HIGHLIGHTS OF BUDGET 2006
One of the main highlights of the budget is that no changes have been made in personal and corporate Income Taxes.
Also, the one-by-six scheme for mandatory filing of tax returns has been abolished and an increase in the Securities Transaction Tax across the board has been proposed.
The finance minister did not bow down to the demand of the industry to withdraw the Fringe Benefit Tax. However, he has modified it to remove some glitches in implementation.
Chidambaram also ruled out withdrawal of Banking Cash Transaction Tax.
Small cars cheaper
Custom and excise duties on a number of items, including small cars and aerated soft drinks have been slashed.
In all, 16 more items like ATM operations and luxury class air travel have been brought under the service tax net.
The finance minister also raised the excise duty on cigarettes by 5 per cent. While the proposals on direct tax are expected to yield Rs 4,000 crore, those on indirect taxes are expected to yield Rs 2,000 crore.
Budgetary support
During his speech, Chidambaram pegged the fiscal deficit for 2006-07 at 3.8 per cent of GDP at Rs 1,48,686 crore and revenue deficit at 2.1 per cent at Rs 84,727 crore.
Chidambaram also raised gross budgetary support for plan to Rs 1,72,728 crore, an increase of 20.4 per cent. Out of this, the central plan will receive a support of Rs 1,31,285 crore.
He estimated the total expenditure for the coming year at Rs 5,63,991 crore. The total revenue receipts have to be placed at Rs 4,03,465 crore and revenue expenditure at Rs 4,88,192 crore.
Defence allocation has been increased by Rs 6,000 crore to Rs 89,000 crore with allocation for capital expenditure raised to Rs 37,000 crore.
Social sector
With the UPA government’s emphasis on social sector spending, the budget gave a major thrust on taking forward the Common Minimum Programme.
The Bharat Nirman Programme has been allotted a hike of 54 per cent in its budgetary support. Further, Rs 12,041 crore has been allocated for northeastern region and Rs 4,813 crore for mid-day meal scheme.
Total allocation for rural employment, including under the employment guarantee act, has been fixed at Rs 14,300 crore.
Rebates announced
The finance minister announced that fixed deposits in banks with at least five-year maturity will get rebate under income tax for savings.
The Income tax exemption of Rs 10,000 in pension funds under 80 CCC has been removed and brought under rebate under Section 80C within the overall ceiling of Rs one lakh.
In the quest for equity, the minister increased the Minimum Alternate Tax on corporates from 7.5 per cent of book profit to 10 per cent.
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