NEW DELHI: The Union budget for 2007-08 received Parliament's approval on Friday with the Rajya Sabha returning the Appropriation Bill and the Finance Bill by voice vote.

With the Lok Sabha having passed the Bills earlier, the budgetary business for the current fiscal stands completed.

Replying to the debate on the relevant Bills in the House earlier, Finance Minister P. Chidambaram conceded that the income-tax (IT) laws were complicated and assured members that he would table the new IT Code during the monsoon session of Parliament. "We are in the last leg of drafting the new income tax code...I shall be able to introduce it in Parliament by the end of the monsoon session,'' he said.

Threshold limit

The Minister also admitted that high inflation was indeed a problem, but was happy to note that the tolerance level to inflation had come down. During the 1980s and the 1990s, people were irked when inflation crossed double digits. Now, they did so even when the inflation rate was between 4 and 5 per cent. "I am confident that the steps we have taken will moderate inflation,'' he said.

Mr. Chidambaram, however, was quick to point out that he had increased the threshold limit of exemption by Rs. 10,000 for all assessees and, in effect, it would neutralise the 9.72 per cent cumulative increase in the inflation rate in the last two years.

Investment rate

Refuting the allegation of being a "high tax Finance Minister,'' Mr. Chidambaram pointed out that the corporate tax rates effectively worked out to 19.26 per cent instead of the scheduled rate of over 30 per cent. "I am not a high tax Finance Minister. This Government is not a high tax Government. I reject the argument that I am a high tax Finance Minister,'' he asserted.

Continuing the argument, Mr Chidambaram said that had it been so, the country's investment rate would not have been so high. For, high investment was possible through high savings which, in turn, was due to the high disposable income of the people, he said.

On the Fringe Benefit Tax (FBT), the Finance Minister promised to have a re-look at the levy if the effective corporate tax rate inched toward 30 per cent while arguing that since the FBT captured income which escaped tax, its burden on the corporates worked out to less than one per cent. He, however, made it clear that with improvement in tax compliance, the tax rates would also be accordingly moderated and exemptions revisited.

Mr. Chidambaram also sought to defend the tax on free or concessional accommodation as a perquisite saying that by rejigging the relevant formula and linking it to the population, the effective burden stood scaled down from 20 per cent to about 7.5-15 per cent. Besides, another relief was that the new rate would be applicable with retrospective effect from 2005-06.

Rebutting the Opposition members' charge that the UPA regime lacked new ideas and failed to take "bold decisions'' in the budget, Mr. Chidambaram said: "Is doubling of agriculture in three years, which was completed in 2.2 years not an ambitious idea? Is upgradation of ITIs not a big idea? Is restoration of water bodies not a big idea...?''

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