rs 50 million).7.Comprehensive | | | | the enhanced allocations for infrastructure like roads. I |
| Insurance Regulatory and Development Authority bill | | | | am sure this will drive growth. |
| to be introduced in 2006-07 incorporating the | | | | We are also glad that Finance Minister P |
| recommendations of K P Narasimhan Committee on | | | | Chidambaram has announced a series of incentives in |
| insurance sector revamp. The committee has already | | | | the agriculture sector. He has made good allocation |
| submitted its report to government and IRDA is | | | | for agriculture. This will increase agricultural output and |
| studying its recommendations.8.An Investors | | | | it will in turn help develop the rural areas.One area of |
| Protection Fund will be set up and funded by fines | | | | concern in the Budget is power generation. The |
| and penalties to safeguard the interests of retail | | | | finance minister has now announced five new power |
| investors.9.FII investment limit in stock markets will | | | | projects, and we hope these new projects will |
| be raised from $1.75 billion to $2 billion to deepen, | | | | accelerate growth in the industrial sector. But our |
| strengthen and broaden the market.10.Raise in the | | | | concern is whether the power projects will be |
| aggregate investment of overseas investors from $1 | | | | executed on time.It is also great that Chidambaram |
| billion to $2 billion is proposed.11.An investment | | | | has not touched income tax rates. I believe reducing |
| protection fund under the aegis of SEBI would be set | | | | the excise tax rates will lead to more manufacturing. |
| up.12.Rs 50 cr (Rs 500 million) for Mumbai, Kolkata, | | | | The finance minister's idea to introduce goods and |
| Chennai varsities.13.Eighty two power projects are in | | | | services tax by 2010 is a good move forward.R |
| various stages of implementation in the country to | | | | Seshasayee, Vice President, CII: I feel overall the |
| overcome power shortage. This when completed in 1 | | | | Budget is good. The good news is that we must |
| to 3 years will generate 33,000 mws of power in | | | | celebrate the tax-GDP ratio of 10 per cent. It proves |
| PSUs and 6500 mws in private sector. Of this, 15,000 | | | | our economy has arrived. The disappointing factor is |
| mw of power generation is to be installed by March | | | | the continuation of bank withdrawal tax. |
| 2007.14.Five mega power projects of Rs 4000 crore | | | | Another good thing about the Budget is that it |
| (Rs 40 billion) each is to be set up for which | | | | continues to put emphasis on education. |
| clearance is to be given by March 31, 2006. Of this, | | | | The overall approach is good for economy and |
| one each will come in Chhattisgarh and MP. The | | | | country if we continue to pay more attention on |
| remaining three will be in coastal areas of | | | | education.The above mentioned proposals are as |
| Maharashtra, Karnataka and Gujarat.15.NHAI to be | | | | presented by Union Finance Minister of India Mr. P. |
| reconstituted to make it more effective.16.A new | | | | Chidambaram in Parliament on 28th Feb. 2006. These |
| deep draft port to be set up in West Bengal. A | | | | proposals are debatable and subject to |
| study is to be conducted.17.The National Institute of | | | | change.Compiled and prepared by: Sanjeev Sharma |
| Port Management in Chennai to be renamed as | | | | (Himachali) |
| National Maritime Academy and converted into a | | | | Chandigarh-India |
| Central University with branches in Mumbai, | | | | (Mobile: +91-9876328841) |
| Viskhapatnam and Kolkata.18.Old age pension to be | | | | (E-mail: ; sanjeev. |
| increased to Rs 200 per month for above 75 years | | | | |