Budget Highlights (2004-05)

• Two percent education cess imposed on income tax, corporation tax, excise duties, customs duties and service tax.
• Service tax rate hiked from eight percent to ten per cent, tax net to include a host of services.
• Persons with taxable income of Rs. one lakh will not have to pay income tax, tax slabs and rates unchanged for others.
• No change in interest rates on small savings including PPF, GPF and special deposit scheme.
• Sectoral cap for FDI to be raised from 49 per cent to 74 per cent in Tele-Communications; from 40 per cent to 49 per cent in Civil Aviation and from 26 per cent to 49 per cent in insurance.
• Investment ceiling for FIIs in debt funds to be raised from US $ 1 billion to US $ 1.75 billion.
• Equity oriented mutal funds will continue to be exempt from tax on dividends
• Banks with strong risk management systems to be allowed greater latitude in their exposure to capital market.
• Investment commission to be established.
• 85 items to be taken out of the reserve list for small scale sector.
• Automobile industry will be entitled to 150 per cent deduction of expenditure on in-house R&D facilities.
• Request of shipping industry for the levy of tonnage tax accepted.
• New hospitals with 100 beds or more set up in rural areas to get tax benefit.
• Long-term capital gains from securities transactions to be replaced by a tax on transactions; short term capital gains tax slashed to 10 per cent.
• Tractors, dairy machinery and hand tools such as spades to be fully exempt from excise.
• Preparation of meat, poultry and fish to attract 8 per cent excise, down from 16 per cent earlier.
• Computers to be fully exempted from excise duty; LPG gas stoves costing less than Rs. 2000 and footwear upto Rs. 250 to get excise relief.
• Task force to be appointed on reforms in the cooperative banking system.
• Rs. 2,800 crore provided for accelerated irrigation benefit programme.
• Special economic package of Rs. 3225 crore for Bihar through the Rashtriya Sam Vikas Yojana.
• North -Eastern region gets Rs. 650 crore from the central pool for specific projects and schemes.
• Jammu and Kashmir to get special assistance for a reasonable plan size, Baglihar project and to switch over to RBI ways and means advance
• Additional provision of Rs. 10,000 crore for programmes such as food for work, Sarva Shiksha Abhiyan, basic health care, drinking water etc.
• Antyodaya Anna Yojana to be extended to 2 crore families.
• Pilot scheme for distributing food stamps to be introduced.
• Defence budget hiked from Rs. 65,300 crore to Rs. 77,000 crore.
• States share of union taxes to increase by about 30 per cent, from Rs. 63,758 crore to Rs. 82,227 crore.
• States to pay 9 per cent interest on Govt. of India loans as against 10.5 per cent
• Plan expenditure hiked to Rs. 1,45,590 crore, up from Rs. 1,21,507 crore in the revised estimate for 2003-04.
• Direct taxes to yield Rs. 2000 crore more, indirect tax changes to stay revenue neutral
• Fiscal deficit pegged at 4.4 per cent, down from 4.8 per cent in 2003-04 revised estimates.
• Revenue deficit to be eliminated by 2008-09.