NEW DELHI: Finance Minister P. Chidambaram on Thursday announced marginal modifications in the excise duty on cement as also the export levy on iron ore while refusing to budge on demands for granting some more relief to individual taxpayers.

Replying to the debate in the Lok Sabha on the Finance Bill 2007, Mr. Chidambaram agreed with members that the current rate of inflation at around six per cent was a major concern and said the Government would strive to scale it down to a more tolerable 4.5 per cent through more intense supply-side, fiscal and monetary measures.

No sops on personal tax

The House later passed the Finance Bill along with the required official amendments by voice vote after rejecting an amendment on higher personal income tax exemptions moved by the Leader of the Opposition, V. K. Malhotra (BJP), following which all the Opposition members staged a silent walk-out.

In a point-by-point rebuttal of issues raised by various members during the debate, Mr. Chidambaram sought to provide cogent arguments for standing firm on his Budget proposals while pointing out that the UPA Government had fared much better than previous regimes on such matters as handling of the inflationary spiral as well as tax relief to the common man.

Turning to the tax proposals for various sectors of industry, Mr. Chidambaram conceded that the cement manufacturers had failed to respond positively to the dual excise duty structure and, therefore, a revision was deemed necessary.

Accordingly, while producers selling cement at a price below Rs. 190 a bag of 50 kg would continue to enjoy the lower duty of Rs. 350 a tonne, the others selling the commodity at a higher price would have to pay an ad valorem duty of 12 per cent on the retail selling price instead of the specific excise duty of Rs 600 a tonne proposed in the budget. This, he said, would result in a price reduction of Rs 7 per bag.

Responding to the demand of the mineral industry, Mr. Chidambaram rationalised the export duty on iron ore. Differentiating between iron ore with low and high ferrous (FE) content, he reduced the export duty on iron ore fines with less than 62 per cent FE content to Rs. 50 per tonne from Rs. 300 imposed in the budget. However, the duty of Rs. 300 a tonne is to be maintained on iron ore fines and lumps with FE content of more than 62 per cent.

As nickel, a vital metal required for steel making is not available in the country, the Finance Minister reduced the customs duty on nickel from five per cent to two per cent, and also exempted cut and polished diamond from the import duty.

Inflation control

On the high inflation rate, Mr Chidambaram assured members that the Government would make efforts to rein in inflation to less than 4.5 per cent by effecting various measures on fiscal and monetary fronts.

Other sops

Mr. Chidambaram also abolished the customs duty on refrigerated motor vehicles for transporting farm products and also reduced the excise duty/CVD from 16 per cent to eight per cent. The duty on N-paraffin, used in the manufacture of chemicals, has also been cut from 10 to 7.5 per cent.

The Finance Minister exempted `soya bari' and all ready-to-eat packaged food products from excise duty while extending the duty exemption benefit to biscuits with a retail price of Rs. 100 per kg from Rs. 50 announced in the budget.

Aircraft imported for training purposes by flying clubs and institutes and non-scheduled point-to-point and non-scheduled charter operators also stand exempted from import duty. The customs duty on zip fasteners has also been cut from 16 per cent to eight per cent and that on water purification devices scrapped.

ESOP valuation

Mr Chidambaram made it clear that the fringe benefit tax on stock options given to employees was there to stay. However, the fair market value of shares received as ESOPs would be determined on the date of vesting of such options. Noting that the Banking Cash Transaction Tax had enabled the tracking of large unaccounted transactions, Mr. Chidambaram said that the levy would be reviewed next year.

Printer friendly page  
Send this article to Friends by E-Mail