New Delhi: Finance Minister Pranab Mukherjee on Thursday announced changes in tax proposals that will benefit coffee growers, new hospitals and construction sector while making it clear that service tax on domestic travellers would be Rs 100 per domestic journey and a maximum of Rs 500 for international travel.
Mukherjee announced these concessions that would cost the exchequer Rs 300-400 crore a year but did not touch the demand for rolling back the hike in petroleum and fertiliser prices on which the entire opposition walked out before Lok Sabha passed the Finance Bill, 2010.
Explaining the reasons for his inability to concede the Opposition's demand, he said the financial position was such that oil marketing companies faced an under recovery of Rs 85,000 crore this year apart from heavy outgo on account of subsidies, interest and other payments.
On account of the new coffee-debt relief package, the outgo from Government kitty will be Rs 241.33 crore, but benefit to farmers will be worth Rs 362.82 crore.
Replying to the debate on the Finance Bill that was passed by voice vote with official amendments, Mukherjee said with a view to giving an impetus to the health sector, construction of hospitals with at least 100 beds anywhere in the country would qualify for tax concessions based on their investment.
The Government has also provided tax relief to the construction sector by levying the newly imposed service tax only on 25 per cent of the total value of the property, including land, compared to 33 per cent proposed in the Budget.
Mukherjee also exempted from service tax low cost housing for the urban poor under the Jawahar Lal Nehru National Urban Renewal Mission (JNNURM) and under Rajiv Awas Yojna.
To augment supply of steel in the growing economy, the Government announced cut in customs duty on stainless steel scrap from five per cent to 2.5 per cent and increase in export duty on iron ore lumps to 15 per cent from 10 per cent.
Referring to the imposition of service tax on domestic and international air passengers, he said he has received a number of representations expressing concerns that this levy would affect the aviation sector and make air travel prohibitive.
"I would like to clarify that it would not be so. The effective rates of levy, when they come into effect, would be a maximum of Rs 100 per travel for domestic journey in any class and a maximum of Rs 500 per travel for international journey for economy class.
"Further domestic travel to and from the North Eastern sector would be exempt even from this moderate tax," he said.
With the passage of the Bill, the three-stage budgetary process has been completed in the Lok Sabha. The Bill will go to Rajya Sabha for being returned.