Ruling out the implementation of value-added tax from June 1, Finance Minister Jaswant Singh on Wednesday announced several excise duty concessions on edible oil and textiles.

Winding up discussion on the Finance bill in the Lok Sabha, Singh allayed apprehensions of members saying there was no proposal to bring in Agriculture Income tax in the country.

Singh said VAT cannot be implemented "without full preparation being made by states as he was not in favour of any patchwork or partial implementation."

He made it clear that reduction in central sales tax from the present 4 per cent to 2 per cent is contingent upon implementation of VAT.

Singh, who was repeatedly interrupted by Bharatiya Janata Party members, did not relent on the demand of increasing the excise exemption limit on small powerlooms to Rs 50 lakh (Rs 5 million) from the Rs 25 lakh (Rs 2.5 million) he announced.

On agriculture income tax, Singh said: "There is no propose to levy any such income tax on agriculture. It is totally baseless and nobody should have any apprehension on this account."

Bowing to the demand of the Industry, Singh replaced the eight per cent ad valorem duty of excise on branded edible oils and vanaspati in sealed containers to one per cent per kg duty on edible oils and Rs 1.25 per kg on vanaspati.

He also reduced customs duty on refined palm oil by 15 per cent to 70 per cent.

Elaborating on the concessions to the textile sector, Singh said the powerlooms whose declared value of stocks do not exceed Rs 10,000 per loom will be exempt from scrutiny for tax purposes.

This will not have retrospective application or consequences, he said.

He said small powerlooms operating with eight to ten looms will be fully exempt from excise duty with the choice of registering or opting out of CENVAT.

Excise exemption for unbranded, woven and knitted readymade garments has been given with prescribed ceiling for clearance of Rs 25 lakh and an annual turnover of Rs 30 lakh (Rs 3 million).

Import duty on rags has been reduced from 25 per cent to five per cent and on hand processed fabrics, excise duty has been reduced from 10 per cent to 5 per cent.

Concessional customs duty of 5 per cent has been expanded to cover 117 more categories of textiles machinery and their parts besides extending customs duty of 10 per cent to all twisters and rewinding machines.

On direct taxes, Singh announced 100 per cent tax exemptions to offshore banking units being set up in special economic zones for three years besides 50 per cent exemption for the subsequent two years.

He also exempted from income tax capital gains accruing to political parties.

The minister limited the exemption on long-term capital gains on equity shares to only those appearing in the list of BSE 500 as on March one, 2003 and where transactions were on a recognised stock exchange.

Exemptions were also extended to equity shares allotted through public issue on or after March 1 this year and listed in recognised stock exchanges before March 1, 2004.

Income earned on Insurance policies taken before April 1, 2003, would continue to enjoy tax exemptions.

In the face of demand to exempt sportspersons up to the age of 30 from paying income tax, Singh announced deduction of up to Rs 75,000 from the income received as professional fees to all sportsmen participating in games and sporting events.

Listing out indirect tax concessions, Singh announced that hand pumps would be fully exempt from excise duty.

Metcoke used in iron and steel industry would be exempted from special additional duty. So also, nickel oxide sinter and unwrought nickel used in steel making.

He also fully exempted from excise duty nictonine ploacrilex gum and reduced excise duty from 16 to 8 per cent on tiles made by units not using electricity or petroleum fuel for firing the kilns but used firewood or other agro-waste.

He reduced customs duty on specified capital equipment for IT industry from 15 per cent to 10 per cent.

Customs duty on decorative transparent films and dyestuffs used in the manufacturing of writing instruments have been reduced from 25 per cent to 15 per cent.

On VAT, the minister said there would be no departure from the agreed list of commodities that were to be subject to 12.5 per cent rate of VAT and all state legislations must conform with the model VAT legislation circulated to them earlier.

LS passes Finance Bill

The Lok Sabha on Wednesday passed the Finance Bill, 2003 containing direct and indirect tax proposals with a number of official amendments.

The House also negatived all opposition amendments.

Highlights

Following are the highlights of Finance Minister Jaswant Singh's reply to the debate on the Finance Bill 2003:

• Service Tax: Service tax to be extended to certain new services.
• Interaction with concerned sectors before new service tax levies are given effect to.
• Whatever service tax is rendered in Jammu and Kashmir or is exported abroad will be outside the scope of the proposed service tax.
• Textiles: In powerloom sector wherever the value of stocks declared does not exceed Rs 10,000 per powerloom, such declaration will not be subject to any scrutiny for tax purposes. This will not have any retrospective application or consequences.
• Small powerloom sectors or owners of traditional looms operating up to 8 to 10 looms will be fully exempt from duty.
• Choice of registering or opting out of CENVAT will be theirs.
• Excise exemptions for unbranded, women and knitted readymade garments given with prescribed ceiling for first clearance and annual turnover.