E-Paper
Life made easy for taxpayers: Chidambaram
FM has said budget will make life easy for honest taxpayers.
Finance MinisterPalaniappan Chidambaramis confident that his budget will give a big stimulus to industry, pep up markets and also make life easy for honest taxpayers. He has identified sustaining growth momentum coupled with massive diversification in agriculture as the twin challenges. Excerpts from the first post-budget interaction withK.A. Badarinath:
Q. People think you have raised the tax exemption limit to Rs 1 lakh. Have you?
FM: No. The exemption limit has not been raised. The route I have taken is not familiar to the Indian taxpayer. Individuals with annual taxable incomes up to Rs 1 lakh will file a tax return. He will not pay any tax, nor claim any refund. Apart from the Rs 50,000 income exempted from tax levy, Rs 30,000 standard deduction and say another Rs 20,000 in savings (the total comes to Rs 1 lakh), he need not pay income tax at all. Otherwise, the existing tax slabs and rates have been kept unchanged due to revenue considerations.
Q. What will happen to the interest rates?
FM: Taking cue from my budget proposals, I think the interest rates will remain at the current level. Interest rates will stick to the current level, as they were not reduced when the world interest rates went down. I have not proposed any change in the existing rates on small-savings instruments. Consequently, PPF, GPF and the Special Deposit Scheme will attract 8 per cent interest this year.
Q. Then what about the EPF rates?
That is for the EPFO trustees to decide. The trustees are meeting on July 13 to take a view on the EPF rates. I have retained the interest rate on SDS at 8 per cent as before. (Over 80 per cent of EPF funds are parked in SDS.)
Q. The Varishta Bima Yojana has been closed.
This is a decision LIC will have to take. From now on, we will not provide any interest subsidy to LIC for this scheme. Existing policyholders will continue to get 9 per cent returns. LIC may like to continue this scheme in some other form.
Dada-Dadi bonds announced by your predecessor have been dropped.
They were not launched. They have been a non-starter. For senior citizens, I have announced a savings scheme offering an interest rate of 9 per cent per annum. One can invest up to Rs 10 lakh in the senior citizens scheme. For others, the 8 per cent RBI savings bond scheme exists.
Q. Your budget is inflationary.
No. With sharp reduction in customs and excise duties, inflation is bound to go down.
Q. Can one call it anti-investment?
Not at all. There is nothing in the budget that is anti-investment, anti-services and anti-industry. Exemptions and incentives for agri-based industries, hospitals, power transmission and distribution, industry must get a boost and stimulus.
Q. But markets have given the thumbs-down — they have fallen by 118 points.
Markets have reacted moderately. The industry has not absorbed the fact that I have targeted a sharp reduction in revenue deficit by 1.1 per cent and retained the fiscal deficit at 4.4 per cent by tightening government expenditure. Once this fact is absorbed, the markets will look up, recover.
Q. Through the tax proposals, how much do you propose to collect additionally?
From direct taxes, it will be about Rs 2,000 crore. I have taken credit for Rs 5,750 crore additional revenue from services. On the indirect taxes front, the proposals would be revenue-neutral, taking into consideration the cuts in customs and excise duties.
Q. Is it the end of the disinvestment story?
I have set a target of Rs 4,000 crore. NTPC has already announced an IPO offering 5 per cent. Government will ride piggyback on NTPC with another 5 per cent. I also have the option on residual stake in Balco. The new Board for Reconstruction on PSEs will take up on case-by-case basis.
Q. Will the investment commission set the stage for winding up FIPB?
It will be a proactive body to realise both domestic and foreign investments. The body will woo investments unlike the passive role a government plays. It will approach major domestic and international industrial houses, understand their investment plans and see if the government can help them out. Since most approvals would be on automatic route, FIPB would look into cases where more than one ministry's approval is necessary.
Q. What is the progress on the employment guarantee scheme?
Work has commenced. We have to only implement the scheme once it is ready. Till the 100-day employment scheme is ready, the 'food for work' programme will continue. Funds allocated for this scheme will be used for the new programme.
