HT This Day: March 01, 1947 -- Salt duty to be abolished

Updated on Feb 28, 2022 08:04 PM IST

Heavy taxation to the extent of Rs. 30.75 crores which will fall mainly on industry, relief to the lower middle class by raising the minimum taxable limit from Rs. 2,000 to Rs. 2,500, abolition of the salt tax, appointment of a Commission to investigate private accumulations of wealth concerned with direct taxation and provision of about Rs. 100 crores for development schemes, mostly provincial, are the chief features of the first budget of the Interim Government presented by Mr Liaquat Ali Khan, Finance Minister, in the Central Assembly today.

HT This Day: March 01, 1947 -- Salt duty to be abolished
HT This Day: March 01, 1947 -- Salt duty to be abolished
ByHT Correspondent, New Delhi

Heavy taxation to the extent of Rs. 30.75 crores which will fall mainly on industry, relief to the lower middle class by raising the minimum taxable limit from Rs. 2,000 to Rs. 2,500, abolition of the salt tax, appointment of a Commission to investigate private accumulations of wealth concerned with direct taxation and provision of about Rs. 100 crores for development schemes, mostly provincial, are the chief features of the first budget of the Interim Government presented by Mr Liaquat Ali Khan, Finance Minister, in the Central Assembly today.

Among the taxation proposals are a levy of special income-tax of 25 per cent on business profits and professional and vocational income exceeding Rs. 1 lakh, tax on capital gains, doubling of export duty on tea and increase of corporation tax from one anna to two annas.

The Finance Minister also announced the appointment of an Economy Committee, the Government’s decision to nationalize the Reserve Bank of India in due course and to bring in legislation regulating stock exchanges and the termination of the Financial Settlement between the Government of India and the Bi-itish Government with effect from March 31, 1947.

The Budget proposals, it is gathered, were framed by the Finance Minister and were first approved by a sub-committee of Cabinet consisting of Pandit Nehru, Dr John Matthai and Mr Liaquat Ali Khan and were endorsed by the Cabinet as a whole today.

Although the salt tax is abolished, power is taken to control organized manufacture, purchase or control of all imported salt and fix maximum wholesale and retail selling prices of salt. A sum of Rs. 17.35 crores will be spent in subsidizing imported food grains.

The Defence Budget for 1947-48 is estimated at Rs. 188.71 crores as against Rs. 240.11 crores in the revised estimates for the current year.

A sum of Rs. 6.5 crores has been provided for expenditure on National Highways and it is proposed to borrow Rs. 150 crores during the budget year.

First reactions in the lobbies of the Assembly may be summed up thus: The proposals are sensational. Their effect on industrial development will have to be carefully assessed because the proposals reimpose the E.P.T . The financial statement is on traditional lines. The budget proposals are of the Cabinet while their peculiar presentation is the Finance Minister’s contribution. The abolition of the Salt Tax and the relief to the poor tax -payer are wholly in accord with the demand voiced by popular parties in the past.

Finance Minister Cheered

The Finance Minister entered the House a few minutes before the scheduled time. Mr Sri Prakasa of the Congress Party led the cheers as Mr Liaquat Ali Khan took his seat. Public galleries were packed to overflow recording the largest attendance at any sitting of the session. The President’s Gallery and the Distinguished Visitors gallery were filled by several industrial leaders and public men and women including Mrs Sarojini Naidu, Mrs Matthai, Mrs Liaquat Ali Khan, Miss Maniben Patel, Mrs Madankar, Sir Homy Mody, and Mr M. A. Master, President of the Federation of the Indian Chambers of Commerce.

Mr Liaquat Ali Khan appeared self-conscious. He cleaned his glasses and sipped water in preparation for the ordeal of reading his speech which lasted 1-3/4 hours. The speech was a mixture of the brief prepared by Sir Cyril Jones. Principal Finance Secretary, and political pronouncements inserted by the Finance Minister himself.

This explained the difference in phraseology in various parts of the speech. For instance, the portions which the Finance Minister had written himself referred to India as a vast sub-continent whereas those prepared by the Finance Secretary referred to India as one country. Again, while the budget proposals made provision for Central planning, Mr Liaquat Ali Khan occasionally harped on regional planning as being more conducive to India’s development.

Taxation And Social Justice

On two occasions, the Minister warmed up and raised the tone of his speech. He did this once when he emphasized that his taxation proposals were based not on Anancial necessities but on the principle of social justice which, he said, was a Quranic injunction. The second occasion was when he referred to sterling balances and declared that India had not only borne her full share of war burdens but had strained herself to assist the U.K. and her allies.

Three occasions on which the House as a whole applauded him were when he announced abolition of the Salt Tax, raising of minimum taxable limit and India’s claim for just settlement of sterling balances. The House was disappointed when the Finance Minister failed to give any estimate of the cost involved ice implementing the proposals of the Central Pay Commission. The Finance Minister said he had made no provision for it in his budget.

The members silently heard the announcement that the various obligations between India and Britain in regard to the British forces in India and the use of Indian forces abroad were to be mutually waived during the next year. On the other hand, the House appeared to appreciate the manner in which the defence expenditure had been prepared giving a truer estimate of the country’s defence expenditure.

The members also noted approvingly the Finance Minister’s assurance that the sterling balances would be wisely spent in the purchase of capital goods and the creation of productive assets would not be allowed to be frittered away on luxuries, trifles or non-essential consumer goods.

The House heard with relief that India’s coal resources were adequate for the country’s industrial plans.

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