Govt seeks additional Rs79,590 crore to meet oil, fertilizer bills

The enhanced expenditure includes additional Rs21,000 crore for compensating oil marketing companies, Rs9,000 crore for meeting the defence pension bill and Rs8,000 for fertiliser subsidies

New Delhi: The government today sought Parliament's nod for the sanction of an additional Rs79,590 crore to meet extra expenses related to oil and fertiliser subsidies during the current fiscal, over and above the funds allocated earlier, reports PTI.

This includes an additional Rs21,000 crore for compensating the oil marketing companies for under-recoveries on the sale of sensitive petroleum products, according to the third supplementary demands for grants tabled in the Lok Sabha.

In addition, Rs9,000 crore was sought for meeting the defence pension bill and Rs8,000 crore toward fertiliser subsidies.

Out of the total demand of Rs79,590 crore, the net cash outgo on meeting the extra expenses during the fiscal would be Rs68,918 crore.

The remaining amount, it added, would be met through savings in other heads of expenses and enhanced recoveries.

The outgo will not have any implications on the fiscal deficit, as the amount has been included in the revised estimates for 2010-11.

The Rs8,000 crore grant for fertilizers was sought in lieu of a Rs4,350 crore subsidy on imported decontrolled fertilisers and a Rs3,650 crore subsidy on indigenous decontrolled fertilisers.

The total grant amount sanctioned for oil marketing company in the current fiscal stands at Rs38,558 crore, including Rs14,278 crore that was allocated toward their under-recoveries in the last fiscal.

The government has also sought Rs3,187 crore for meeting the additional expenditure on recapitalisation of PSU banks and to raise its holding in certain state-run banks to 58%.

The grant also includes a Rs3,000 crore compensation to state governments for their revenue loss due to the reduction in central sales tax and Rs500 crore toward value-added tax (VAT) compensation.

Furthermore, Rs5,000 crore was sought for extending short-term loans to Food Corporation of India for procurement operations under the targeted public distribution system.

The government also sought an additional Rs3,380 crore sanction for the farmers' debt relief fund to implement debt waiver and debt relief schemes.

The government had budgeted Rs11.08 lakh crore toward various subsidies in the current fiscal, which was later revised to Rs12.16 lakh crore.


Imposition of MAT will impact SEZ projects: Sharma

Finance minister Pranab Mukherjee has proposed to levy MAT of 18.5% on the book profits of SEZ developers and units. The changes in the tax rate would be effective from April 2012

New Delhi: Expressing "surprise" at the budget proposal to impose minimum alternate tax (MAT) on special economic zone (SEZ) developers, commerce and industry minister Anand Sharma today said he has voiced his concerns to finance minister Pranab Mukherjee as the move would impact these projects, reports PTI.

Mr Mukherjee has proposed to levy MAT of 18.5% on the book profits of SEZ developers and units. The changes in the tax rate would be effective from April 2012.

Both developers, as well as units in the tax-free enclaves, were earlier exempted from MAT under Section 115 JB of the Income Tax Act.

"I have discussed this (with Mr Mukherjee) and I have written to the finance minister... It was a surprise and for the developers, surely it is a matter of concern," Mr Sharma told reporters here.

The minister was surprised because MAT was scheduled to be imposed on SEZs when the Direct Taxes Code (DTC) is rolled next year.

He, however, said that the finance minister has assured him that the benefits and concessions that were available to the developers until 2012 and units until 2014 will be there.

"Our understanding has been that we will try to align it (imposition of MAT) with the coming in of the DTC," he added.

MAT was introduced in 1987 to bring companies that paid no or very little tax, after taking advantage of the exemptions provided by the Income Tax Act, into the tax net.

The government has also proposed to impose dividend distribution tax on SEZ developers, which would come into effect from June this year.

Exports from SEZs contribute about one-third of the country's total exports. Shipments from these zones during April-December 2011, grew by 47% to Rs2,23,132 crore vis-à-vis the same period last year.

Under the SEZ Act, units get 100% tax exemption on profits earned for the first five years, while developers get exemption for ten years. Additionally, units get a 50% exemption for the next five years and another 50% exemption on re-invested profits in the following five years.

So far, 582 SEZs have been formally approved by the Board of Approval (BoA), of which 130 are in operation. SEZs have emerged as major sources for attracting investment and increasing exports in the country.

Finance minister Pranab Mukherjee in his budget has marginally raised the MAT from 18% to 18.5% on companies' book profits.


Hasan Ali likely to appear before ED on 7th March

Tax enforcement agencies are trying to locate properties of Hasan Ali Khan abroad which could be attached or auctioned to extract from him a huge tax liability to the tune of Rs40,000 crore

Mumbai: Pune-based real estate consultant and stud farm owner Hasan Ali Khan, who is alleged to have stashed away over $8 billion in Swiss banks, is likely to appear before the Enforcement Directorate (ED) on 7th March, reports PTI.

The agency recently sent a notice to Mr Khan, who is under investigation for money laundering and for allegedly transferring cash/valuable assets outside the country by unlawful means with the help of foreign nationals.

Mr Khan had appeared before Income Tax (I-T) authorities here on 18th February apparently in connection with notices issued to him on 31 December 2008, over alleged huge tax evasions following undisclosed funds in several foreign bank accounts, including $8 billion in an account in the Zurich branch of UBS. However, UBS had denied any business relationship with Mr Khan.

Tax enforcement agencies are now trying to locate properties of Mr Khan abroad which could be attached or auctioned to extract from him a huge tax liability to the tune of Rs40,000 crore.

Earlier, in January 2007, the I-T department had raided Mr Khan's residence at Koregaon Park in Pune and had seized documents that showed that he had $8.04 billion in a UBS account in Zurich.

The raid followed a revelation that Mr Khan had allegedly concealed his income and not filed income tax returns since 1999. The department had also raided his properties in Mumbai and Hyderabad.


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