The main feature of the presentation of the Mini Budget was the downright irritating protests of the opposition members on technical grounds rather than the contents.
As expected, no major upheavals were presented. Most of the proposals of Mr Jaswant Singh hovered around either streamlining and simplifying existing provisions or promises made to the electorates at large under the condition 'If I am there'.
The Interim Budget: Complete Coverage
Classic example is -- "standard deduction for salaried employees and family pension needs to be looked into".
Following are the main provisions affecting the retail individuals, of the Interim Budget and also the changes effected by the Mini Budget just before the presentation of the Interim Budget.
Employees with salary under Rs. 150,000
Employees earning (after taking into account exemption u/s 16 in respect of standard deduction and professional tax) up to Rs 150,000 p.a. need not file tax returns, provided
1-by-6 scheme not applicable to pensioners
At present, this scheme is not applicable to senior citizens. On the same line, the scheme will also not apply to pensioners for FY 03-04 and onwards unless, the total income chargeable to tax during the year exceeds Rs 50,000.
LT gains on equities
At present, long-term capital gains arising from purchase of
Dividend distribution tax
At present, dividends paid by equity-based MF schemes do not attract the 12.8125 per cent dividend distribution tax. This provision also faces a sunset date of March 31, 2004.
Finance minister failed to mention in his speech that the tax exemptions on dividend distribution would continue.
Subsequently, the finance secretary has issued a clarification that this sunset will also be extended by five years.
LT gains on agricultural land
Agricultural land situated within 8km of the local limits of any municipality, notified area committee, town committee or a cantonment board and which has a population of not less than 10,000 is considered as a capital asset.
Consequently, sale or transfer made of such lands situated within the limits attracts capital gains tax. Henceforth, compulsory acquisition of agricultural land will be exempt from tax. Also, there is no TDS on interest earned on any enhanced compensation paid subsequently on the sale of such land.
Central stamp duty
Thankfully, for the first time in the history Indian lexicon, the authorities have conceded that the stamp duties levied on various transactions are heavy.
Mr Jaswant Singh has cut the central stamp duty by as much as 50 per cent on transactions on eight instruments where the rates are fixed by the central government.
These include -- bills of exchange, bills of lading, debentures, letters of credit, policies of insurance, promissory notes, receipts and proxies.
Of greater significance is the decision in respect of stamp duty on receipts. Currently, all receipts above Rs 500 have to bear a stamp duty of Re 1 or more.
It is a cumbersome levy as even small salary transactions have to bear an adhesive revenue stamp. The finance minister has raised the threshold level for stamp duty levy on receipts to Rs 50,000 from the earlier Rs 500.
These instruments don't cover property transactions. Stamp duty on share certificates is in any case almost redundant as it is not leviable on demat transactions.
Perk of housing loan
At present, as per Rule 3(7i) the value of the benefit to the assessee resulting from the provision of interest-free or concessional loan made available to the employee or any member of his household by the employer or any person on his behalf shall be determined as the sum equal to the simple interest computed @10 per cent p.a., in respect of loans for house and conveyance and @13 per cent p.a., for other loans on the maximum outstanding monthly balance as reduced by the interest, if any, actually paid by him or any such member of his household.
These rates were fixed way back in April '01 and became unrealistic with passage of time. To bring the rates in line with market-determined rates, the corresponding rates used by SBI will be used from April 1, 2004 onwards.
50 per cent of DA merged with the basic pay
The Fifth Pay Commission recommended that for government employees, DA component, which is linked to the Consumer Price Index should be merged with basic pay whenever it crosses 50 per cent of the basic pay. This 50 per cent mark was crossed in July last year and it is now at 59 per cent.
The government will have to pay higher pension, gratuity and other retirement liabilities will be huge. The country cannot afford this burden.
For the rest, the budget has nothing very concrete to offer. There are promises galore -- to set up all kinds of funds, yojanas and schemes. The message is clear. This is our statement of intent. Vote us back to power and this is what we'll do.