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Rediff.com  » Business » Highlights of Union Budget 2005-06

Highlights of Union Budget 2005-06

Last updated on: February 28, 2005 16:41 IST
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Finance Minister P Chidambaram presented his fourth Budget in Parliament on Monday.

Following are the highlights:

  • Income upto Rs 1,00,000 per annum exempted from tax
  • Income between Rs 1-1.5 lakh to be taxed at 10%
  • Rs 1.5-2.5 lakh income to be taxed at 20%
  • Income above Rs 2.5 lakh to be taxed at 30%
  • Exemption level for women at Rs 1.25 lakh
  • Exemption level for senior citizens at Rs 1.5 lakh
  • Consolidated limit of Rs 1 lakh of saving to be deducted from income before calculating tax
  • Standard deduction removed from tax structure
  • 0.01  per cent tax on withdrawal of over Rs 10,000 in cash from banks on a single days
  • Payment of electricity bill of over Rs 50,000 a year replaces mobile phone owners in the one-in-six criteria for filing income tax returns
  • Govt proposes 50 paise per litre cess on petrol and diesel to fund highways
  • Defence allocation to be increased to Rs 83,000 crore next fiscal
  • Customs duty on crude petroleum to be cut to 5% from 10%
  • LPG for domestic consumption and subsidised kerosene not to attract customs and excise duties
  • Customs duty on motor spirit, high speed diesel and other petroleum products to be lowered to 10% from 15-20%
  • Specific rate on cigarettes to be increased by about 20 per cent
  • Other tobacco products, including gutka, chewing tobacco, saunf and pan masala to attract 10% surcharge on ad valorem basis
  • Fringe Benefits Tax of 30 per cent on benefits collectively enjoyed by employees
  • Transport services for workers and staff and canteen services in an office, factory exempted from tax
  • Peak customs duty for non-agricultural products to be reduced to 15 per cent from 20 per cent
  • Fiscal deficit pegged at Rs 1,51,144 crore or 4.3 per cent of GDP during 2005-06
  • Revenue deficit proposed to be Rs 95,312 cr or 2.7 per cent of GDP for next fiscal
  • Plan expenditure is estimated at Rs 1,72,500 crore for 2005-06
  • Of plan expenditure, Rs 29,003 cr to be raised as loans by state governments directly
  • Non-plan expenditure at Rs 370.85 crore for next fiscal.
  • Re 1 per kg surcharge on tea to be abolished
  • Re 1 per kg excise duty on refined edible oils and
  • Rs 1.25 per kg on vanaspati to be removed
  • Matches made by mechanised and semi-mechanised sector to pay 12 pc excise duty against the present 16%
  • Securities transaction tax hiked to 0.02 per cent on all categories of trade
  • Excise duty on imitation jewellery to be cut to 8% from 16%
  • 2% excise duty on branded jewellery, unbranded exempted
  • Customs duty on specified capital goods and all inputs for manufacture of IT Agreement bound items to be removed
  • Countervailing duty of 4 pc on imports of IT agreement bound items, IT software will be exempt
  • Customs duties on cut flower to be raised from 30% to 60%
  • Customs duty on cloves to be lowered to 35%
  • Customs duty on all other agricultural goods to be same
  • Customs duty on most textile machinery reduced to 10% from 20%
  • Customs duties on primary and secondary metals to be cut to 10% from 15%
  • Coking coal with high ash content to attract 5% customs duty in place of 15%
  • Customs duty on polyester and nylon chips, textile fibres, yarns and intermediates, fabrics and garments to be cut to 15% from 20%
  • Service tax to remain at 10%
  • Domestic companies to pay 30% corporate income tax and 10% surcharge
  • No change in the tax regime for foreign companies
  • Polyester filament yarn, tyres and air conditioners to attract 16% CENVAT against the present 24%
  • CENVAT on motors cars and aerated drinks remain unchanged at 24%
  • Customs duty on 9 specified machinery used in pharma and biotechnology sectors to be cut to 5%
  • Customs duty on specified parts of battery-operated road vehicles and for printing presses to be lowered       from 20% to 10%
  • Customs duty on primary and secondary metals to be cut to 10% from the existing 15%
  • Service providers up to Rs 4 lakh gross turnover to be exempted from service tax
  • Membership fee of clubs, associations and other services to be in the service tax-net
  • The rate of depreciation to be 15% for general machinery and plant
  • Initial depreciation rate to be raised to 20%
  • Withholding tax on technical services to be cut to 20% from 10%
  • Credit to be allowed for Minimum Alternate Tax
  • Exemption from tax on agreements to acquire aircraft to aircraft engines on lease to be extended to September 30, 2005.
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