I-T sops to up middle class buying & savings

The Union  Budget for fiscal 2014-15 on Thursday introduced sops for income tax payers by raising the threshold exemption limit from Rs 2 lakh to Rs 2.5 lakh and investments under Section 80C by Rs 50,000 to Rs 1.5 lakh while seeking to revive growth, manufacturing and investor confidence.

In a bid to encourage savings, finance minister Arun Jaitley raised the deduction limit on interest on housing loan for self-occupied property from Rs 1.5 lakh to Rs 2 lakh and raised the exemption limit in the case of senior citizens from Rs 2.5 lakh to Rs 3 lakh. However, there is no change in rate of surcharge either for the corporates or individuals and the education cess of 3 per cent will also continue. Baggage allowance for passengers returning from abroad has been raised from from Rs 35,000 to Rs 45,000.

The Budget makes cigarettes, tobacco, pan-masala, gutka and cold-drinks costlier by raising excise duties while CRT TVs used by poor, LCD and LED TV panels of less than 19-inches will be cheaper through cuts in customs duties. Direct tax proposals in the budget involve a sacrifice of Rs 22,200 crore while indirect tax proposals will yield a revenue of Rs 7,525 crore.

To address the serious issue of inverted duty structure introduced by the previous pro-US Manmohan Singh regime, the nationalist Narendra Modi government’s Budget reduced customs duty on certain products, under which finished goods used to be taxed at lower rates than raw material, and boost domestic manufacturing.

Inverted duty structure impacts the domestic industry adversely as local manufacturers have to pay higher price for raw material in terms of duty while the finished foreign products land at lower duty and cost low.

Jaitley lowered the basic customs duty on coal tar pitch, battery waste and battery scrap from 10 per cent to 5 per cent. The duty on steel grade limestone and steel grade dolomite was cut from 5 per cent to 2.5 per cent, while on crude glycerin from 12.5 per cent to 7.5 per cent and crude glycerin used in the manufacture of soaps from 12.5 per cent to nil. Also duty on fatty acids, crude palm stearin, RBD and other palm stearin, specified industrial grade crude oils was cut from 7.5 per cent to nil for manufacture of soaps and oleo-chemicals. In April-March 2013-14, the manufacturing sector’s output contracted 0.8 per cent compared with 1.3 per cent growth previously.
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