Money > Budget > Budget News & Analysis FEBRUARY 11, 2002 I 17:30 IST rediff.com
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Tax to be imposed on insurance premium

The Union Budget is likely to levy a cess on insurance premium to build a 'catastrophe fund' for meeting exigencies such as terror strikes and national calamities.

Official sources said that the fund is needed to be built from the cess on insurance premium since no insurance company can bear the huge cost otherwise.

Also, if one plans to insure against such catastrophes, the premium will be so high that it would not be cost effective, the sources said.

The Budget is also likely to reduce the average customs duty from the present 26 per cent to 23 per cent as part of tax reforms, sources said, adding that there is no likelihood of any reduction in income tax rates, but corporate tax could be reduced from the present 35 per cent to 30 per cent.

Besides, tax incentives to revive the textiles industry and encouragement to agro-processing units in rural areas are also likely.

Notwithstanding lower revenue collections mainly due to the economic slowdown, the Budget is expected to rationalise excise and customs duties to remove anomalies.

While the peak customs duty is likely to be brought down from the present 35 per cent to 30 per cent, a sincere attempt would be made to correct distortions like imports of raw materials attracting more duty than finished products, sources said.

PTI

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