Untitled Document

IF you look at the second Union Budget of the 15 th Lok Sabha in an unbiased manner, there is no doubt on the unanimity that the Hon.ble Union Finance Minister has tried to address the multiple objectives confronting the nation viz. inclusive growth, fiscal consolidation, sustain the economic resilience, reducing inflationary impact in a balancing and best possible manner. As rightly pointed out repeatedly in his budget speech, the Annual Budget is not a mere statement of account but vision of economy. If you look at the Budget, it encompasses all the elements required for the robust all inclusive growth and reiterates the commitments and concerns contained in the manifesto. Massive plan allocation is made on flag scheme programmes intended for the benefit of the aam aadmi like MGNREGS, rural infrastructure programmes under Bharat Nirman, Backward Region Grand Fund, drought mitigation Fund for Bundelkhand region, social sector, etc. Rs.4500 crores allocated to the Ministry of Social Justice and Empowerment for the next fiscal is a record increase of 80 percent over last year.

2. There is absolutely no necessity to make any hue and cry on the nominal hike of Rs.1/- per litre made in the duty structure of Motor Spirit (petrol) and HSD (diesel) and restoration of basic customs duty. This decision is a conscious one made as a measure to contain the fiscal deficit in the back drop of the prevailing global petroleum prices which are much lower now. During the 13 th Lok Sabha, the country had witnessed rise in the price of petroleum products on 12 occasions, which will probably be an all time record. Those who are agitating under the pretext that the rise will escalate inflation and price rise are wistfully ignoring the fact that the service tax exemption at present available to transport of fruits, vegetables, eggs or milk by road by a goods transport agency has been extended to include food grains and pulses. However, due to the arithmetic equation in the Lok Sabha between the ruling combine and the opposition, the politics will have a last laugh over prudent economics and thus compel the ruling UPA combine to roll back the price of at least diesel.

3. The thrust given to agriculture sector by way of four-pronged strategy covering (a) agricultural production, (b) reduction in wastage of produce, (c) credit support to farmers and (d) thrust to the food processing sector is laudable and underlines the unblemished resolve of the UPA dispensation to promote all inclusive growth and focused attention on rural development and food security. The genuine concerns made by the eminent agriculture scientist and one of the architects of India's green revolution, Mr.M S Swaminathan and many others including Netizens on the food crisis due the continuous neglect of agriculture sector over a period of time had an instinctive impact in the Budget 2010 ( Budget suggestions dated February 12, 2010 by Shri. O Chamukuttan Master (Retd. Teacher is one such article )). So far, the agriculture sector has been provided with debt relief, fertilizer subsidy, Maximum Support Price to the food grains which were precisely intended for the benefit the rich farmers. The road map for agricultural renaissance now provided by the Union Government in an unambiguous terms by massive plan allocation need to be executed by the State Governments in a time bound and transparent manner to achieve the desired result. The NGOs, RTI activists, whistle bowlers have to play a pro active role on a continuous basis, as mammoth allocation of public fund is involved in the social, rural infrastructure and agriculture projects. The package unleashed in the Union Budget 2010 for the agriculture sector, clean energy fund, water harvesting can be rightly termed as a long over due stimulus package for agriculture, rural growth and Environment protection. It is only a beginning and much more need to be done. The proposed green revolution to be unleashed in the Eastern corridor with the active involvement of Gram Sabhas and the farming families in Bihar, Chattisgarh, Jharkhand Eastern UP, West Bengal and Orissa, which are, by and large, neglected areas where the populace also is both socially and economically backward, proposal to organize 60,000 ‘pulses and oil seed villages' in rain-fed areas and provide an integrated intervention for water harvesting, watershed management and soil health to enhance the productivity of the dry land farming areas as part of Rashtriya Krishi Yojana, steps for sustained conservation in farming through concurrent attention to soil health, water conservation and preservation of biodiversity as part of climate resilient agriculture initiative, steps for reduction of significant wastages in storage as well as in the operations of the existing food supply chains in the country in order to bring down the considerable difference between the farm gate prices, wholesale prices and retail prices, proposed revamping of PDS system, improving availability of credit to farmers and extension of debt waiver and debt relief scheme for farmers upto June 2010 are sufficiently enough to prove that the Government is equally concerned on the plight of agriculture sector and the farming community.

4. On the indirect tax front, the increase in the standard rate of excise duty from 8% to 10% was on the expected line. But it is noticed that a few commodities were left untouched, which may lead to inverted impact leading to accumulation of input credit. Aligning the date of filing of quarterly return to SSI units with the date for non-SSI units was long over due which has now been carried out As a sequel to the pre-budget changes made in Rule 8 and 12 of the Central Excise Rules, 2002 with regard to electronic payment of duty and electronic filing of return, introduction of invoice wise debt for large industries and major service providers and allowing the SME both in manufacturing and service sector to continue with the monthly debit was expected. However, the Budget has provided relief to SME in the form of quarterly debit of duty instead of monthly payment. This will lead to a situation wherein allowing the buyers from these SME to take credit even before the duty has been paid to the exchequer. In order to check mate the misuse of Cenvat, and growing tendencies of raising bogus invoice for taking fake credit at the cost of exchequer, what is required is online issue of invoice and access through ACES for large manufacturers and major service providers and to continue the SME to raise invoice manually or through other accounting software. With the ACES in place, online scrutiny of invoice can be very well explored to bring more transparency and accountability.

5. The customs duty exemption for project imports for cold storage, cold room, mechanized handling systems & pallet racking systems in mandis or warehouses will immensely help the Government in fulfilling the dream mission of agricultural renaissance.

6. On Service Tax side, removal of unnecessary doubts created among the builders on their liability for service tax under the Service Head – Construction Services, irrespective of the various types of agreement followed in the realty sector by inserting an Explanation that unless the entire payment for the property is paid by the prospective buyer or on his behalf after the completion of construction (including its certification by the local authorities), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly.

7. Also, the restriction in exemption from service tax on ‘Commercial Training or Coaching Service' to only vocational training courses in the designated trades notified under the Apprentices Act, 1961 and amendments in the definition of the ‘Renting of immovable property Service' so as to provide explicitly that the activity of ‘renting' itself is a taxable service with retrospective effect from 1.6.2007 and removal of condition prescribed i.e. ‘such service is provided from India and used outside India' in the Export of Services Rules, 2005 are a few notable changes which would immensely help both the officers at the field level as well as the service providers and avoid litigation .

8. The proposed amendment in Section 2 (15) of Income Tax Act that “the advancement of any other object of general public utility” shall continue to be a “charitable purpose” if the total receipts from any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business do not exceed Rs.10 lakhs in the previous year will have a wider ramification from the service tax point of view.