Finance Minister Yashwant Sinha kept personal and corporate income-tax rates intact, withdrew some direct tax exemptions, imposed a five per cent surcharge in lieu of the Gujarat surcharge, cut peak customs duty to 30 per cent and hiked special excise duty on most items, in the Union Budget 2002-03 that he unveiled on February 28, 2002.
Sinha said direct tax proposals would result in revenue gain of Rs. 6,000 crore including the surcharge of Rs. 2,750 crore, to mop up a total Rs. 91,585 crore next fiscal.
The government also intends to mop up additional Rs. 6,000 crore mainly through withdrawal of various direct tax exemptions and imposition of a five per cent surcharge in the next fiscal.
The Finance Minister kept personal income-tax rates unchanged at 10, 20 and 30 per cent. But, while lifting the Gujarat surcharge of two per cent, he imposed a five per cent surcharge across the board, except those having annual income up to Rs. 60,000.
Keeping corporate tax rate unchanged at 35 per cent, Sinha slashed the tax rate on foreign companies to 40 per cent from the present 48 per cent.
Budget 2002-03 proposed a cut in peak customs duty rate to 30 per cent, hiked special excise duty on most items and extended service tax to 10 more sectors, as part of efforts to raise indirect tax collections to Rs. 1,43702 crore.
The Budget also lays down the roadmap for reduction of Customs duty to 10 per cent for raw materials, intermediaries and components by 2004-05, while reducing the duty to 20 per cent for final products.
The thrust of Budget 2002-03 would be to deepen structural reforms and regenerate industrial growth, continue the emphasis on agriculture and food economy reforms, besides enhancing public and private investment in infrastructure and strengthening the financial sector and capital markets.