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Sify Home >> Finance >> Union Budget 2005 >> Fullstory
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Highlights of Union Budget
Monday, 28 February , 2005, 10:55
Finance Minister P Chidambaram has presented the Union Budget for 2005-2006. Following are the highlights of the speech:

  • Tax bracket altered. Income upto Rs one lakh will be exempt across the board. Income between Rs 1 lakh and Rs 1.5 lakh will attract 10 per cent tax and Rs.1.5 lakh to Rs.2.5 lakh will attract 20 per cent tax. Income beyond Rs 2.5 lakh will be taxed 30 per cent.
  • Rs 1 lakh consolidated exemption limit for all tax payers before computing taxable income.
  • Women & senior citizens with Rs 1.5 lakh exempted
  • Section 88 of IT Act removed
  • Corporate Income Tax at 30%, 10% surcharge
  • Surcharge on cash withdrawals above Rs 10,000 per day.
  • Direct taxes to yield Rs 6,000 crore, indirect taxes revenue-neutral.
  • Countervailing duty on IT products proposed. Software exempt from proposed duty
  • Branded jewellery gets more expensive with 2% excise duty. Duty on Imitation jewellery down.
  • Edible oil & vanaspathi to become cheaper
  • Govt will provide Rs 3,644 crore for rehabilitation of tsunami victims
  • Cigarettes and tobacco products get more expensive. Bidis spared.
  • No customs duty on LPG, kerosene
  • Rs 83,000 crore for defence
  • Customs duty on textile industry down 20%to 10%
  • Customs duty on select capital goods to be below 15%
  • Customs duty on polyester products down 20% to 15%

  • Rationalisation of stamp duty proposed
  • Tax relief to small scale industries, exemption limit up to Rs 4 crore.
  • Subsidy regime to continue.
  • Rs 100 crore grant to make Indian Institute of Science, Bangalore, a world-class university.

  • High-power committee to make Mumbai a regional financial hub

  • Inflation reined in, business confidence restored
  • Food-for-work programme in 150 districts
  • Allocation for education for 2005-06 will be Rs 18,337 crore
  • Industry growth pegged at 8%
  • Work on AIIMS-like institutions to begin to promote medical educations
  • Budget to focus on growth & job creation
  • IT industry to offer 7 million jobs by 2009
  • Textile sector to offer 12 million jobs in 5 years
  • Fertilizer subsidy to be at Rs 162.54 crore
  • 2000 research fellowships for SC/ST students
  • Rs 14,379 crores for women's development. All departments to provide gender-based Budgets.
  • Rs 3010 crore for mid-day meal scheme
  • Special package for Bihar, J&K and North-Eastern states to continue. Rs 7,975 crore grants for Bihar in five years.
  • Rs 300 crore for Baglihar project
  • Ambitious Bharat Nirman plan to provide rural infrastructure by 2009.
  • Budget to support services sector through policy and tax initiatives.

  • Rs 630 crore for National horticultural mission, which will be launched on April 1, 2005
  • Increase in flow of agricultural credit
  • Allocation for Rajiv Gandhi drinking water missionincreased to Rs 4750 crore in 2005-06 from Rs 3300 crore in the current year.
  • Accepts report on reforms in Co-operative banking sector
  • Govt to promote microfinance and credit linking.
  • NGOs, SHGs to become micro-insurance agents.
  • Central assistance for recruitment and posting of Urdu teachers in primary and upper primary schools where majority of students speak that language.
  • New scheme to revive manufacturing sector with focus on medium and small scale industries.
  • Package for handlooms & weaving industry.
  • Scheme for revitalisation of sugar factories
  • Policy support for pharma and Biotech sectors.
  • Equity support to small and medium industries in knowledge sector
  • $150 billion export target for 2008-2009
  • Govt to explore FDI in new sectors: mining, trade and pensions
  • Rs 1,100 crore for rural electrification
  • Special-purpose vehicles to finance infrastructure.
  • Seeks infrastructure projects for metros, big cities.
  • RBI to unveil reforms roadmap for banking sector
  • Legal framework for bond trading and securitisation.
  • Rs 1400 crore provided for creation of 4000 km of four-lane highways.
  • Fiscal deficit target to be achieved. Revenue deficit stands at Rs 95,300 crore. Fiscal deficit at 1.51 lakh crore
  • Service tax net widened.
  • Twelfth Finance Commissions recommendations would cost the exchequer Rs 26,000 crore in 2005-06. VAT to be implemented from April one, 2005
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