Finance Minister Pranab Mukherjee on Thursday announced a slew of tax concessions, while rejecting the Opposition demand for rollback of duty hike on petroleum products.
The concessions include reduction in service tax on purchase of flats from builders and duty cut on life saving drugs.
Though any significant tax concessions that could have been of interest to common man were absent, Mukherjee unveiled a fresh debt relief package to provide relief to the debt-ridden small coffee growers. Some of the tax concessions announced by the minister, while replying to a 10-hour long debate on the Finance Bill, 2010, relate to cut in customs duty on drugs; reduction in excise duty on paper made from waste and hand-rolled local cigarettes and a hike in export duty on iron ore lumps.
Disappointed over the announcement, BJP staged a walkout with Leader of the Opposition Sushma Swaraj saying the relief had nothing for the common man.
The only tax concession that could be of interest to the middle income group is the reduction in service tax on purchase of flats from builders. The Budget for 2010-11 while expanding the ambit of service tax extended it to purchase of flats built by builders. This imposition of additional tax burden evoked sharp reaction from the middle income group making their life-long ambition to buy a flat difficult.
The government now proposes to provide some relief to the construction sector by enhancing the Service Tax rate of abatement from 67 per cent to 75 per cent of the gross value where such value includes the value of the land for construction.
The service tax will now be levied on 25 per cent of the gross sale value of property compared to 33 per cent proposed in the budget in February this year. Mukherjee also promised that certain procedural bottlenecks relating to the completion certificate prescribed in the law will also be simplified. With a view to giving thrust to low cost housing schemes for the urban poor, he proposed to exempt service tax on constructions under JNNURM and Rajiv Awas Yojna.
In a bid to generate employment he extended Service Tax exemption currently available to the vocational training institutes affiliated to the National Council for Vocational Training to skill development courses provided by the training institutes registered under the Labour Ministry.
In the health sector Mukherjee announced Customs duty relief on 11 drugs, including cancer and AIDS drugs by cutting the duty rate to 5 per cent. While Mukherjee reduced excise duty on paper made from waste to 4 per cent, he extended excise duty cut on hand-rolled local cigarettes.