New Delhi : The Lok Sabha Thursday passed the Finance Bill for the current fiscal (2007-08) after Finance Minister P. Chidambaram’s reply to the debate on the union budget during which he brought some amendments in the tax proposals but said exemptions would be phased out eventually.
Chidambaram also said that proposed recast of tax brackets may be linked to inflation and sought to increase the tax-to-gross domestic product ratio to 11.8 percent for the current fiscal, from 11.5 percent in the previous year.
The Finance Bill, passed by a voice vote, seeks to give legal effect to the tax proposals contained in the national budget, which was introduced by the finance minister Feb 28.
Among the amendments, Chidambaram said an ad valorem duty of 12 percent will be imposed on cement sold above Rs.190 per bag even as he expressed disappointment that manufacturers had not taken his advice of reducing prices seriously. He said the reduction of excise on cement from specific duty of Rs.900 per tonne would result in savings of Rs.7 per 50-kilogram bag.
He, however, rejected the demand of the Left parties to hike securities transaction tax rate, but said the double-taxation avoidance treaty with Mauritius would be revised with mutual consent. He also retained the service tax on rented realty.
The finance minister said he was conceding to some demands of industry to reduce customs duty on refrigerated trucks even as he scrapped the tariff on cut and polished diamonds.
Members of the main opposition, the Bharatiya Janata Party (BJP), however walked out minutes before Speaker Somnath Chatterjee took up the voting on the bill, saying some of their pro-poor amendments were ignored.
The Rajya Sabha, the upper house of parliament, is expected to pass the bill Saturday, ending the process of giving legislative sanction to the budget.
The date for passage of the bill was advanced to enable the finance minister to attend the annual meetings of the World Bank and the International Monetary Fund (IFC) in Washington, for which he leaves May 6 and returns May 11.
During the debate, Chidambaram also assured the house that all effort was being made by the government and the Reserve Bank of India (RBI) to bring down prices and rein in inflationary expectations.
He said five reasons were responsible for the price rise including high economic growth, supply-demand mismatch in commodities such as sugar, wheat and pulses, hikes in support prices for rice and expansion of money supply.