Business and first class air-travel will get dearer by 10.3%, which will have a huge impact as the fares in these classes are upward of Rs 1 lakh. Tickets for business and first class will thus become costlier by at least Rs 10,000.
A senior travel agent said this would hurt Indian carriers as passengers would rather fly economy to some nearby place like the Gulf and then take a business or first class seat to Europe and US. ‘‘To circumvent the tax, such passengers may get their overseas offices or relatives abroad to buy their tickets for premium classes,’’ he said.
The government has provided tax relief to house buyers by increasing the abatement on the value of house property from 67% to 75% to levy service tax. That means, the service tax at the rate of 10.3% will now be levied on 25% of the value of the house instead of 33% as was proposed in the Budget. This will reduce the service tax component by 0.83 percentage points from 3.4% to 2.57%. That means, in a house worth Rs 50 lakh, the service tax component will come down by Rs 41,500 and on a house of Rs 1 crore, the benefit will be of Rs 83,000. Mukherjee also exempted low cost housing for the urban poor under the JNNURM and under Rajiv Awas Yojna from service tax.
At the same time, to augment supply of steel in the growing economy, the government announced cut in customs duty on stainless steel scrap from 5% to 2.5% and increase in export duty on iron ore lumps to 15% from 10%. With a view to giving an impetus to the health sector, construction of hospitals with at least 100 beds anywhere in the country would qualify for tax concessions based on their investments, he said.
Explaining the reasons for his inability to concede the opposition’s demand to roll back the price hike of petroleum and fertilizer, Mukherjee said he couldn’t afford taking additional burden by rolling back excise and customs duties on fuels. ‘‘Any additional burden at this juncture could indulge in financial profligacy that I cannot afford to do.” he said. The government was forced to raise the fuel prices as the oil marketing companies faced an under recovery of Rs 85,000 crore in 2010-11.
The government has also decided to approve a fresh Coffee Debt Relief Package, specifically for the small growers. As per this, for pre-2002 loans, 50% of the total liability shall be waived subject to a maximum benefit of Rs5 lakh per farmer to be borne by government.
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