New Delhi, May 7: Bowing to demands from various quarters, the Government today announced rollback of various proposals in the Budget, including the central excise duty on gems and jewellery and the proposed amendment in General Anti-Avoidance Rules(GAAR).
It also assured that the clarificatory amendments in the Income Tax Act now under consideration of Parliament will not be used to reopen any cases where assessment orders had already been finalised.
Moving the Finance Bill for consideration and passage in the Lok Sabha, Finance Minister Pranab Mukherjee said the Govermment would amend the General Anti-Avoidance Rules (GAAR) in a way as to remove the onus of proof entirely from the taxpayer to the Revenue department before any action could be initiated under the Rules.
He also announced that it had been decided to withdraw the levy on all precious metal jewellery, branded and unbranded , with effect from March 17.
?The levy was well intentioned and introduced not so much for raising the revenue as for raionalisation and movement of GST. However, the outpouring of sentiment both within and outside the House indicates that we are not ready for it,? he said.
He also announced that a new provision in the Customs and Central Excise Law regarding grant of bail only after hearing the public prosecutor was also being omitted entirely in response to the concerns expressed by Members that it was too harsh.
On the issue of clarificatory amendments in the Income Tax Act, the Finance Minister said these amendments did not in any way override the provisions of Double Taxation Avoidance Agreement(DTTA) whichIndiahas with 82 countries. It would impact those cases where the transaction has been routed through low tax or no tax countries with whomIndiadoes not have DTAA, said Mukherjee.
In the GAAR, the Finance Minister said, some more amendments were being proposed on the recommendation of the Standing Committee.
These were introducing an independent member in the GAAR approving panel to ensure objectivity and transparency, and also providing that any taxpayer can approach the Authority for Advance Ruling for a ruling as to whether an arrangement to be undertaken was permissible or not under GAAR provisions.? Coming to the long-term capital gains proposal, the Finance Minister proposed to reduce the tax rate from 20 to 10 per cent on the sale of unlisted securities in the case of non-resident investors, including private equity investors too, as is the case with Foreign Institutional Investors, to give parity to the former.
Mukherjee also extended the benefit of tax exemption on the long-term capital gains to the sale of securities in an initial public offer, proposing to provide the levy of securities transaction tax (STT) at the rate of 0.2 per cent on such sale of unlisted securities. Besides, he extended the lower rate of withholding tax to all business while in the Finance he had earlier proposed this lower rate for funding specific sectors through foreign borrowings.
The Finance Minister announced withdrawal of one per cent TDS tax on transfer of immovable property (other than agricultural land).
The threshold limit for tax collection at source on cash purchases of jewellery has been raised to Rs 5 lakh from Rs 2 lakh.
Taking into considerations the states? concerns over the negative list, the Finance Minister also announced changes in the definition of ?service? which will exclude the activities specified in the Constitution as ?as deemed sale of goods?.
The definition of ?works contract? has also been enlarged to include properties.
Moreover, exemption for specified services relating to agriculture in the negative list has also been extended to agricultural produce enlarging the scope of entry.
Sinha points to worsening economic outlook for India
Former Finance Minister and senior BJP Member Yashwant Sinha said in this open economic era there is no relevance of continuing with the age old practice of maintaining secrecy on the Budget.
Initiating the discussion on the Finance Bill, 2012, in the Lok Sabha, he said in fact the ideal practice should be that the Finance Minister should present the Finance Bill before the presentation of Budget in the Lok Sabha and once it is approved by the House the Government should give the final touches before it is placed along with the budget. He said it would greatly help the people from lots of bureaucratic hassles.
He said currently the biggest problem faced by the country is how to overcome the problem of Current Account Deficit which has gone upto the level of 70 per cent. ?The situation becomes grim when we have to repay the short term debts.? Sinha said leading economists in the country have already started cautioning the Government over the possible further worsening situation of the economy. This can be gauged by some of the facts that Foreigh Currency Assets have declined by over 2 per cent to 14 per cent compared to corresponding period in the previous year.
Foreign currency reserves declined by 12.8 billion dollar in March/April, 2012.
Sinha solely and wholely put the blame for this state of economy on the former Finance Minister P Chidambaram as it was he who was responsible for making huge short term borrowing during 2008-09 and the country is now paying for that sin, Sinha added.
He said what a paradox when the country has produced over 250 million tonnes of foodgrains but still the Government failed to feed millions of our people and over 70 million tonnes of foodgrains had been destroyed as there is no space to either store them or any policy to protect these foodgrains and this leads to high rise in the prices of food items.
Sinha suggested the Government to release the food stocks liberally as it would definitely help in the stabilisation of prices. (UNI)
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