Focusing on the need to give relief to the stressed infrastructure, manufacturing and other sectors, Mukherjee proposed reduction from 20 percent to 5 percent for three years on the rate of withholding tax on interest payments on external borrowings. The sectors covered include power, airlines, roads and bridges, ports and shipyards, affordable housing, fertilizers and dams.
Corporates are proposed to get access to low cost funds to promote higher investments. The restrictions on Venture Capital funds to go. Investment linked deduction of capital expenditure increased to 150 percent from 100 percent to businesses covering cold chain facility, warehouses, hospitals, fertilizers and affordable housing. New sectors including bee keeping and production of honey, container freight station will also be included for this concession. Research and development to get incentives with weighted deduction of 200 percent.
To boost power sector, the sunset date of 100 percent deduction allowed for 10 years has been extended to another year. Small and Medium Scale Enterprises having a turnover of one crore rupees will not come under compulsory tax audit. The Earlier limit was 60 lakh rupees. To generate jobs and remove the shortage of skilled manpower, the manufacturing sector will get weighted deduction at the rate of 150 percent of expenditure incurred on skill development.
Security transaction tax reduced by 20 percent on cash deliveries to help the capital markets. Alternate minimum tax extended to all persons other than companies to moderate outgo of profit linked deduction.
To bring out unaccounted money, the Finance Minister proposed several measures including 30 percent taxation of unexplained money, credits, investments and expenditures. Compulsory reporting of assets held abroad, assessment upto 16 years, tax on purchase of jewellery exceeding two lakh rupees, deduction at sources on transfer of immovable properties and trading in coal, lignite and iron ore are the other measures.
Turning to indirect taxes, the budget proposes to raise the service tax from 10 percent to 12 to all services except those to be included in the negative list. The list comprises 17 heads including the services provided by the government or local authorities except a few specified services where they compete with the private sector.
