In a bid to promote horticulture, food processing and dairying, Finance Minister P Chidambaram on Thursday announced a number of tax measures, which will help accelerate farm income.
Tractors, milking machines, dairy machinery and hand-tools like spades, shovels and sickles, which now attract 16 per cent excise duty have been exempted.
Excise duty on branded and packaged preparations of meat, fish and poultry has been reduced to eight from 16 per cent.
Excise duty on food grade hexane used in edible oils has been cut to 16 per cent from 32 per cent.
To promote agro-processing, the Budget presented on Thursday in Parliament proposes to amend the Income Tax Act to provide 100 per cent deduction of profits for five years and 25 per cent for the next five years in the case of new agro- processing industries set up to process, preserve and package fruits and vegetables, effective from April 1, 2005.
The deduction will be available from the assessment year relevant to the previous year in which the undertaking starts such business.