| Financial Bill, 2006-2007...Government of IndiaThe | | | | years of age.19.Allocation for it put at Rs 1430 crore |
| following are the proposals announced by Union | | | | (Rs 14.3 billion) from the Centre and the state |
| Finance Minister of India, in the Parliament on 28th Feb. | | | | government to provide matching contribution.20.Rajiv |
| 2006. | | | | Gandhi drinking water program to get Rs 4680 crore |
| Changes in Fringe Benefit Tax...as compare to | | | | (Rs 46.8 billion) next year as against Rs 3645 crore |
| Financial Bill, 2005-2006Fringe Benefit Tax introduced | | | | this year.21.National Health Mission allocation increased |
| last year as a revenue raising measure; justified on the | | | | to Rs 8207 crore (Rs 82.07 billion) in next fiscal from |
| principles of horizontal equity and vertical equity; on | | | | Rs 6,553 crore (Rs 65.53 billion) this |
| review, following changes being proposed:B)Value the | | | | year.22.Government plans to eradicate polio by |
| benefit in the form of 'tour and travel' at 5 per cent | | | | December 2007, Chidambaram said.23.The Finance |
| instead of 20 per cent;C)Value benefit in the form of | | | | Minister said that Rs 14,300 crore (Rs 143 billion) for |
| 'hospitality' and 'use of hotel boarding and lodging | | | | rural employment program would be scheduled during |
| facilities', in case of airline companies and shipping | | | | 2006-07, out of which Rs 11,300 crore (Rs 113 billion) for |
| industry, at 5 per cent instead of 20 per | | | | NREG program and Rs 3,000 crore (Rs 30 billion) for |
| cent;D)Exclude expenses on free samples of | | | | SGRY.24.New towns to be established on specific |
| medicines and of medical equipment distributed to | | | | themes.25.For gender budgeting under various heads, |
| doctors;E)Exclude expenses incurred on brand | | | | Rs 28,737 crore (Rs 297.37 billion) has been |
| ambassador and celebrity endorsement; | | | | allocated.26.Special schemes to be announced for |
| andF)Prescribe a threshold of Rs 100,000 under | | | | STs and SCs for their development.27.India to be |
| section 115WB(1)(c) so that only a contribution by an | | | | made a manufacturing hub for textiles, steel, metals |
| employer to an approved superannuation fund in | | | | and petroleum products.28.Maulana Azad Educational |
| excess of Rs 100,000 per year per employee to | | | | Foundation corpus doubled to Rs 200 crore (Rs 2 |
| attract FBT.G)Under section 80C there is already | | | | billion) for greater financial support to organizations |
| exemption up to Rs 100,000 for contribution by an | | | | involved in minority welfare.29.Allocation for national |
| employee to an approved superannuation | | | | Urdu education program increased to Rs 13 crore (Rs |
| fund.H)Effective FBT rate on hospitality reduced to | | | | 130 million) from Rs 10 crore (Rs 100 million) this |
| 1.68% from 6.73%.I)Free sample exclusion from FBT to | | | | year.30.One thousand schools for girls of SCs, STs, |
| benefit pharma companies.Proposals on Direct | | | | OBCs and minorities to be set up.31.A girl child will get |
| (Income) -TaxA)No changes in the rates of personal | | | | Rs 3,000 deposited in a bank account after she enrolls |
| income tax, which will remain as they are | | | | for eighth class examination and the amount would be |
| currently.B)No change in corporate income tax | | | | given when she becomes a major.32.Separate |
| rate.C)No new taxes on income.D)One by six scheme | | | | window for tenant farmers to ensure loan share. Agri |
| for filing of income tax returns has been | | | | credit proposed to be increased to Rs 175,000 crore |
| abolished.E)Services tax net to be increased which | | | | (Rs 1750 billion) next year as against Rs 1,41,500 crore |
| include ATM operations, maintenance and | | | | (Rs 1415 billion), covering additional 50 lakh |
| management, share transfers, registration, international | | | | farmers.33.Farmers to receive short term credit at 7 |
| air travel excluding economy class, sponsorship other | | | | per cent.34.Budgetary loan for PSEs has been fixed at |
| sports events, auctioneers, ship management and | | | | Rs 16901 crore (Rs 169.01 billion) including Rs 2791 crore |
| travel on cruise.F)25 per cent across the board | | | | ( Rs 27.91 billion) for Railways.35.Ninety-six per cent of |
| increase in securities transaction tax.G)Cooperative | | | | the golden quadrilateral would be completed by June |
| lending banks and rural development banks to be | | | | 2006 and the corridor would be completed by the end |
| exempted from taxes under Section 80(B).H)Fixed | | | | of 2008.36.Six lakh hectares of irrigation potential |
| deposits in scheduled commercial banks with at least | | | | expected to be created this year. Rupees nine |
| five year maturity will get tax exemption for savings | | | | hundred and forty-four crore (Rs 9.44 billion) released |
| under section 80C of Income Tax Act.I)The Rs 10,000 | | | | this year under the Accelerated Irrigated Benefit |
| exemption limit for investment in pension funds under | | | | Program.37.Allocation on education increased by 31.5 |
| Section 80CCC has been removed but these | | | | per cent to over Rs 24,150 crore (Rs 241.5 billion) and |
| investments would be brought under Sec.80C subject | | | | that for healthcare raised by 22 per cent to Rs 12, 546 |
| to a ceiling of Rs 1 lakh.J)Donations to only religious | | | | crore (Rs 125.46 billion).38.Entire Rs 1,100 crore (Rs 11 |
| institutions will be exempted from tax.K)Minimum | | | | billion) for rural electrification released this year and |
| alternative tax on corporates increased from 7.5 per | | | | 10,366 villages to be electrified.39.Five lakh additional |
| cent to 10 per cent.L)More transactions to come under | | | | class rooms to be constructed and 150,000 additional |
| PAN.M)Constituency allowances of MLAs to be | | | | teachers to be appointed.40.Larger budgetary support |
| treated as constituency allowances of MPs for | | | | will be given to Bharat Nirmal Programme: Rs 18696 |
| income tax purposes.N)Banking cash transaction tax | | | | crore (Rs 186.96 billion) to be given which represents a |
| introduced last year will continue.O)Fringe Benefit Tax | | | | hike of 54 per cent.41.Total budget for north-eastern |
| modified. Threshold limits raised, but FBT will remain as | | | | region will be Rs 12,041 crore (Rs 120.41billion) including |
| it is justified for ensuring horizontal equity.P)Minimum | | | | Rs 1,350 crore (Rs 13.5 billion) for the ministry of |
| alternative tax on corporates increased from 7.5 per | | | | north-east development.42.A massive immunization |
| cent to 10 per cent.Proposals on Indirect -TaxA)Excise | | | | program will be launched to eradicate polio completely |
| duty on cigarettes increased by five per cent.B)Many | | | | by 2007.43.Allocation for mid-day meal scheme to be |
| tax exemptions in customs and excise to be removed | | | | enhanced to Rs 4813 crore (Rs 48.13 billion) next fiscal |
| barring SSI.C)April 1,2010 has been fixed as the date | | | | as against Rs 3014 crore (Rs 30.14 billion) this |
| for introduction of goods and services tax.D)Peak | | | | year.44.Gross budgetary support for annual plan |
| customs duty for non agriculture products reduced | | | | expenditure has been raised to Rs 1,74,725 crore (Rs |
| from 15 to 12.5 per cent.E)Customs Duty on primary | | | | 1747.25 billion) for 2006-07 as against Rs 1,43,497 |
| and non-primary steel and alloy products reduced from | | | | crore (Rs 1434.97 billion), an increase of 20.4 per |
| 10 per cent to 7.5 per cent.F)Duties on mineral products | | | | cent.45.Likewise for the central plan increased to Rs |
| reduced from 15 to five per cent, barring some | | | | 1,31,285 crore (Rs 1312.85 billion) next fiscal.46.Eight |
| items.G)Duty on ores and concentrates reduced from | | | | flagship program of the UPA including Sarva Shiksha |
| five to two per cent.H)Duty on refractories reduced to | | | | Abhiyan and Mid-Day Meal Scheme will get a total |
| 7.5 per cent.I)Customs duty reduced on ten anti-AIDS | | | | allocation of Rs 60,015 crore (Rs 600.15 billion) in |
| drugs and 14 anti-cancer drugs to five per | | | | 2006-07 as against Rs 34,927 crore (Rs 349.27 billion) |
| cent.J)Customs duty on packaging machines reduced | | | | in the current year.47.Metro in Hyderabad to be |
| from 15 per cent to five per cent.K)Four per cent | | | | considered.48.Old age pension to be increased to Rs |
| countervailing duty on all imports to be levied with few | | | | 200 per month for above 75 years of |
| exceptions.L)Customs duty on bulk plastics reduced | | | | age.49.Allocation for it put at Rs 1430 crore (Rs 14.3 |
| from 10 per cent to five per cent.M)To protect | | | | billion) from the Centre and the state government to |
| vanaspati industry, customs duty to be increased to 80 | | | | provide matching contribution.50.Rajiv Gandhi drinking |
| per cent on its imports.N)Import duty on all man made | | | | water programme to get Rs 4680 crore (Rs 46.8 |
| fiber has been reduced from 15 per cent to 10 per | | | | billion) next year as against Rs 3645 crore this |
| cent.O)Excise duties on man-made fibers and filament | | | | year.51.National Health Mission allocation increased to |
| yarn reduced from 16 per cent to eight 8 per cent, | | | | Rs 8207 crore (Rs 82.07 billion) in next fiscal from Rs |
| since it provides growth and employment.P)Eight per | | | | 6,553 crore (Rs 65.53 billion) this year.52.Government |
| cent special additional duty on aerated soft drinks and | | | | plans to eradicate polio by December 2007, |
| small cars withdrawn and they will attract only 16 per | | | | Chidambaram said.53.The Finance Minister said that Rs |
| cent CENVAT excise duty instead of 24 per cent | | | | 14,300 crore (Rs 143 billion) for rural employment |
| earlier.Q)Reduction of duty on footwear priced | | | | programme would be scheduled during 2006-07, out of |
| between Rs 250 and Rs 750 from 16 per cent to | | | | which Rs 11,300 crore (Rs 113 billion) for NREG |
| eight per cent.R)Duty on specialized writing paper | | | | programme and Rs 3,000 crore (Rs 30 billion) for |
| reduced form 16 to 12 per cent.S)Excise duty on | | | | SGRY.54.New towns to be established on specific |
| compact fluorescent lamps reduced from 16 to eight | | | | themes.55.For gender budgeting under various heads, |
| per cent.T)Cess on domestically produced petroleum | | | | Rs 28,737 crore (Rs 297.37 billion) has been |
| crude has been raised from Rs.1800 per tonne to | | | | allocated.56.Special schemes to be announced for |
| Rs.2500 per tonne but the entire amount to be | | | | STs and SCs for their development.57.India to be |
| absorbed by oil producing companiesOther Highlights | | | | made a manufacturing hub for textiles, steel, metals |
| of General Budgets...Others Proposals1.The defence | | | | and petroleum products.58.Maulana Azad Educational |
| budget raised to Rs 89,000 crore (Rs 890 billion) in | | | | Foundation corpus doubled to Rs 200 crore (Rs 2 |
| 2006-07 from Rs 83,000 crore (Rs 830 billion) in the | | | | billion) for greater financial support to organizations |
| current year. Of this Rs 37,458 crore (Rs 374.58 billion) | | | | involved in minority welfare.59.Allocation for national |
| would be capital expenditure.2.Rs 100 crore special | | | | Urdu education programme increased to Rs 13 crore |
| grant for Punjab Agricultural University as a centre of | | | | (Rs 130 million) from Rs 10 crore (Rs 100 million) this |
| excellence for its commendable work in agricultural | | | | year.60.One thousand schools for girls of SCs, STs, |
| research.3.500 ITIs to be upgraded in five years. Work | | | | OBCs and minorities to be set up.61.A girl child will get |
| has already started in 100 ITIs and would be taken up | | | | Rs 3,000 deposited in a bank account after she enrolls |
| in the remaining 400 institutes soon. Rs 97 crore (Rs | | | | for eighth class examination and the amount would be |
| 970 million) allocated in 2006-07.4.Special assistance of | | | | given when she becomes a major.62.Separate |
| Rs 848 crore (Rs 8.48 billion) for Jammu and Kashmir | | | | window for tenant farmers to ensure loan share. Agri |
| for its reconstruction fund, including Rs 230 crore (Rs | | | | credit proposed to be increased to Rs 175,000 crore |
| 2.30 billion) for Baglihar project. This will be in addition to | | | | (Rs 1750 billion) next year as against Rs 1,41,500 crore |
| 2006-07 state plan of Rs 2,300 crore (Rs 23 | | | | (Rs 1415 billion), covering additional 50 lakh |
| billion).5.Rs 10 crore (Rs 100 million) allocated for | | | | farmers.63.Farmers to receive short term credit at 7 |
| preparatory work for celebrating the 150th anniversary | | | | per cent.64.Budgetary loan for PSEs has been fixed at |
| of the First War of Independence of 1857 in a befitting | | | | Rs 16901 crore (Rs 169.01 billion) including Rs 2791 crore |
| manner.6.To safeguard old art forms, Vedic chanting | | | | ( Rs 27.91 billion) for Railways.What they have to say |
| and Ram Lila have been declared UNESCO heritage | | | | about the Financial Bill, 2006-2007Saroj K Poddar, |
| and will be granted Rs 5 crore (Rs 50 | | | | President, FICCI: The most significant points in the |
| million).7.Comprehensive Insurance Regulatory and | | | | Budget are the enhanced allocations for infrastructure |
| Development Authority bill to be introduced in 2006-07 | | | | like roads. I am sure this will drive growth. |
| incorporating the recommendations of K P Narasimhan | | | | We are also glad that Finance Minister P |
| Committee on insurance sector revamp. The | | | | Chidambaram has announced a series of incentives in |
| committee has already submitted its report to | | | | the agriculture sector. He has made good allocation for |
| government and IRDA is studying its | | | | agriculture. This will increase agricultural output and it will |
| recommendations.8.An Investors Protection Fund will | | | | in turn help develop the rural areas.One area of |
| be set up and funded by fines and penalties to | | | | concern in the Budget is power generation. The |
| safeguard the interests of retail investors.9.FII | | | | finance minister has now announced five new power |
| investment limit in stock markets will be raised from | | | | projects, and we hope these new projects will |
| $1.75 billion to $2 billion to deepen, strengthen and | | | | accelerate growth in the industrial sector. But our |
| broaden the market.10.Raise in the aggregate | | | | concern is whether the power projects will be |
| investment of overseas investors from $1 billion to $2 | | | | executed on time.It is also great that Chidambaram |
| billion is proposed.11.An investment protection fund | | | | has not touched income tax rates. I believe reducing |
| under the aegis of SEBI would be set up.12.Rs 50 cr | | | | the excise tax rates will lead to more manufacturing. |
| (Rs 500 million) for Mumbai, Kolkata, Chennai | | | | The finance minister's idea to introduce goods and |
| varsities.13.Eighty two power projects are in various | | | | services tax by 2010 is a good move forward.R |
| stages of implementation in the country to overcome | | | | Seshasayee, Vice President, CII: I feel overall the |
| power shortage. This when completed in 1 to 3 years | | | | Budget is good. The good news is that we must |
| will generate 33,000 mws of power in PSUs and 6500 | | | | celebrate the tax-GDP ratio of 10 per cent. It proves |
| mws in private sector. Of this, 15,000 mw of power | | | | our economy has arrived. The disappointing factor is |
| generation is to be installed by March 2007.14.Five | | | | the continuation of bank withdrawal tax. |
| mega power projects of Rs 4000 crore (Rs 40 billion) | | | | Another good thing about the Budget is that it |
| each is to be set up for which clearance is to be given | | | | continues to put emphasis on education. |
| by March 31, 2006. Of this, one each will come in | | | | The overall approach is good for economy and |
| Chhattisgarh and MP. The remaining three will be in | | | | country if we continue to pay more attention on |
| coastal areas of Maharashtra, Karnataka and | | | | education.The above mentioned proposals are as |
| Gujarat.15.NHAI to be reconstituted to make it more | | | | presented by Union Finance Minister of India Mr. P. |
| effective.16.A new deep draft port to be set up in | | | | Chidambaram in Parliament on 28th Feb. 2006. These |
| West Bengal. A study is to be conducted.17.The | | | | proposals are debatable and subject to |
| National Institute of Port Management in Chennai to be | | | | change.Compiled and prepared by: Sanjeev Sharma |
| renamed as National Maritime Academy and | | | | (Himachali) |
| converted into a Central University with branches in | | | | Chandigarh-India |
| Mumbai, Viskhapatnam and Kolkata.18.Old age pension | | | | (Mobile: +91-9876328841) |
| to be increased to Rs 200 per month for above 75 | | | | (E-mail: ; sanjeev. |