Air travel is to become costlier with Finance Minister Pranab Mukherjee increasing service tax on air travel in the federal budget for 2011-12 Monday.
Mukherjee said service tax levy would go up by Rs.50 on domestic travel while it would be increased by Rs.250 on international travel in economy class.
In July last year, the ministry had put a cap on service tax in case of domestic flights at 10 percent of the gross (total) value of the ticket, or Rs.100 per travel, whichever is less, and 10 percent of the gross value of the ticket, or Rs.500 on international travel by economy class.
Mukherjee said incomes below 180,000 rupees won’t be taxed from the next financial year, increasing the threshold from 160,000 rupees. He also announced a 1 percent interest-rate subsidy for housing loans of up to 1.5 million rupees.
The finance ministry estimates that India produces about 10 percent less electricity than it needs, and roads, which handle 65 percent of the nation’s cargo, are plagued by single lanes and irregular surfaces, boosting the cost of goods and services.
To ease infrastructure bottlenecks and reduce inflationary pressures, India plans to spend 23 percent more on roads, ports and power and increase the limit for foreign institutional investment in infrastructure bonds to $25 billion from $5 billion, Mukherjee said.
India will also allow companies to issue tax-free bonds worth 300 billion rupees to finance infrastructure projects, the minister said.
Food Storage
The country will build capacity to store 4 million metric tons of food grain by March 31, 2012, Mukherjee said, to help boost farm supplies and drive down food prices. The minister said he has directed commercial banks to step up loans to farmers by 27 percent to 4.75 trillion rupees.
Singapore plans to spend S$6.6 billion ($5.2 billion) on benefits including tax cuts and rebates, the government said on Feb. 18. In Hong Kong, relief measures announced this month to help residents cope with inflation included an electricity subsidy and a waiver of property rates.
Mukherjee has room to maneuver in next year’s budget because less bonds are due for repayment and the government in May earned 677.2 billion rupees from the sale of third- generation phone licenses to companies including Vodafone Group Plc, more than the budgeted 350 billion rupees.
The government needs to repay 741.3 billion rupees in the coming fiscal year, compared with 1.12 trillion rupees in the 12 months through March, according to the finance ministry.
Asset Sales
India aims to raise 400 billion rupees from the sale of stakes in state-run companies, Mukherjee said. Proposed sales of stakes in Indian Oil Corp., the country’s biggest refiner, and Steel Authority of India Ltd., its second-largest producer of the alloy, may help raise about 104 billion rupees next fiscal year, according to data compiled by Bloomberg.
Tax revenue is also getting a fillip as economic growth accelerates. Gross collections may rise 25 percent to 9.32 trillion rupees in the financial year starting April 1, Mukherjee estimated.
India will maintain the excise tax rate at 10 percent, refraining from raising the levy to the 12 percent level that existed before the global financial crisis to help boost investment, the minister said.
He said the government plans to increase the service tax on air travel and will extend the levy to include new businesses such as air-conditioned hospitals.
India’s $1.3 trillion economy may expand by as much as 9.25 percent in the next financial year, the fastest pace since 2008, the annual Economic Survey prepared by advisers to Mukherjee said on Feb. 25.
Mukherjee said service tax levy would go up by Rs.50 on domestic travel while it would be increased by Rs.250 on international travel in economy class.
In July last year, the ministry had put a cap on service tax in case of domestic flights at 10 percent of the gross (total) value of the ticket, or Rs.100 per travel, whichever is less, and 10 percent of the gross value of the ticket, or Rs.500 on international travel by economy class.
Mukherjee said incomes below 180,000 rupees won’t be taxed from the next financial year, increasing the threshold from 160,000 rupees. He also announced a 1 percent interest-rate subsidy for housing loans of up to 1.5 million rupees.
The finance ministry estimates that India produces about 10 percent less electricity than it needs, and roads, which handle 65 percent of the nation’s cargo, are plagued by single lanes and irregular surfaces, boosting the cost of goods and services.
To ease infrastructure bottlenecks and reduce inflationary pressures, India plans to spend 23 percent more on roads, ports and power and increase the limit for foreign institutional investment in infrastructure bonds to $25 billion from $5 billion, Mukherjee said.
India will also allow companies to issue tax-free bonds worth 300 billion rupees to finance infrastructure projects, the minister said.
Food Storage
The country will build capacity to store 4 million metric tons of food grain by March 31, 2012, Mukherjee said, to help boost farm supplies and drive down food prices. The minister said he has directed commercial banks to step up loans to farmers by 27 percent to 4.75 trillion rupees.
Singapore plans to spend S$6.6 billion ($5.2 billion) on benefits including tax cuts and rebates, the government said on Feb. 18. In Hong Kong, relief measures announced this month to help residents cope with inflation included an electricity subsidy and a waiver of property rates.
Mukherjee has room to maneuver in next year’s budget because less bonds are due for repayment and the government in May earned 677.2 billion rupees from the sale of third- generation phone licenses to companies including Vodafone Group Plc, more than the budgeted 350 billion rupees.
The government needs to repay 741.3 billion rupees in the coming fiscal year, compared with 1.12 trillion rupees in the 12 months through March, according to the finance ministry.
Asset Sales
India aims to raise 400 billion rupees from the sale of stakes in state-run companies, Mukherjee said. Proposed sales of stakes in Indian Oil Corp., the country’s biggest refiner, and Steel Authority of India Ltd., its second-largest producer of the alloy, may help raise about 104 billion rupees next fiscal year, according to data compiled by Bloomberg.
Tax revenue is also getting a fillip as economic growth accelerates. Gross collections may rise 25 percent to 9.32 trillion rupees in the financial year starting April 1, Mukherjee estimated.
India will maintain the excise tax rate at 10 percent, refraining from raising the levy to the 12 percent level that existed before the global financial crisis to help boost investment, the minister said.
He said the government plans to increase the service tax on air travel and will extend the levy to include new businesses such as air-conditioned hospitals.
India’s $1.3 trillion economy may expand by as much as 9.25 percent in the next financial year, the fastest pace since 2008, the annual Economic Survey prepared by advisers to Mukherjee said on Feb. 25.
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