Highlights of the Budget
ECGC Cover:
An adjustment assistance scheme to provide enhanced Export Credit and Guarantee Corporation (ECGC) cover at 95 per cent to badly hit sectors had been initiated in December 2008 to mitigate the difficulties faced by the exporters. In view of the continuing contraction in exports, the benefits of this scheme have been extended up to March 2010.
MDA:
The Market Development Assistance Scheme provides support to exporters in developing new markets. With many traditional markets still under financial stress, greater effort is required to identify and develop new markets. It has been proposed to enhance the allocation for this scheme by 148% over BE 2008-09 to Rs.124 crore.
Support to MSMEs:
Micro, Small and Medium Enterprises (MSMEs) have been affected by the slowdown in exports and the indirect effect of the global crisis on domestic demand. To support this sector, it has been proposed to facilitate the flow of credit at reasonable rates, by providing a special fund out of Rural Infrastructure Development Fund (RIDF) to Small Industries Development Bank (SIDBI). This fund of Rs.4,000 crore will incentivize Banks and State Finance Corporations (SFCs) to lend to Micro and Small Enterprises (MSEs) by refinancing 50 per cent of incremental lending to MSEs during the current financial year.
NHRM:
The National Rural Health Mission is an essential instrument for achieving our goal of Health for all. There has been to increase of Rs.2,057 crore over and above Rs.12,070 crore provided in the Interim Budget.
Rashtriya Swasthya Bima Yojana (RSBY)
Rashtriya Swasthya Bima Yojana (RSBY) was operationalised last year. The initial response has been very good. More than 46 lakh BPL families in eighteen States and UTs have been issued biometric smart cards. This scheme empowers poor families by giving them freedom of choice for using health care services from an extensive list of hospitals including private hospitals. Government proposes to bring all BPL families under this scheme. An amount of Rs.350 crore, marking 40% increase over the previous allocation, is being provided in 2009-10 Budget Estimates.
Fringe Benefit Tax:
The Finance Act, 2005 introduced the Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees. It has been proposed to abolish the Fringe Benefit Tax on ESOP, Sweat Equity and Superannuation Funds. The tax burden will now be borne by Employees.
Research and Development:
The competitive ability of an economy rests on its progress in the area of Research and Development (R&D). In order to incentivise the corporate sector to undertake R&D work, It is proposed to extend the scope of the current provision of weighted deduction of 150% on expenditure incurred on in-house R&D to all manufacturing businesses except for a small negative list.
Customs, Excise and Countervailing Duty on some life saving drugs
On influenza vaccine and nine specified life saving drugs used for the treatment of breast cancer, hepatitis-B, rheumatic arthritis etc. and on bulk drugs used for the manufacture of such drugs, it has been proposed to reduce the customs duty from 10 per cent to 5 per cent. They will also be totally exempt from excise duty and countervailing duty.
Customs duty will also be reduced from 7.5 per cent to 5 per cent on two specified life saving devices used in treatment of heart conditions. These devices will be fully exempt from excise duty and CVD also.
With the Government's proclaimed objective of introducing a Goods and Services Tax (GST) both at the national and State level, some more steps in that direction are necessary. One measure that would facilitate the process is the further convergence of central excise duty rates to a mean rate - currently 8 per cent. FM has reviewed the list of items currently attracting the rate of 4 per cent, the only rate below the mean rate. There is a case for enhancing the rate on many items appearing in this list to 8 per cent, which It is proposed to do, with the following major exceptions:- drugs, pharmaceuticals and medical equipment besides other sectors.
Exemption of Service tax for Councils:
The Export Promotion Councils and the Federation of Indian Export Organizations (FIEO) provide a valuable service in augmenting our export effort. It has been proposed to exempt them from the levy of service tax on the membership and other fees collected by them till 31st March, 2010 .
Direct Taxes:
It has been proposed to raise the tax exemption limit for:
· Senior citizens by Rs 15,000/- from Rs.2.25 lakhs to Rs. 2.40 lakhs;
· Women by Rs 10,000/- from Rs. 1.80 lakhs to Rs. 1.90 lakhs;
· For all other individual tax payers by Rs. 10,000/- from Rs. 1.50 lakhs to Rs. 1.60 lakhs.
· It has been proposed to phase out the 10% surcharge on personal income tax.
· To tide over the slow down in Exports, the tax holiday for the sector has been increased by a year to include 2010-2011.
ECGC Cover:
An adjustment assistance scheme to provide enhanced Export Credit and Guarantee Corporation (ECGC) cover at 95 per cent to badly hit sectors had been initiated in December 2008 to mitigate the difficulties faced by the exporters. In view of the continuing contraction in exports, the benefits of this scheme have been extended up to March 2010.
MDA:
The Market Development Assistance Scheme provides support to exporters in developing new markets. With many traditional markets still under financial stress, greater effort is required to identify and develop new markets. It has been proposed to enhance the allocation for this scheme by 148% over BE 2008-09 to Rs.124 crore.
Support to MSMEs:
Micro, Small and Medium Enterprises (MSMEs) have been affected by the slowdown in exports and the indirect effect of the global crisis on domestic demand. To support this sector, it has been proposed to facilitate the flow of credit at reasonable rates, by providing a special fund out of Rural Infrastructure Development Fund (RIDF) to Small Industries Development Bank (SIDBI). This fund of Rs.4,000 crore will incentivize Banks and State Finance Corporations (SFCs) to lend to Micro and Small Enterprises (MSEs) by refinancing 50 per cent of incremental lending to MSEs during the current financial year.
NHRM:
The National Rural Health Mission is an essential instrument for achieving our goal of Health for all. There has been to increase of Rs.2,057 crore over and above Rs.12,070 crore provided in the Interim Budget.
Rashtriya Swasthya Bima Yojana (RSBY)
Rashtriya Swasthya Bima Yojana (RSBY) was operationalised last year. The initial response has been very good. More than 46 lakh BPL families in eighteen States and UTs have been issued biometric smart cards. This scheme empowers poor families by giving them freedom of choice for using health care services from an extensive list of hospitals including private hospitals. Government proposes to bring all BPL families under this scheme. An amount of Rs.350 crore, marking 40% increase over the previous allocation, is being provided in 2009-10 Budget Estimates.
Fringe Benefit Tax:
The Finance Act, 2005 introduced the Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees. It has been proposed to abolish the Fringe Benefit Tax on ESOP, Sweat Equity and Superannuation Funds. The tax burden will now be borne by Employees.
Research and Development:
The competitive ability of an economy rests on its progress in the area of Research and Development (R&D). In order to incentivise the corporate sector to undertake R&D work, It is proposed to extend the scope of the current provision of weighted deduction of 150% on expenditure incurred on in-house R&D to all manufacturing businesses except for a small negative list.
Customs, Excise and Countervailing Duty on some life saving drugs
On influenza vaccine and nine specified life saving drugs used for the treatment of breast cancer, hepatitis-B, rheumatic arthritis etc. and on bulk drugs used for the manufacture of such drugs, it has been proposed to reduce the customs duty from 10 per cent to 5 per cent. They will also be totally exempt from excise duty and countervailing duty.
Customs duty will also be reduced from 7.5 per cent to 5 per cent on two specified life saving devices used in treatment of heart conditions. These devices will be fully exempt from excise duty and CVD also.
With the Government's proclaimed objective of introducing a Goods and Services Tax (GST) both at the national and State level, some more steps in that direction are necessary. One measure that would facilitate the process is the further convergence of central excise duty rates to a mean rate - currently 8 per cent. FM has reviewed the list of items currently attracting the rate of 4 per cent, the only rate below the mean rate. There is a case for enhancing the rate on many items appearing in this list to 8 per cent, which It is proposed to do, with the following major exceptions:- drugs, pharmaceuticals and medical equipment besides other sectors.
Exemption of Service tax for Councils:
The Export Promotion Councils and the Federation of Indian Export Organizations (FIEO) provide a valuable service in augmenting our export effort. It has been proposed to exempt them from the levy of service tax on the membership and other fees collected by them till 31st March, 2010 .
Direct Taxes:
It has been proposed to raise the tax exemption limit for:
· Senior citizens by Rs 15,000/- from Rs.2.25 lakhs to Rs. 2.40 lakhs;
· Women by Rs 10,000/- from Rs. 1.80 lakhs to Rs. 1.90 lakhs;
· For all other individual tax payers by Rs. 10,000/- from Rs. 1.50 lakhs to Rs. 1.60 lakhs.
· It has been proposed to phase out the 10% surcharge on personal income tax.
· To tide over the slow down in Exports, the tax holiday for the sector has been increased by a year to include 2010-2011.
