Leaving direct taxes untouched, Finance Minister P Chidambaram on Monday slashed excise duty on cars, SUVs and two-wheelers, and capital goods and consumer durables to boost manufacturing and growth.
Presenting the Interim Budget for 2014-15, he also provided service tax exemption for storage and warehousing of rice like it was done in case of paddy last year. Also, blood banks have been exempted from its purview.
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."
INTERIM BUDGET 2014-15:Key highlights
The Budget document does not give figures of the indirect tax concessions, which are valid up to June 30, 2014 and could be reviewed later. They will be notified later in the day.
He justified the excise duty reliefs saying, "However, the current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost."
To encourage domestic production of mobile handsets, he restructured the excise duty for all categories fixing it at 6 per cent with CENVAT credit or 1 per cent without CENVAT credit.
Customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has been pegged at 7.5 per cent to encourage to domestic production of soaps and oleo chemicals.
FULL COVERAGE:The Great Indian Budget
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.