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Highlights of Union Budget, 2005-06

Following are some of the highlights:

• Income upto Rs 1,00,000 per annum exempted from tax
• Income between Rs 1-1.5 lakh to be taxed at 10%
• Rs 1.5-2.5 lakh income to be taxed at 20%
• Income above Rs 2.5 lakh to be taxed at 30%
• Exemption level for women at Rs 1.25 lakh
• Exemption level for senior citizens at Rs 1.5 lakh
• Consolidated limit of Rs 1 lakh of saving to be deducted from income before calculating tax
• Standard deduction removed from tax structure
• 0.01 per cent tax on withdrawal of over Rs 10,000 in cash from banks on a single days
• Payment of electricity bill of over Rs 50,000 a year replaces mobile phone owners in the one-in-six criteria for filing income tax returns
• Govt proposes 50 paise per litre cess on petrol and diesel to fund highways
• Defence allocation to be increased to Rs 83,000 crore next fiscal
• Customs duty on crude petroleum to be cut to 5% from 10%
• LPG for domestic consumption and subsidised kerosene not to attract customs and excise duties
• Customs duty on motor spirit, high speed diesel and other petroleum products to be lowered to 10% from 15-20%
• Specific rate on cigarettes to be increased by about 20 per cent
• Other tobacco products, including gutka, chewing tobacco, saunf and pan masala to attract 10% surcharge on ad valorem basis
• Fringe Benefits Tax of 30 per cent on benefits collectively enjoyed by employees
• Transport services for workers and staff and canteen services in an office, factory exempted from tax
• Peak customs duty for non-agricultural products to be reduced to 15 per cent from 20 per cent
• Fiscal deficit pegged at Rs 1,51,144 crore or 4.3 per cent of GDP during 2005-06
• Revenue deficit proposed to be Rs 95,312 cr or 2.7 per cent of GDP for next fiscal
• Plan expenditure is estimated at Rs 1,72,500 crore for 2005-06
• Of plan expenditure, Rs 29,003 cr to be raised as loans by state governments directly
• Non-plan expenditure at Rs 370.85 crore for next fiscal.
• Re 1 per kg surcharge on tea to be abolished
• Re 1 per kg excise duty on refined edible oils and
• Rs 1.25 per kg on vanaspati to be removed
• Matches made by mechanised and semi-mechanised sector to pay 12 pc excise duty against the present 16%
• Securities transaction tax hiked to 0.02 per cent on all categories of trade
• Excise duty on imitation jewellery to be cut to 8% from 16%
• 2% excise duty on branded jewellery, unbranded exempted
• Customs duty on specified capital goods and all inputs for manufacture of IT Agreement bound items to be removed
• Countervailing duty of 4 pc on imports of IT agreement bound items, IT software will be exempt
• Customs duties on cut flower to be raised from 30% to 60%
• Customs duty on cloves to be lowered to 35%
• Customs duty on all other agricultural goods to be same
• Customs duty on most textile machinery reduced to 10% from 20%
• Customs duties on primary and secondary metals to be cut to 10% from 15%
• Coking coal with high ash content to attract 5% customs duty in place of 15%
• Customs duty on polyester and nylon chips, textile fibres, yarns and intermediates, fabrics and garments to be cut to 15% from 20%
• Service tax to remain at 10%
• Domestic companies to pay 30% corporate income tax and 10% surcharge
• No change in the tax regime for foreign companies
• Polyester filament yarn, tyres and air conditioners to attract 16% CENVAT against the present 24%
• CENVAT on motors cars and aerated drinks remain unchanged at 24%
• Customs duty on 9 specified machinery used in pharma and biotechnology sectors to be cut to 5%
• Customs duty on specified parts of battery-operated road vehicles and for printing presses to be lowered from 20% to 10%
• Customs duty on primary and secondary metals to be cut to 10% from the existing 15%
• Service providers up to Rs 4 lakh gross turnover to be exempted from service tax
• Membership fee of clubs, associations and other services to be in the service tax-net
• The rate of depreciation to be 15% for general machinery and plant
• Initial depreciation rate to be raised to 20%
• Withholding tax on technical services to be cut to 20% from 10%
• Credit to be allowed for Minimum Alternate Tax
• Exemption from tax on agreements to acquire aircraft to aircraft engines on lease to be extended to September 30, 2005.

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