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Highlights of Union Budget 2006
Taxes:
Government to raise customs
duty on vanaspati to 80%
The food processing industry will get duty relief
The Finance Minister said that value-added tax had been a resounding success,
and that he expects states outside the system to join
Comprehensive bill for insurance in FY07
ATM operations to be brought under service tax net
FBT on hospitality for airline, shipping cos cut to 5% from 20%
Cash withdrawal tax to continue
Excise duty on manmade yarn cut to 8% from 16%
FBT changes: Superannuation contribution up to Rs 1 lakh exempt
FBT on tour & travel reduced to 5% from 20%
Customs duty on major bulk plastics reduced from 10% to 5%
FBT changes: Brand endorsement excluded
GST to be introduced by April 2010
Excise duty on cigarettes upped by 5%
Excise duty on instant food cut to 8%
4% CVD on all imports
Sec.80-IA exemption extended to March 2009
Service tax rate increased from 10% to 12%
One by six scheme for filing of I-T returns abolished
STT rate increased by 25%
Minimum Alternate Tax raised to 10%
No new direct tax imposed
No change in rates of personal or corporate income tax
International air travel, PR service brought under service tax net
Cess on crude processing up from Rs 1,800/tonne to Rs 2,500/tonne
Customs duty on mineral products cut to 5% vs 15%
Excise duty on printing paper reduced to 12%
8% excise duty on packaged software
Excise duty on footwear reduced to 8%
Excise duty exemption for ice cream, condensed milk
Excise duty on small cars, aerated drinks cut to 16% from 24%
Countervailing duty of 4% on most imports
Customs duty on anti-AIDS, anti-cancer drugs cut to 5%
Customs duty on packaging machines reduced to 5%
Customs duty on Naphtha reduced to nil
Customs duty peak rate reduced from 15% to 12.5%
Import duty
on non-ferrous and ferro alloys cut to 7.5% from 10%
Top
Economy:
Fiscal deficit in 2006/07
likely to be 3.8 percent of GDP, compared to an estimated 4.1% the previous
year
Increase in revenue on account of tax proposals pegged at Rs 6,000 cr
Revenue deficit for current year to be 2.6%
Finance Minister says services sector expected to contribute 54% of
GDP in 06/07
Defence spending increased to Rs 89,000 crore in 06/07 from Rs 83,000 crore
in the previous year
Q3 GDP at 7.6% vs 7% last year
Savings up at 21.9% of GDP
GDP growth target for 10th plan at 8%
Gross capital formation up 30% in FY05
Govt determined to take country to 10% growth
Investment rate up from 25.3% in FY03 to 30.1% in FY05: FM
"FY06 prospects good if not better than FY05"
"Continued" buoyancy in capital formation
FY06 GDP growth likely to be 8.1%: FM
Support to Central plan: Rs 1,31,285 cr vs Rs 110,385 cr this yr
Gross Budgetary Support to Plans up 20.4% to Rs 1,72,728 cr
Top
Financial
sector:
Plan to let Indian mutual
funds invest up to $2 billion abroad
Bank FDs up to 5 years included in 80-C exemption
Co-operative banks to come under the tax net
MFs can invest in overseas funds
FII investment in G-secs upped to $2 billion from $1.7 billion
To remove 10% foreign investment cap for mutual funds
FII investment limit in corporate bonds upped from $0.5 billion to $1.5 billion
Non-food credit growing by over 25%
Jan-Nov 2005 saw $4 billion via FDI
Top
Rural
investment:
Raises corpus for rural
infrastructure development fund to Rs 10,000 crore from Rs 7,300 crore
Government to allocate Rs 18,696 crore for rural infrastructure projects in
2006/07
Mid-day meal allocation for FY07 at Rs 4,813 cr
Rs 14,300 cr allotted for rural employment
Rajiv Gandhi drinking water plan to get Rs 4,680 cr vs Rs 3,645 cr this year
Rs 18,696 cr allocation to Bharat Nirman project: FM
Rural health spending at Rs 8,207 cr
Special Nabard credit line for self-help groups
Rs 5,000 cr set aside for backward districts
Health
and Education:
Education spending to be
increased by 31.5 percent, and health spending by 22 percent
Allocation for primary education increased to Rs 10,041 crore from Rs 7,156
crore
20,000 scholarship schemes for students from minority communities
Rs 24,115 cr allocation for education
Aim to eradicate polio by 2007
Rs 100 cr grant to Punjab Agriculture University
Top
Infrastructure:
Comprehensive review of
coal policy needed
Government expects investment of Rs 22,000 crore in oil refining over next few
years. The government will encourage investment in refineries, pipelines and
green fuel.
Highways development programme to receive Rs 9,945 crore in 2006/07. The government
has identified three new road projects to be built under a new special purpose
vehicle.
Indian Infrastructure Investment Company to be set up
96% of Golden Quadrilateral will be completed by June: FM
Golden Quadrilateral project to be completed by end of 2008
5,083 MW capacity to be added in FY06: FM
Trade
and Industry:
Food processing sector to
be treated as a priority sector for bank lending
Finance minister says imports in 2005/06 are "high but welcome" as
they reflect growing investment and industrial activity
To double world export share to 1.5% by FY09
Export body to be set up for gems and jewellery sector
Top
Agriculture:
Agricultural growth back
to 2.1%: FM
Foodgrain output this year at 209.5 mt: FM
Rs 944 cr grant given for irrigation in Bharat Nirman: FM
To double farm credit in 3 years, Rs 1700 cr allocated to farmers
Separate window for tenant farmers to ensure loan share
Short-term
loans to farmers to be made available at 7%; limit at Rs 3 lakh
Top
Others:
Rs 10 crore allocated for
celebrating 150th anniversary of First War of Indian Independence
Kudiyattam, Vedic Chanting and Ramlila declared heritage art forms
National Fisheries Board to be constituted soon
Electronic bond trading net extended to mutual funds, pension, and provident
funds
Fifteen tourist development circuits identified for development
3.92 million tourists came to India in 2005-06
Tourism Plan spending at Rs 830 cr
180 items to be de-reserved from SSI list
Rs 100 cr fund to help tea growers
India to be developed as semi-conductor manufacturing hub
Three investment regions to be developed for oil sector
Four new hotel management institutes in Chhattisgarh, Haryana and Uttaranchal
FY07 public sector outlay at Rs 1.23 lakh cr
Outcome Budget on March 17
To provide Rs 16,901 cr for PSU equity and Rs 2,789 cr via loans in 2006-07
To mull taking Hyderabad Metro under NURM plan
Rs 10,041 cr allocation for Sarva Shiksha Abhiyan
Govt to fund disaster rehabilitation
Manufacturing
sector growth seen at 9.4% in FY07
Top
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