Union Finance Minister P Chidambaram on Thursday said that tax exemptions will be pruned further and phased out eventually and that the controversial Banking Cash Transaction Tax will be reviewed next year.
He also said that Fringe Benefit Tax on ESOPs will stay with minor changes.
During a debate on the Finance Bill in the Lok Sabha, Chidambaram said that the tax brackets recast may be linked to inflation. The government is also looking at keeping tax rates stable and moderate, he said. He also said that the government will periodically review exemptions on corporate taxes to ensure that the sector pays its share.
Highlights of the Finance Bill debate:
- Fringe Benefit Tax on ESOPs to stay with minor changes.
- Pass-through tax benefits for venture capital to be extended to investments in infrastructure sector.
- Finance minister proposes to increase the tax-GDP ratio to 11.8 per cent in FY'08 from 11.5 per cent last fiscal.
- Double Taxation Avoidance Agreement with Mauritius to be revised by mutual consent.
- Excise growth rate for the current fiscal targeted at 10 per cent over 2006-07.
- Tax revenues for 2006-07had exceeded the budget and revised estimates.
- Service tax on renting of commercial properties, proposed in the Budget, to remain.
- Excise duty on pan masala to continue at 45%.
- GST to become operational in 2010.
- The Left parties' demand to hike securities transaction tax rate rejected.
- The government admits there has been a rise in prices of essentials with the Wholesale Prices Index based-inflation up at 6 per cent.
- Inflation to be moderated below 6 per cent in 2007-08 using a combination of measures by the government and the Reserve Bank of India. Desirable level is under 4.5 per cent.
- Customs duty on cut and polished diamond scrapped; customs duty on nickel reduced to 2 per cent from 5 per cent currently.
- Customs duty on iron ore fines with Fe content up to 62 per cent reduced to Rs 50 a tonne, while duty on fines with above 62 per cent Fe content to be Rs 300 a tonne.
- Cement duty of Rs 600 per tonne to be reduced to 12 per cent for commodity priced above Rs 190 per bag of 50 kg; the change may bring down excise by Rs 7 per bag.
Budget 2007-08: Complete Coverage