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Union Budget 2004-2005

UNION BUDGET 2004-2005
Salient features

(Suggestion accepted as indicated in para 3 under custom duty and para 2 under central excise.)

Indirect Taxes:

Custom Duty

An Education Cess @ 2% on the aggregate of duties of customs except safeguard duty u/s BB and BC, countervailing duty u/s 9 and anti dumping duty u/s 9A of the Custom Tariff Act has been evied on the items imported into India. Items attracting custom duty at bound rate under international commitments have been exempted from this cess.

Custom duty has been reduced from 20% to 15% on metals such as Zinc and Titanium.
Concessional rate of custom duty of 5% presently available to specified items (Capital Goods) for use in leather industry has also been extended to such items designed for use in non-leather footwear industry. These items would be subject to CVD.

Custom duty on imports of non-edible grade vegetable oils used for manufacture of industrial fatty acids and fatty alcohol has been reduced to 20% on actual user basis

Central Excise

An education cess @ 2% on aggregate duties of excise is being levied on excisable goods manufactured in India. The credit of cess paid on imputs and capital goods shall be available as credit for payment of cess on final products as per the provisions of Cenvat Credit Rules, 2002.

The Retail Selling price limit for excise duty exemption on footwear has been raised from Rs. 125 to Rs. 250 per pair. The exemption will now be available only if RSP is indelibly marked or embossed on the footwear itself.

Service Tax

An Education cess @ 2% is being levied of the Service tax. The cess paid on inputs services shall be available as credit for payment of cess on output services.

The rate of Service Tax is being raised from 8% to 10%.
The present rate of interest of 15% p.a. on delayed payment of service tax is being replaced by a range, from 10% to 36% p.a. The Central Government will have power to notify the rate of interest on delayed payment of service tax within this range.

Direct Taxes:

Income Tax

No tad payable by resident individuals having income of Rs. One lakh or less. No relief if income of resident individual exceeds Rs. 1,00,000/-. No relief to HUF and others. No changes in income tax slabs and rates.

Gift from unrelated person above Rs. 25000/- on or after 1.09.2004 will be taxed as income
Cess of 2% to be levied on Income Tax, Corporation Tax.

Central Sales Tax

Units situated in Special Economic Zones (SEZs) have been exempted from payment of CST for setting up, operation and maintenance of such units.

Indian Stamp Act

Provision have been made to raise the threshold level above which stamp duty in the form revenue stamps is charged on receipts from the current level of Rs. 500 to Rs. 5000/-.

Small Scale Industry

Capital Subsidy Scheme has been reviewed by the finance minister and proposed that the ceiling for loans under the scheme be raised from Rs.40 lakh to 1 crore. The rate of subsidy will also be raised from 12% to 15%.

There is no change in the custom and central excise duties on the products related to rubber industries classified under chapter 40 and 39.

Suggestions as made by All India Rubber Industries Association for Indian Rubber Industry but not considered by the Government as yet.

Indirect Taxes: Import Duties

i) Bring down the import duty on raw materials like synthetic rubber, steel cords etc. not indigenously produced from peak rate of 25% to 10% advalorem.

ii) Keep custom duty difference of 20% between raw material & finished products.

iii) Give subsidy to Indian Exporters of rubber goods manufacturers and not to the exporters of natural rubber.

iv) Withdraw the unjustified anti-dumping duties.

v) Duty on Natural Rubber and Natural Rubber Latex be reduced from 25% to 5% and 70% to 5% respectively.

vi) Nominal duty of 10% be levied on imports of testing equipment to strengthen R&D efforts of the Indian industries, particularly the SSI.

vii) SAD: Atleast exempt such raw materials, which are not produced indigenously like the speciality rubbers like butyl, polychloroprene, hypalon, viton, epichlorohydrin & polyacrylic, polyester high tenacity yarn / cord, steel cord etc. which are used by the rubber industry and have to be imported.

Excise Duty

i) Latex Foam and other cellular rubber products (40.08/40.16) be exempted. He offtake of Natural Rubber will boost domestic rubber growers and discourage import of hazardous polyurethane thus saving foreign exchange.

ii) Fix minimum exemption limit and allow Modvat benefit on service tax to manufacturers.

iii) Exemption of SSI should be raised to 500 lakhs and also value of exempted goods should be excluded from the turnover.

Direct Taxes
Income Tax

i) Basic exemption for individual be increased to Rs. 1 lakh p.a. This is only partly accepted as no tax payable upto Rs. 1 lakh.

ii) Standard Deduction be raised to Rs. 50,000/- p.a.

iii) Reasonable concessions in the rates of income tax to tiny and SSI sector - atleast 10% be given.

iv) Higher rate of depreciation be introduced to SSI sector.

v) Revised limit for compulsory audit for business under section 44AB from Rs. 40 Lakhs to Rs. 1 crore and for professionals from Rs. 10 lakhs to Rs. 25 lakhs.

vi) Minimum exemption limit for TDS be raised to Rs. 60,000/-

vii) Provision for refund excess income tax deducted at source and deposited with the Government on account of dividend, payments to contractors/subcontractors, job works and advertisements etc.


i) The out-dated labour laws be suitably modified to meet the challenges by tiny, small scale and medium scale units, under the changing industrial scenario.

ii) Contract labour be permitted.
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