Eight new services under tax net at 10%

Retaining the stimulus rate of service tax at 10 per cent, the Union government on Friday sought to widen the revenue base by bringing eight new services, including brand promotion, under the net and expanded the ambit of some of the services to garner Rs. 68,000 crore during 2010-11.

In effect, it will be Rs.10,000 crore more than the Rs. 58,000 crore mopped up this fiscal, as per the revised estimates.

Explaining the rationale for the changes, Finance Minister Pranab Mukherjee said that while the service sector contributed 60 per cent of the gross domestic product (GDP), its tax to GDP ratio was only 1 per cent, so there was significant potential to augment revenue. He had two options: raising the tax rate to the pre-stimulus levy of 12 per cent or bringing all services under the net.

Balanced effort to sustain growth in budget: Chidambaram

Balanced effort to sustain growth in budget: Chidambaram

New Delhi, Feb 26: Home Minister P Chidambaram on Friday described the union budget as a ‘balanced effort’ marked by a responsible judgement of the state of the economy and of the measures required ‘to sustain high and inclusive growth’. “Finance Minister Pranab Mukherjee’s budget for 2010-11 is a very balanced effort marked by a mature assessment of the state of the economy and of the measures required to sustain high and inclusive growth,” Chidambaram said in a statement. The home minister, who held the finance portfolio till the 26/11 terror strikes in Mumbai, said the underpinning of a budget lay in its fiscal consolidation. “Assistance to states for modernisation of police force has been pegged at Rs.1,975 crore, a modest increase of Rs.130 crore over the actual expenditure that will be incurred in 2009-10. However, I am confident that, if necessary, we can find additional resources through re-appropriation or through supplementaries,” he said. In the union budget, Mukherjee said immigration services had been provided Rs.155 crore and the bulk of this provision (Rs.140 crore) would be spent on setting up Integrated Check Posts. The ambitious Crime and Criminal Tracking Network and System (CCTNS) has received a generous provision of Rs.175 crore. In his budget speech, Mukherjee said there had been a decline in violence in Jammu and Kashmir last year and the government had proposed a number of confidence building measures. “As one more such measure, government proposes to recruit about 2,000 youth as constables in five central paramilitary forces in the year 2010,” he said. “The worst may be over and the finance minister has signalled that beginning 2010-11 we will move in the direction of reducing the fiscal deficit and revenue deficit.” “While these two indicators will remain high in 2010-11 (5.5 percent and 4.0 percent respectively), I am confident that we would be able to adhere to the road map laid down by the 13th Finance Commission,” he added. (IANS)