New Delhi: The Union Budget for 2010-11 was cleared on Thursday, with Parliament passing the Finance Bill after amendments to provide marginal direct and indirect tax concessions to sectors such as healthcare and construction.
Finance minister Pranab Mukherjee, replying to the debate on the Bill, turned down demands from the Opposition to roll back indirect tax hikes for crude oil and related products—announced when he presented the Budget on 26 February—saying they were crucial to keep fiscal deficit under check.
“As was expected, there are minimal changes to the Finance Bill in the course of its passage into the Finance Act,” said Dinesh Kanabar, deputy chief executive and chairman, tax, KPMG.
The amended Bill extended direct tax benefits for building hospitals with at least 100 beds to the whole country due to “the pressing need for more hospitals”. Earlier, the benefits were not available to hospitals built in metros such as New Delhi and Mumbai.
Deficit concern: Finance minister Pranab Mukherjee refused to roll back indirect tax hikes for crude oil and related products. Harikrishna Katragadda / Mint
“This is a welcome move and a very positive development for the healthcare industry. It will contribute to the creation of much-needed infrastructure in the country,” said Shivinder Mohan Singh, managing director, Fortis Healthcare Ltd.
Mukherjee announced a debt relief package of Rs241.33 crore for coffee growers.
To retain tax neutrality when a company is converted into a limited liability partnership, the amended Bill proposed tax exemption for the transfer of shares during the conversion.
Housing projects, which come up as a part of Central and state governments’ slum-development scheme, would qualify for investment-linked deduction, Mukherjee said.
Other tax proposals from the Budget, which saw the construction and aviation industries lobby for a revision, were retained or partially rolled back.
Mukherjee marginally lowered the effective rate of tax relating to service tax provisions that were extended to the construction sector in the Budget.
Service tax on air travel was retained, but the tax levied will not be on a percentage basis. The maximum tax on domestic air tickets would be limited to Rs100 and, in case of international air travel, the tax would be capped at Rs500.
Paper, tobacco and drugs were some sectors that got marginal concessions in indirect taxes. In the case of export of iron ore lumps, export duty was enhanced by five percentage points to 15%.
The increase in export duty will not have a significant impact on the industry as 90% of iron ore exports consist of iron ore fines, said a steel analyst, who did not want to be named. The increase may be more of a revenue enhancement measure than a serious attempt to restrict iron ore exports, the analyst said.
Mukherjee did not disclose the revenue implications of the amendments.
Radhieka Pandeya contributed to this story.