FM cuts gas prices, offers savings option
As part of the UPA's push to its reforms agenda, and to lessen the burden of the common man, finance minister P Chidambaram came out with a few measures on Friday.delhi Updated: Sep 21, 2012 23:46 IST
As part of the UPA's push to its reforms agenda, and to lessen the burden of the common man, finance minister P Chidambaram came out with a few measures on Friday.
For starters, the government cut the excise and customs duties on non-subsidised LPG cylinders people would have to buy after consuming the six-cylinders-a-year quota.
"We have amended the notification for non-subsidised household LPG cylinders... customs and excise (on them) will be zero," Chidambaram told reporters.
Now, the consumer will have to pay Rs. 798 against Rs. 895 per 14.2-kg cylinder in Delhi, while a subsidised cylinder costs Rs. 399 in Delhi.
On the financial front, the government allowed mutual funds and exchange traded funds to launch the Rajiv Gandhi equity savings scheme - 50% tax relief for first-time investors in the stock market, who earn less than Rs. 10 lakh a year and invest up to Rs. 50,000 in the scheme.
So, if your income is in the highest tax slab of 30% and you invest Rs. 50,000 in this scheme, you will save Rs. 25,000 or a little more than Rs. 2,000 a month, enough to buy a motor cycle or a washing machine this festive season.
Moreover, Chidambaram said, "This move will ... help people move away from investing in gold, which is a dead asset."
"It will encourage the flow of savings into financial instruments and improve the depth of the domestic capital market," said Sundeep Sikka, CEO, Reliance Capital Asset Management.
What's more, in order to attract NRI money and prop up the rupee, the government reduced the tax on interests to 5% from 20%.
Also, the government removed the procedural hurdles for companies borrowing from overseas investors if they fulfil "general conditions", without any government approval.
"We are doing away with the case-by-case approach of granting approvals," Chidambaram said.