This Budget saw Finance Minister, Pranab Mukherjee adding many services under the services tax net in order to rake in revenue that would help reduce India's enormously large fiscal deficit. However, Mukherjee now seems to be on a withdrawal mode close to elections.
Giving into pressure from the health care sector Pranab Mukherjee has agreed to roll back the 5% service tax that he had proposed to levy on health and diagnostic services. Taxes on centrally air conditioned hospitals with more than 25 beds, however, will continue to be levied.
The government also said that it was considering providing Cenvat credit to hospitals. This move would scale back revenues that could be brought in as taxes paid by suppliers, hospital and insurance companies.
Pranab Mukherjee also announced that he would be looking into demands from the auto sector. The industry has been pressuring the government to review its decision to impose additional duty on import of completely knocked down automobile kits.
Meanwhile, West Bengal Chief Minister Buddhadeb Bhattacharjee too has been urging the finance minister to review the Budget proposal of a mandatory levy on ready-made garments and a reduction in the basic customs duty on raw silk. In fact, the readymade garments and hosiery industry is all set to go on a two-day strike from tomorrow in protest against the FM's proposals.
Even the commercial and cooperative banks are threatening to go on strike during the next Parliament session to protest against the special sops offered to private-sector banks.
In his bid to present a populist Budget, Mukherjee eased income tax slabs and provided sops for senior citizens. This will prove to be a major setback in terms of government revenue. And now that the Finance Minister has already given into pressure from the health care sector, will he also meet the demands of other sectors amidst outcries for service tax rollbacks to win his party some votes?
All of this makes you wonder if the Finance Minister will be able to meet his fiscal target.
Will India's economic growth take a backseat to elections once again?
No comments:
Post a Comment