The Indian Budget 1996-97 The Indian Economy Overview


[Index] [Prev] [Next] [Page 20]

Taxation [8]

  1. Mr. Speaker, Sir, the Central Excise and Salt Act, 1944, reminds us of the colonial era when excise duty was collected on salt. There is no excise duty on salt and hence the reference to salt is outdated. I propose to delete all references to salt.

  2. The Modvat scheme which provides for duty credit on inputs and capital goods has been liberalised considerably over the past few years. Still, there are problems about the coverage of certain inputs and capital goods. I propose to clarify the scope of eligible capital goods by specifying the heading and sub-headings of the tariff relating to capital goods in the Modvat Rules. It is also a matter of concern that there is misuse of the Modvat credit scheme. At present, Modvat invoices can be issued by any dealer registered with the excise department and this facility is reportedly being misused. Therefore, I propose to restrict the issue of Modvatable invoices by dealers upto two stages. Suitable provisions are also being made in the Modvat Rules for charging of interest in the case of wrong availment of Modvat credit and for mandatory penalty for misuse of Modvat facility.

  3. The tax on services has come to stay. With a view to widening the tax base, I propose to bring in advertising services, radio paging services and courier services under the tax net. The tax on these services will be at the rate of 5%. While this measure is expected to yield Rs.150 crore in a full year, I am taking credit only of Rs.70 crore in the current year.

  4. My proposals relating to reduction in customs duties are estimated to result in a loss of Rs.650 crore in the remaining part of the current financial year. However, by taking into account receipts from the special customs duty estimated to be Rs.1600 crore, there will be a net gain of Rs.950 crore in customs revenue.

  5. In the case of excise duties, including additional excise duties, a gain of Rs.760 crore is estimated. Of this, the States are likely to get Rs.384 crore as their share of excise duties.

  6. I now have something to say on behalf of my colleague, the Minister of Communications. Postal rates, some of which were last revised in 1990, do not meet even the direct cost of most of the services resulting in increasing budgetary support. Notwithstanding this, no change in the rates of ordinary postcard, letter, parcels and other postal services is being proposed. A modest increase is proposed only in respect of two services which are used for business and commercial purposes. The rate of the printed post card is being increased from 60p. to Re.1 and the registration fee is being increased from Rs. 6 to Rs. 8. It has also been decided to introduce a new category of postcard, called Competition Postcard, which alone may be used for responding to any competition organised on or through television, radio, newspapers or magazines. It is proposed to remove the unintended subsidisation by fixing the tariff for this category of postcard at Rs.2. The changes will take effect from a date to be notified after the Finance Bill is passed. The revisions proposed are estimated to yield a modest revenue of Rs.38 crore in 1996-97, still leaving a large postal deficit.

  7. Copies of notifications giving effect to the above changes in customs and excise duties will be laid on the Table of the House in due course.

  8. My budget proposals have many implications both for the expenditure side and the revenue side. However, Hon'ble Members will be pleased to know that the end result is satisfactory. The revenue deficit in 1996-97 is placed at Rs.31,475 crore or 2.5% of GDP which is significantly lower than Rs.33,331 crore in RE 1995-96 or 3% of GDP. The fiscal deficit comes to Rs.62,266 crore in 1996-97, which is lower than the figure of Rs.64,010 crore in RE 1995-96. As a percentage of GDP, the fiscal deficit is 5% in 1996-97 compared to 5.9% in the previous year. I hope to do better in my next budget and move along the path of reducing the fiscal deficit to below 4%.
[Top of Page] [Index] [Prev] [Next]

SiteMap Upcoming Content Useful Tools People behind IEO Feedback / Comments Copyright 1996 MediaWeb India, except where otherwise noted.

Our Sponsors | Advertising Rates | About this Site | MediaWeb Services