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Budget concessions expected today

By Alok Mukherjee

NEW DELHI APRIL 25 . The Union Finance Minister, Yashwant Sinha, is expected to announce tomorrow in the Lok Sabha a rollback of some of the 2002-03 Budget proposals. The announcements are expected when Mr. Sinha moves the Finance Bill 2002 for the consideration of the House. Voting on the Bill is scheduled for Monday.

Since the changes to be announced will be moved by the Finance Minister himself, he will have to incorporate these in the original Finance Bill he had submitted to the House on February 28. Hence, the amendments will have to be moved right at the initial stage when he moves the Bill for the consideration of the Lok Sabha.

Mr. Sinha has been under pressure right from the day of the budget presentation to withdraw some of the proposed taxation measures since these were considered to be harsh on the middle and salaried classes. In fact, the momentum for the rollback gathered force once the BJP received a pounding at the Delhi Municipal Corporation elections and it became apparent that its traditional vote bank — the middle class — had reacted strongly to the proposed taxation measures.

Mr. Sinha's own party MPs also accused him of being oblivious to the party's political considerations since he had singularly focused on the salaried and middle classes for his additional revenue mobilisation efforts.

After consultations with party MPs and with the Prime Minister, Atal Behari Vajpayee, the Finance Minister is now expected to announce concessions pertaining to Section 88 of the Income Tax Act (which deals with tax exemptions in case of specified investments as in provident fund, insurance premiums, etc.) and alter the proposed measure for taxing dividend at the hands of the recipients at their individual rates of taxation instead of a flat rate of 10 per cent as was the practice earlier.

Private sector professionals would also be looking anxiously to the Finance Minister for any changes in the norms for taxing perquisites since this proposal has hit the corporate sector hard.

But Mr. Sinha is unlikely to yield much on this score as this is one area which could mobilise substantial resources.

A sector in which the Finance Minister is not likely to yield ground is administered interest rates applicable to small savings as he has already created a window for tax-free interest income for retired employees by removing the investment ceiling on Relief Bonds for this class of investors.

However, he might change some of his excise and customs proposals to take note of the apprehensions expressed by industry and trade.

The insurance industry's demand for exemption from the proposed service tax may not figure in tomorrow's announcements since no formal notification has yet been issued for this tax and the Government may announce changes and exemptions when such a notification is issued.

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