Summary of Union Budget 2007-08

New Delhi, Feb 28 (UNI) Reduction of duty on petrol and diesel, expanding the safety net for rural poor, additional one per cent cess to fund secondary and higher education and expansion of the service tax net are some of the highlights of the Union Budget 2007-08 presented by Finance Minister P Chidambaram in the Lok Sabha today.

On excise duty the Finance Minister has brought down the ad valorem component from 8 per cent to 6 per cent on petrol and diesel. The peak rate of customs duty for non-agricultural products has been slashed from 12.5 per cent to 10 per cent. While cigarettes and bidis will cost more, duty on pan masala not containing tobacco has been reduced from 66 per cent to 45 per cent.

Duties on most chemicals and plastics have been reduced from 12.5 per cent to 7.5 per cent and customs duty on polyester fibers and yarn has also been reduced from 10 per cent to 7.5 per cent.

The Gem and jewellery industry gets relief with duty on cut and polished diamonds reduced from 5 per cent to 3 per cent. Dredgers have been fully exempted from import duty. Duty on drip irrigation systems, agricultural sprinklers and food processing machinery have been reduced by 2.5 per cent. Additional countervailing duty of 4 per cent has been completely lifted from crude and refined edible oils.

On the direct tax front, there is no change in the tax rate.

However, the threshold limit for income tax payers has been increased by Rs 10,000, giving every tax payer a relief of Rs 1000.

The new threshold limit for women will be Rs 1,45,000 and for senior citizens Rs 1,95,000. Companies with a taxable income of Rs one crore or less, will not have to pay surcharge on income tax.

Companies providing cross country natural gas distribution network, including gas pipeline and storage facilities will be entitled to tax concession. Mr Chidambaram said tax-free bonds will be issued through State Pooled Finance Entities to facilitate creation of urban infrastructure.

Dividend distribution tax has been hiked from 12.5 per cent to 15 per cent. Money market mutual funds and liquid mutual funds will attract 25 per cent Dividend Distribution Tax. The scope of Fringe Benefit Tax has been expanded to include employees stock option plan. Mr Chidambaram also proposed a levy of one per cent additional cess on all taxes to fund secondary and higher education and expansion of capacity by 54 per cent for reservation for socially and educationally backward classes.

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