Indian Budget 2007

1. INDIAN BUDGET 2007
   
   Some points suggested by our finance minister during the budget presentation in February
   
   Tax rate of foreign companies may be lower in order to bring them on par with India Inc. (15.02.07)
   
   The import duty on cut and polished diamonds (CPDs) and gemstones may be abolished. (13.02.07)
   
   Corporate tax may come down in this budget by 3% either through abolition of 10% surcharge or by reduction of corporate tax from the existing level of 30%.
   
   Finance Minister may scrap 120 central sector schemes in the 11th Five Year Plan
   
   Some Valuable suggestions in the budget
   
   Custom duty on machinery imports for the sectors such as leather, footwear, textiles & clothing and sports goods will be reduced
   
   • Short-term capital gains tax on stocks may go up to 15%.Finance Minister has also put additional burden on taxpayers investing in stock markets by raising dividend distribution tax from 12.5 per cent to 15 per cent( he ought to have introduced the securities tax so as to avoid the sudden ups and downs of the stock market)
   
   Chidambaram added that additional irrigation potential of 24 lakh hectares to be implemented, including nine lakh hectares under Accelerated Irrigation Benefit Programme
   
   • There is a possibility of the minimum alternate tax (MAT) to come in for some structural change in the Budget. This is to expand the scope of tax that is currently applicable on certain zero-tax companies( mainly IT). It will cover units taking benefits of the STPI( special tax exemption scheme) scheme in order to bring big IT companies into the tax net. Although NASCOMM has recommended chidambaram to give another 10 yrs for the IT comps (not in SEZ) to move around without tax concerns as they pointed out the rising power of China in this industry, FM was adamant that there should be a halt to this.
   
   
   
   Features
   
   No proposal for strengthening the public distribution system. As the price rises continue to go up, chidambaram says all these recent developments indirectly leads to price rise which is running away from the basic facets of economics.
   
   In spite of the petrol and diesel price coming down on the world market, but India market is unable to absorb the global scenario as there are no provisions for steadying the price of petrol and diesel. The government should also take steps to control these sudden fluctuations in the world market by proposing a price system that would last for these fuels throughout the year.
   
   There is no mention about the food corporation of India (FCI) which should be strengthened to meet the demands of the population. The food grains are being imported at cheaper prices, leaving the farmers in penury and the produced food grains are accumulating in the hands of corporates leading t high prices of these essential commodities.
   
   The rules and regulations related to special economic zones are to be modified. The occupants of the region set aside for the special economic zones should be either guaranteed an employment in that zone or they should be a share holder of the particular zone along with the government suggestion of an alternative habitat. Moreover the companies will come under the tax rules in 5 years and not 10 years as suggested by the government for being tax free.
   
   The prevaricating minds of the investors as sudden withdrawal and investment of the national bonds can be dealt seriously by the government by issuing a specific security tax for these stock market bonds.
   
   Corporate tax should be raised and this should be converted to grama and panchayat developmental projects.
   
   The government should give room to alternate loan facilitators especially certain banks associated with countries like Canada or latin American oil rich countries willing to invest in India. ADB, Japan bank and others should not be the only solution for infrastructure or sewage projects.
   
   The price stabilisation of certain basic crops should be a matter of concern for the government as subsidies should not only be awarded to cash crops and the farmers belong to crash crop cultivation community should not alone be promoted.
   
   The finance minister should have firmly taken a stance against the NASCOMM proposal for the IT companies remain zero tax companies for another 10 yrs rather than the introduction of a minimum alternate tax proposal suggested by him.
   
   The proposal and the drawbacks of the employment guarantee scheme is to be submitted so as to include modifications for a full scale effective launching of the scheme.