The 1 per cent surcharge on ‘super-rich’ having income above Rs 1 crore in a year, and the 5 per cent surcharge on corporates imposed last year, has been allowed to lapse with the finance minister saying, “In keeping with the conventions I do not propose to make any announcements regarding changes to the tax laws.”
Similarly, a concessional customs duty of 5 per cent on capital goods imported by Bank Note Paper Mill India Pvt Ltd has been provided to encourage to indigenous production of security paper for printing currency notes.
Giving budget estimates, the minister said the current financial year will end on a satisfactory note with the fiscal deficit at 4.6 per cent, below the redline of 4.8 per cent, and the revenue deficit at 3.3 per cent.
The fiscal deficit for 2014-15 has been pegged at 4.1 per cent, which will be below the target of 4.2 per cent set by the new fiscal consolidation path. Revenue deficit is estimated at 3 per cent.
Plan expenditure for the coming fiscal has been fixed at Rs 555,322 crore, unchanged from current year, and non-Plan expenditure at Rs 12,07,892 crore, marginally higher than 2013-14.
Chidambaram said excise duty has been reduced from 12 to 10 per cent on capital goods and consumer non-durables falling under Chapter 84 and 85 of the Schedule to the Central Excise Tariff Act.
Small cars, motorcycles, scooters and commercial vehicles will attract a lower excise duty of 8 per cent from the current 12 per cent, while SUVs will see a 6 per cent reduction in duty from 30 to 24 per cent.
Large and middle segment cars will enjoy an excise duty of 24/20 per cent, down from 27/24 per cent.
Outlining a 10-point vision for the future, the finance minister said India must achieve the target of fiscal deficit of 3 per cent of GDP by 2016-17 and remain below that level always.
On current account deficit, he said there is no room for any aversion for it since the country will run a CAD every year for some more years and it can be financed only by foreign investments – FDI, FII or ECBs or any other foreign inflow.
As part of the vision, he said a developing economy must accept that when the aim is high growth, there will be moderate level of inflation.
“RBI must strike a balance between price stability and growth while formulating monetary policy,” he said in his vision formula that included financial sector reforms, infrastructure, manufacturing, subsidies, urbanisation, skill development and sharing responsibilities between states and Centre.
Expressing disappointment over not being able to introduce goods and services tax (GST), he said, “I leave it to you to answer the question who blocked the GST when an agreement on the game-changing tax reform was around the corner?”
He said the DTC, which will serve for the next 20 years, is ready and intents to place in on the website for public discussion.
“I appeal to all political parties to resolve to pass the GST laws and DTC in 2014-15,” he said.