Highlights of the Union Budget 2001-2002

(Posted on 28 February, 5:45 pm)

TAX RATE CHANGES:
1)No change in Direct tax rates
2)All surcharges on corporate and non-corporate taxes except for calamity relief abolished
3)One by six schemes extended to all Urban areas
4)TDS extended to commission and brokerage incomes
5)Wind Fall income - lotteries, games shows-at 30 per cent
6)All companies to file a mandatory return
7)No tax exemptions on interest paid on ECBs
8)No tax gains if invested in Primary issues
9)Dividend tax reduced to 10 per cent
10)20 year Tax holiday for core infrastructure
11)10 years tax holiday for infra in airports
12)15 years tax holiday for telecom projects
13)Interest exemption on housing loans raised to Rs 150,000
14)Foreign telecast channels to be taxed

DUTY STRUCTURE CHANGES:
1)Rate structure rationalised: One CENVAT rate of 16 per cent and one special excise duty of 16 per cent introduced
2)Services Tax net widens
3)Ten per cent surcharge on Customs Duty abolished
4)Peak Custom Duty down to 35 per cent
5)Customs Duty on select and IT products down to 15 per cent 6)Second hand car customs duty at 180 per cent
7)Customs Duty on cement and clinkers down to 25 per cent
8)Duty on Gold reduced to Rs 250 per 10 grams
9)Peak Customs Duty to be reduced to 20 per cent in 3 years

BUDGET ESTIMATES:
1)Fiscal Deficit target 4.7 per cent
2)Expenditure set at Rs 3752.23 billion
3)Total Revenues Receipts at Rs 1630.31 billion

MACRO POLICY CHANGES:
a) Move towards Capital Account Convertibility
1)FIIs can invest up to 49% in Domestic Companies
2)Domestic Companies can invest 10 times their export earnings or 100 million abroad
3)RBI to issue guidelines for companies
4)FDI in NBFC upto 100% through automatic route

b) Interest rate on small savings cut by 1.5 percentage points

c) Interest on central loans to state governments reduced by 50 basis points

d)Labour reforms introduced
1)Industrial Disputes Act to be amended
2)Retrenchment compensation increased to 45 days from 15 days
3)For companies employoing less than 1,000, retrenchment made easier 4)Contract Labour Act to be amended Safety net for workers through group insurance scheme

e) Divestment:
1)Rs 120-billion target
2)Divestment of 12 PSUs to be completed this year; including VSNL, Air-India and Maruti
3)Rs 50 billion set aside for outlay for infrastructure and social sectors

f) Second-hand car imports liberalised

g) Prices decontrolled
1)Urea Prices to be decontrolled by 2006
2)Decontrol of Sugar; Future and Options to be introduced

h)Policy changes at sectoral level - Agricultural
1)Interest charged by Nabard reduced 1 per centage point to 10.5 per cent
2)RIDF corpus increased to Rs 50 billion from Rs 45 billion
3)Credit flow to agriculture to be increased by 2 per cent
4)Personal insurance for Kisan credit card holders
5)Nabard to help agri graduates to launch agri clinics and agri business centres as part of extension services

i) Strategy of Budget:
1)Speeding up of Agricultural Reforms
2)Change management of the Food Economy
3)Improve infrastucture
4)Deepen capital markets
5)Improve quality of government expenditure
6)Widening of tax base
7)Structural reforms.
Information Courtsey Business Standard

Budget 2001-02:
Highlights relating to the TV and entertainment sector
The tax axe for foreign telecasting channels
Not so friendly for the cable & satellite television industry
Full text of Yashwant Sinha's budget speech