SHRI RAMA MUNI REDDY SIRIGIREDDY (CONTD.): Farmers' suicides are increasing in the country, particularly in Andhra Pradesh. Spurious seeds and failure of genetically modified seeds in the country, particularly in Andhra Pradesh. Dr. Swaminathan's Committee Report has to be implemented in its letter and spirit.

More than 40 farmers' associations have demanded for integrating all agriculture-related departments and separate Budget for agriculture also. (Time-bell)

Poultry industry is also on a bumpy run. The recent Bird Flu flattened this sector. It is understood that MNCs are making this sector, through indirect ways, to dance according to their tunes. So, I request the Finance Minister to pay a little more attention on this sector also.

Inclusion of 'education' in the Concurrent List in 1976 was a step in the right direction. The Union Government has to play its role in making the people of this country literate. Knowledge-based employment has to be provided. Education has to be given a fillip. For this, allocations are not according to the expectations. There are so many schools in India where you have no classrooms, leave alone teacher. SSA is the largest literacy programme in the world. It should be given more and more funds and more and more penetration.

Mid-Day Meal Scheme, Sir, is a very important scheme. It should be implemented by allocating more and more money in all the villages and provide more nutritious food. More emphasis should be given on girl education.

Proper health facilities are not provided to all. One of the main drawbacks is clean drinking water. Many water-borne diseases are spread due to this. In spite of having so many programmes and plans, we are not able to give clean drinking water to people. Doctors should be given a compulsory stint in the rural areas after their internship. Otherwise, don't award them degree and don't allow them to pursue PG. AIDS has to be controlled. Chicken Guenya has appeared in Andhra Pradesh after 40 years. We have to take measures to prevent such diseases. We should reduce mortality and morbidity rate. More and more ASHA, Associated Social Health Activists, have to become functional to make 'Health for All' dream a reality.

Sir, please include Andhra Pradesh also in National Rural Health Mission. NDA has developed a very good infrastructure. North-South-East-West Corridor is running at snail's pace. Same is the case with the Golden Quadrilateral project. Now, the pace has come down. What has happened to Sagarmala Project? We have to make plans anticipating the requirements of the next 20-30 years. Private participation should also be encouraged.

There is a lot of labour unrest in the country. People are sucking the blood of poor labourers in the unorganised sector. So, reforms have to be brought about in labour laws to suit our labour. More attention should be paid to beedi workers.

Textile weavers have to be protected. There is no marked improvement in their lives even after removing the quota. Special attention has to be paid on the handloom weavers. They are committing suicides. It is more so in Andhra Pradesh, Karnataka, Maharashtra, etc. They should be taught the marketing strategies. Training has to be provided to them. More emphasis should also be paid on rural artisans. (Time-bell)

Finally, Sir, the National Rural Employment Guarantee Programme started only in 200 districts.

MR. DEPUTY CHAIRMAN: You can hand over your papers to the Minister or you can place it on the Table of the House.

SHRI RAMA MUNI REDDY SIRIGIREDDY: Sir, I have just a few lines. It should be increased to more districts. The PMGSY also is not progressing well. Very little has been done in Andhra Pradesh. Now, this has taken under Bharat Nirman. The Minister should allocate more funds for this. The quality of houses under IAY should be improved. Government is giving Rs.25,000 per unit. It is less. It has to be increased to Rs.50,000. Thank you, Sir. (Ends)

ֵָ߮ ִ (֬ Ϥ): ֳ֯ן , 2006-07 ׻֋ ֮ և , ֓ ׻֋ ׾֢ ׾֬ ֵ ֵ ׾֢ ׾֬ ֻ ִ ׻֋ ӡ ֮ ӿ֮ ß־ פ ֵ ׬׮ִֵ, ֮ ׬׮ִֵ, ߴ ׬׮ִֵ, ߴ ׸ ׬׮ִֵ, ׬׮ִֵ ָߵ Ù ׬׮ִֵ, ָ ֮ ӿ׬֟ , ֮֮ߵ ׾֢ ӡ ׾֢ ׾֬ ָ ֓ ן

, ׾֢ ׾֬ ָ כӛ , ֵ֮ , ו֮ ָ ֮ ֟ 3B/MCM ָ ֿ:


ֵָ߮ ִ (֟) : ֵԾָ ֮ ӡֵֻ ׻֋ 2006 2.76 ֵ , 2.40 , ֮ ӯ ׾ֳ ׻֋......(־֮֬)

ֳ֯ן : ֵ, כӛ ևԅ և ײֻ ֮֯ פօ

ֵָ߮ ִ : פ, ֮֟ -߮ ־ ָ

ֳ֯ן : ֯ ײֻ ָ ׻֋

ֵָ߮ ִ : , ײֻ ָ ֮

ꌿ֮ ߿֮ ָ ׮־ ꌿ֮ ߿֮ ָ ־ã ֳ ׾֮֬ ֳ ־ - , ־ ֣ , ו ֓ ֓ ֛ ָָ , ϵ

׸ָ ׮ֵ֮ ָ ׾ָ֓ ׮־ֵ ׸ָ ׮ֵ֮ ׮֟ӟ ־ֿ ֳ ׮׿֟ ָ ֮֋ , ꅠ ָ ָ ֻ օ ָ ד֟ ן ֮֕ן ׌ֵ ֮ ֵ֟ , ִ ׮־ ד֟ ן ֮֕ן ֵ , ָ ׯ֔ , ׿ ֵ֤ ׮׿֟ ָ ׾ָ֓ , ֱ և000, և000 ד֟ ן ֮֕ן , ו֮ ־ֿ ֤ ֵ֤ ָ߲ ד֟ ָ ֵ֟ ֋ ׮׿֟ ֳ օ ֲ ֣ ֮ ֟ ִ֯ ֮֯ ִֵ פ, ֯ - ֮־֤ (ִ֯)

ֵ ֿ Ͼֻ (™ߵ ֮֕֬ , פ) : ֳ֯ן , ֯ ֮־֤ ֮֯ ִֵ פօ և ײֻ , ִ - -߮ ־ ֿ ׾֢ ӡ ֺ ֮

ָ ֮֯ פ , ִֵ ֮֯ ֵ֤ ֯ , ֻ ֮ ו ִ , ꅠ ָ ֯ , ָ ֕߾ Ӭ և , ֻ ׻֋ פ ֵ օ ֕ ָ ֻ ֮ , ָ ֵ֮ ֻ ֟ ߙ ֻ ֯ , ִ ֓ , ִ پ ֛ ֛ ֿ ֜־ ׻֋, ֤ ׻֋ ֯ ֵ֤ ꅠ ׻֋ پ ֟ ִ ָ ֣ ߕ ָ, ָ ꅠ ָ, ֻ ֮ ֯ ֟ , , ֯כָ ֲ ָ כ ָ ֯כָ ֮ ֮ ߅ ֮֮ , ־ , ֕ ָ֯ , ָ ֻ ָ ֛ , ָ , پ , ִ ׸߱ ֯ ?

ָ, ә ָ ֮֯ ָ ָ 8000 ә ָ ֟ ֵ֤ ָ֟ , ֜ 1100 ә ֻ ֵ ׾֢ ӡ ֮֮ ֲ 8000 ә ֮ ָ ֵ֤ ָ֟ ֜ , ָ ֕ ֯ ? ֕ ֋ , ו֮ פ ӓ ؛ , ָ ׻֙ ָ ֮ ֈә , ֯ Ù ֈә , ֛ , ֲ ָ ֻ֮և , ִ ֵ֤ Ù ־ ׻֙ ֯ ִ ֋ ֤

(3C ָ ֿ:)


ֵ ֿ Ͼֻ (֟) : ָ, ևә ֻ ָ ָ ֯ ֲָ , և ֮ ֟ , ו ֻ ָ ָևִ ִ Ù ׸ ִ ֮ ֮ߕ ? ֮ ו֋ - ֮ ֟ , ִ ָ Ù ֵ ֟ ֮֮ ָָ ? ֯ ָ וÙ֮ ֻߙ ֤ , ָ ֵօ ָ - ָ֯י ֟ , ֣ ָ ֵ ևԾ , ֮ߕ ֻ ֮ , ֮֮ ָ ֮ ׻֋ ?

ָ, Ù ևә כ-ֻև֮ Ù , 29 ß , ו , ׻֋ ִ ֵ֮ ֵ ָ, ֯ ֮֟ 23 21 Ù ֓ ֮ ֻ פ Ù ֓ ӡ ֮֮ ֯ ִ ֤ ? ׻֋ ִ ֵ֮ ? ֕ ִ Ù , ؛ , ִ ֮ ֮֮ ֯ ׻֋ ֮ ֵ֮ ֵָ , Ù ? ֵ֤ ״ֻ ֮ ֮ ֵ֕ ֵ֤ ֵ ֿ ֯ ֺ ֮ ֮־֤ (ִ֯)

ֳ֯ן : ֕߾ ㌻ ֯ ִ ָ ֵ , ָ ִֵ ֯

SHRI RAJEEV SHUKLA (UTTAR PRADESH): Sir, I was not here at that point of time, but I will be very brief in making my observations. I will be making only three or four suggestions.

At the outset, I would like to congratulate the Finance Minister for giving us a growth-oriented Budget which has brought happiness all over the country. The Sensex has reached the 11000-mark, and I have also come to know that it is likely to touch the 16000-mark in the days to come. So, this is what the stock market news is. I am happy that there will be happiness all over. Sir, there is one industry about which I want to make a request to the hon. Finance Minister. Nothing has been done for the entertainment industry. This is one industry which is growing by leaps and bounds.

SHRI V. NARAYANASAMY: What about cricket?

SHRI RAJEEV SHUKLA: Cricket, I will come to it later.

Sir, by 2010, it is going to be Rs.82,000 crores. This is a PriceWaterhouseCoopers' Report. The latest study has shown that the Bollywood and the television industry, put together, is going to be Rs.82,000 crores; from the television industry alone, it is going to be Rs.42,000 crores. There is a massive scope for foreign exchange earnings also. You can fetch lots of foreign exchange through the Bollywood industry, through the Indian TV programmes. But no incentive has been given to this industry! In fact, this industry is reeling under a heavy tax burden; 47 per cent tax is being paid by this industry, 35 per cent corporate tax plus 12 per cent service tax. Nothing has been done about this industry. No incentive has been given, no fillip has been given and no boost has been given to this entertainment industry. This industry is still considered as a natch-gana industry. Instead, it should be part of the knowledge industry. Lots of incentives are being given to the knowledge economy. The IT sector is booming because of the Government support, because of the Government incentive and because of the Government encouragement, but nothing is being done for the entertainment industry. He must consider giving some relief to the entertainment industry.

Secondly, Sir, I want to know why Mr. Jethmalani should not pay service tax, why Mr. Arun Jaitley should not pay service tax, why Mr. Chidambaram should not pay service tax. There are Supreme Court lawyers earning......(Interruptions)... And Mr. Ravi Shankar Prasad also. Crores and crores of rupees they are earning. ...(Interruptions)... Mr. R.K. Anand also. But they are not paying service tax. I, as a small writer of TV serials, as a small poet and as a small journalist, am paying it. Lawyers and doctors who are earning more than a lakh of rupees or more than five lakhs of rupees should also pay service tax. Why are they not paying service tax? ...(Interruptions)...

SHRI B.S. GNANADESIKAN: Sir, even chartered accountants are paying.

MR. DEPUTY CHAIRMAN: Shuklaji, chartered accountants are also paying.

SHRI RAJEEV SHUKLA: The District Court lawyers should not pay, the High Court lawyers should not pay, but the Supreme Court lawyers should pay. So, service tax should be imposed on these prominent lawyers at least. (Contd. by 3D)


SHRI RAJEEV SHUKLA (CONTD.): Thirdly, I think, some injustice has been meted out to the old people, as far as the interest rate on their deposits is concerned. Something should be done in that regard. Thank you. (Ends)

SHRI R. SHUNMUGASUNDARAM (TAMIL NADU): Sir, I want to seek only two clarifications regarding clauses 33 and 35 of the Bill. By clause 33, the Minister proposes to insert new section 139B. He is going to bring another specific category of people called Tax Return Preparers. I don't know what it is. This is a new category of people. We already have the auditors; we already have the tax practitioners. When we go to file our tax returns, when we go to settle our accounts, we really become nervous. That is the only time in my life I become nervous. When I go to settle my accounts and file my tax return I become nervous. Now, we are creating a new category. The auditors and the tax practitioners really play on our nerves. Now, we are bringing in another category of people. Is it necessary at all? What is the criterion? The Government says that it is going to issue a notification and, through the notification, it will give out the qualifications and the requirements for such practitioners.

The second clarification which I would like to seek is regarding clause 35. It relates to amendment to section 142 of the Act. By clause 35 they want to add a new sentence to section 142(1)(i). It says, "for the words, brackets and figures "within the time allowed under sub-section (1) of section 139", the words, brackets and figures "within the time allowed under sub-section (1) of section 139 or--this is the new sentence which is being added--"before the end of the relevant assessment year". I don't know what it means. This is a provision which attracts prosecution. As far as I understand, prosecution under section 276CC is attracted, if return is not filed within the specified time. Normally, the notice period is 30 days. Even after 30 days, if the tax return is not filed, prosecution is launched. I know about the cases in Tamil Nadu where senior politicians are involved in cases of non-filing of returns. I personally want them to be disqualified and debarred from contesting elections. But this should not be misinterpreted. It would give scope for misinterpretation by lawyers and others. The period for filing the returns is extended by this provision. I would like to seek these two clarifications.

Sir, I congratulate the Finance Minister for giving a real thrust to education. In his Budget Speech also he has announced grants to three major universities and IITs, and many other things. He is also continuing the two per cent education cess in the Finance Bill. I really congratulate him. But what I request the hon. Finance Minister, through you, Sir, is to consider, apart from building classrooms in Government schools, which alone is not sufficient, appointment of teachers also. There are no teachers in the Government schools. In urban schools teachers are available in plenty. But there are no teachers in village schools. It should be taken care of. The SSA Scheme should be extended and more funds should be allotted to the SSA for appointing teachers in large numbers. With these words, I welcome the Finance Bill. Thank you. (Followed by 3E/VK)


THE MINISTER OF FINANCE (SHRI P. CHIDAMBARAM): Mr. Deputy Chairman, Sir, I am grateful to the hon. Members for this brief but illuminated discussion on the Finance Bill. I am sorry, there is constraint of time. But I shall try to be as responsive as possible even while I race through the points one by one. Sir, I am very fortunate to have Shri Yashwant Sinha as one of my predecessors and the leading Member of the Opposition. I have presented three Budgets so far. I was rather nervous when I presented the first Budget of the UPA Government because I expected that I would be judged by what I do; the Government would be judged by what it does. Mr. Sinha, speaking for the Opposition, launched a scathing attack on that Budget. I still recall some of the words that he used. He was scathing not only inside the House, he was scathing outside the House, on the Television, in articles, especially, written by him in the media. But I was very happy that at the end of the year, notwithstanding the scathing criticism that he mounted, India recorded a 7.5 per cent growth. Last year also, he was quite scathing in an article. But for some reason, he did not take the floor; he yielded in favour of Shri Arun Shourie. Naturally, when you write, you can be more incisive and more precise than when you speak. Therefore, as against the spoken words which I assumed would have been scathing, written words were even more scathing. Thanks to his scathing attack, in the second year also India's economy grew; it is expected to grow by 8.1 per cent. Let me thank him warmly for his scathing criticism today because I expect that after this India's economy will grow even more.

It ill befits a former Finance Minister, whose record I will read today, to condemn some exercises that we have undertaken in order to put India in the growth story. I believe that my learned friend was Finance Minister between 1998-99 and 2002-03. Although, the NDA Government had one more year to run, but for some reason which I do not know, he was alleviated to the position of External Affairs Minister. In the first year of his tenure, India's GDP was 6.5 per cent. Then in the following four years, it went to 6.1 per cent, 4.4 percent, 5.8 per cent and 3.8 per cent. The fiscal deficit, which was 4.1 per cent in 1996-97, thanks to the ASEAN crisis, went up to 4.8 per cent. I conceded it. In his first year, he showed a fiscal deficit of 5.1 per cent and in the four years thereafter, it was 5.3 per cent, 5.6 per cent, 6.2 per cent and barely managed to reduce it to 5.9 per cent. He inherited 4.8 per cent and left at 5.9 per cent. Revenue deficit was 3.1 per cent when he inherited it, then it became 3.8 per cent 3.5 per cent, 4 per cent, 4.5 per cent and 4.4 per cent. He inherited 3.8 per cent and left it at 4.4 per cent. During the five years, the average of the GDP growth was 5.3 per cent. In the first year of this Government, it was 7.5 per cent and in the second year it is expected to be 8.1 per cent. I will be happy with any growth rate between 7.5 per cent and 8.1 per cent. Therefore, while I expect criticism, I also expect a certain degree of generosity. The Government must be doing something right. It cannot be that every page of the Budget Speech was wrong, where every tax proposal is wrong, every idea is flop, every departure is mistaken, every refusal to follow the NDA practice is misguided. We must be doing something right and even if I do not do something right and unwittingly, I do something wrong, surely, the Prime Minister is not going to let me do something wrong. (Contd. by 3F)


SHRI P. CHIDAMBARAM (contd.): Among the four Finance Ministers who occupied this Office since 1991, we all acknowledge that the Prime Minister of the day is the most competent and the most learned Finance Minister. Whatever I have done, let me say, Sir, I have done with the full support, full understanding and full concurrence of the Prime Minister. Therefore, let us look at the merits of what we have done rather than try to score political points. If I were to score political points, I don't have to say anything except to read these figures. Sir, he said that I have made a massive effort to increase the tax burden on people. I have not. The Additional Resource Mobilisation, what we call, the ARM, is estimated at Rs.6,000 crores. What was his record? What was NDA's record? According to the Budget speeches, in 1998-99, the ARM was Rs.8,313 crores; in 1999-2000, it was Rs.9,424 crores; in 2000-01, mercifully, it was only Rs.5,080 crores; and in 2001-02, mercifully, it was only Rs.2,549 crores, plus the direct taxes to be made up by buoyancy. It was a parting gift in 2002-03; Mr. Yashwant Sinha claimed to have an ARM of Rs.10,500 crores! And, my ARM of Rs.6,000 crores pales into insignificance. The point is, we have removed some exemptions. As a result of that, I expect to mobilise an additional resource of Rs.6,000 crores. But my learned friend legitimately points out that we should do more. You say that I should not even do this. The point is, we have to strike a balance. I think both of them have a point. We cannot burden the people with too many taxes, nor can we afford not to tax people who ought to bear the burden of taxes. I think the record of the UPA Government is quite exemplary. As I said in paragraph 118, in 2004-05, the gross tax revenues increased by 19.9 per cent; that is, nearly 20 per cent, and in 2005-06, according to the Revised Estimates, they are expected to increase by 21.4 per cent. So, on an average, we are increasing by 20 per cent a year. The bulk of this is coming from better tax administration. A substantial part is coming from tax buoyancy. Only a small part is coming from additional resource mobilisation. In answer to Mr. Yechury, much of his criticism is met by the fact that I am getting more revenue from better administering the current taxes, and that is another way of saying that I am taxing people who are escaping the tax net. It is also another way of saying that I am reaching to more people who ought to pay taxes, but who are not paying taxes. I hope to be able to keep the same momentum this year, and we increase the gross tax revenues by 20 per cent. I hope I can come back next year and report to the House that I have achieved the gross tax revenue growth rate of 20 per cent.

Sir, Shri Yashwant Sinha said, referring to paragraph 165, that my reasons for removing the exemption under Section 10 (23 G) are specious. In fact, I began the paragraph 165 by saying the very reason for it. He said that I did not say the reason.

(MR. CHAIRMAN in the Chair.)

But I have said it; I began the paragraph 165 by saying that I have revisited the exemptions in the Income-Tax Act. Paragraphs 165, 166 and 167 deal with three exemptions which I am removing; it falls under a pattern. The main reason that I give for these three paragraphs is that I am revisiting the exemptions. Section 10 (23 G) is an exemption that I am revisiting, and I am supported by the Kelkar Committee which went a step further and said that Sections 80 (i) (a) and 80 (i) (b) should be removed. (Continued by 3G)


SHRI P. CHIDAMBARAM (CONTD.): I have not gone that far because it will hurt our infrastructure. I have not gone to the extent of removing 80-IA and 80-IB. I have limited myself to removing an exemption contained in section 10(23G) which, I believe, is no longer relevant because interest rates are moderate.

As regards the next paragraph, section 80-P, the Kelkar Committee has dealt with it in its report and I have, therefore, dealt with it in paragraph 166 and I say that cooperative banks, like any other bank, if they make a profit, must pay tax, because they are like any other bank today. The principle of mutuality does not really apply to cooperative banks because they are now taking money from non-members and they are also lending money to non-bankers; they are becoming virtually like any other bank. Unfortunately, their regulation is inadequate. There is dual regulation. The State regulators, I am sorry to say, have failed to do their duty. That is why the entire cooperative credit structure is in shambles. We have had to put together a package of Rs.14,500 crores to restore life to the cooperative credit structure and that is a huge burden which the Central Government is going to carry in the next financial year and the years thereafter. But that is a dire necessity. In the meanwhile, we have looked at the cooperative banking sector and, after exempting all the PACs and all the primary agricultural long-term credit institutions which numbered a lakh and eight thousand, we are saying 2,288 cooperative banks, if they make a profit, should pay income-tax. Now, I have not said this in this paragraph, but I have explained it outside and I stand by that explanation. Once they are required to file a properly audited income and expenditure statement and a properly audited balance-sheet for income-tax purposes, I think you will find that their internal management gets better, their internal governance structures get better, because they now know that they cannot get away with financial irregularities. Bank after bank has closed down in Gujarat and Maharashtra because of malfeasance, misfeasance and cheating. Therefore, we think that cooperative banks, if they make a profit, should pay income-tax. If they are not making a profit, they do not pay income-tax. But we have exempted 1,08,000 primary societies.

Sir, the next point he made was about section 43. He is absolutely right. Section 43-B is a later-day introduction. It is not there in the original Income-tax Act. It was done at a time when, perhaps, the CDR mechanism, or, its use was invented to help people restructure. But what was happening? People were not paying interest, claiming that unpaid interest as an income-tax deduction and taking the interest back as a fresh loan. All that we have said is, if the interest is paid, you can take it as an income-tax deduction; if the interest is not paid, you roll it over as a new loan; you will claim it as a deduction in the year in which you repay the new loan. So, there is no additional liability in what we have done to section 43-B.

Let me come to MAT. MAT, again, was an introduction in 1996-97. It was tweaked here, tweaked there, but matters remained. I think there is a great deal of equity in MAT. Something like 30-40 per cent of India's companies do not pay any corporate tax at the rate at which they should pay corporate tax. They pay MAT. Why? They pay MAT because they enjoy the whole lot of exemptions. They make book profits, but they don't pay tax. Sir, by definition, a MAT company is a profit-making company. There is a popular misconception that a MAT company is a loss-making company. That is not so. By definition, a MAT company is a profit-making company. But, after it strikes the profit, because of the various exemptions, it ends up as a non-tax-paying company. All that we are doing is, in section 150-JB there are certain additions to be made, there are certain deductions to be made.

(Contd. by 3h/tdb)


SHRI P. CHIDAMBARAM (CONTD.): Now, long-term capital gains was not a deduction until 2004; a point which, I am afraid, Mr. Sinha missed. During your entire tenure, it was not a deduction. In 2004, when long-term capital gains was abolished for securities sold on the stock exchange, we put it in section 10(38). We could have equally put it in section 47. By putting that in section 10, sub-section 38, unwittingly, it got the benefit of section 115J(B). Last year, we did not notice it because we were not revisiting the MAT section. This year, when we revisited the MAT section, we found that unwittingly we had given a benefit which they did not enjoy up to 2004. Therefore, we have brought it back and said, if you have a long-term capital gains that will be added back to the book profit. In any event, we have given them a seven years' time to set off. MAT is not an additional tax liability. MAT is only a deferred tax. MAT is only an advanced payment of a tax liability to be incurred later. Most corporates have understood it. I have addressed the FICCI; I have addressed the CII. This is no longer an issue. The MAT rate today is 1/3rd of the normal rate. Both companies are profit-making companies. Profit-making company 'A' pays 30 per cent plus 10 per cent surcharge. Profit-making company 'B', because it is a MAT company, which ought to pay 30 per cent plus three per cent, now pays ten per cent plus one per cent, i.e. eleven per cent. I think there is still a huge advantage in being a MAT company. Slowly, over a period of time, we must remove these exemptions. All profit-making companies to pay tax. But, as it is, I think the MAT rate, which is 1/3rd of the normal corporate tax rate is justified on the principle of equity.

Sir, 1/6; yes, it no longer serves a useful purpose. There used to be several lakhs of returns in the initial years. Now, of course, the base is widened. It is diminishing return. In 2004-05, there were only 70,000 returns under 1/6. Therefore, we thought it has served its purpose. I am not saying it did not serve its purpose. It started with 2/4, which I introduced in 1996-97. It became 1/6. It had served its purpose. Having served its purpose, we are getting rid of the 1/6 scheme.

Sir, about the CVD, again, my learned friend makes a mistake. The CVD is not like Customs Duty. The CVD is VATable. The CVD has been imposed in order to protect domestic manufacturers against imports. This Budget, in more than one place, signals a bias in favour of the domestic manufacturers. I want India's domestic manufactures to grow. If umbrellas are being made in India, I would rather have umbrellas made in India rather than umbrellas imported from somewhere. All that we have said is, if you are importing the good, you pay a CVD of four per cent because there is a VAT of either four per cent or 12.5 per cent. It partially compensates for the VAT liability on the domestic manufacturer. But, it is not an additional burden on the domestic manufacturer because this four per cent is VATable against the Excise Duty payable. It is not an additional burden. It is an additional burden on the importer. On the importer of the finished good, it is an additional burden. But, that is the right thing to do because it is a bias in favour of the domestic manufacturer.

Sir, my learned friend went through a whole series of Excise Duty exemptions, and criticised some; reluctantly, praised some. But, the point is, there can be no uniform philosophy about the Excise Duties. And I don't have to follow the NDA philosophy either. Nor does he have to follow my philosophy. The point is, we agree on one thing -- that Excise Duties were converged on a rate, and I conceded to him in the last Budget that the 16 per cent rate appears to be the current consensus on the CENVAT rate. All duties must, therefore, converge at 16 per cent. I concede that point -- though 24 per cent duties have been brought to 16 per cent. Steel, for example. For no reason at all when Mr. Jaswant Singh on the eve of the election reduced the Excise Duty on steel to eight per cent, I did not hear Mr. Yashwant Sinha's voice raised against that. Why was it reduced to eight per cent on the eve of the elections? I don't know. I am asking. You should know better. ...(Interruptions)...

SHRI YASHWANT SINHA: Why did you not raise your voice?

SHRI P. CHIDAMBARAM: No, we raised it back to 12 per cent, and raised it back to 16 per cent. Steel is a primary commodity in India. If steel doesn't set an example of paying the CENVAT rate, which commodity should suffer a 16 per cent rate? (Contd. by 3j)


SHRI P. CHIDAMBARAM (contd.): The point is, at given point of time -- I will give you the reason why he may have reduced it. Steel was going through a slump; he may have reduced it to 8 per cent in order to revive the steel industry. Therefore, excise duties are tweaked from time to time in order to give a boost to certain industries or in order to give relief to some industries. For every excise duty change I had given a reason either in the Budget Speech or I have given reasons in some other document. I will tell you why. Automobile, have I not given a reason? I have given a reason. It may be a right reason, it may be a wrong reason. You may agree with my reason or you may not agree with my reason. I have given a reason is a plausible reason; it seems to be a good reason to me. I want to encourage small car manufacturers in this country, I want to make India a manufacturing hub for small cars and take it from me, five years from today, India will become the world's largest manufacturer of small cars. Let us wait and see whether my assessment is right or wrong.

Two years ago, I gave excise duty relief to the cotton textile industry. The results are there. There is a boom in the cotton textile industry today. Cotton textile machinery manufacturers have an order booked running to 36 months! Just ring up LMW and ask them. He will not take orders today. He has got an advance payment requirements and has an order delivery time of 24 months! Today, we are giving similar relief to the manmade textile industry. The manmade textile industry is crying for a relief. They came out with advertisements before the Budget, they came out with advertisements after the Budget thanking the Government and the Prime Minister. We have given relief. We believe that with this relief to the manmade textile industry will have another major boom.

I have given relief to paper. Why? Capacity addition in paper has slowed down. I have looked at the statistics. Paper is consumed widely. Therefore, in order to give a boost to the paper industry, we have reduced it from 16 to 12 per cent.

My learned friend asked me, where did you get this 12 per cent? I did not get it. Computers are at 12 per cent. Matches are at 12 per cent. And paper is also at 12 per cent. I am not saying this will remain at 12 per cent for all times to come. When a GST is introduced in 2010, all these rates will converge. But, in the meanwhile, if I want the paper industry to expand, if I want more paper capacity to be added in this country, why should you not give it an excise relief? Giving excise relief, allowing capacity to be built, allowing demand to be stimulated, allowing the growth of the industry, is a well-tried and well-tested principle of taxation. But I do not apologise for giving relief on excise items; we have given relief on some excise items and we have justified it.

We have given a large relief to the food processing industry. Why? We want the food processing industry to take off. There is a Vision 2015 document published by this Government, we want massive investment in the food processing industry. And, therefore, we have given relief to a large number of packaged food products.

Sir, regarding Chartered Accountants, the point is their exemption is taken away. This provision is introduced in 1998. It is not a provision which is introduced now. But while bringing Chartered Accountants under the service tax net, I think, some day or the other, lawyers will have to be brought under the service tax net, I think, doctors also will have to be brought under the service tax net.

On a day that I am absent in this House, I would urge this House to pass a resolution to bring all lawyers under the service tax net, and even doctors be brought under the service tax net. And I hope, Mr. Ram Jethmalani would move the resolution and I hope Mr. Ravi Shankar Prasad will second the resolution. No problem with that.

SHRI RAM JETHMALANI: We want to be brought under the service tax net. But we will not be taxed so long as he is the Finance Minister. He himself is a Supreme Court lawyer.

SHRI P. CHIDAMBARAM: Sir, the senior lawyers threaten me all the time. Sir, Chartered Accountants were brought in 1`998. But simultaneously, we published a notification dated 16th October, 1998 by the Finance Ministry presided over by Shri Yashwant Sinha, not me, which said, "Hereby exempts the taxable services provided by a practising Chartered Accountant other than the taxable services relating to:"

After bringing Chartered Accountants you limited the scope by listing a certain number of activities. Accounting and auditing, cost accounting, secretarial auditing, etc. I have no quarrel with this. But Chartered Accountants being as ingenious as lawyers said, "Legal services are not listed here, every time I appear, or every time I give an opinion, I am citing some provision of the Income-Tax Act, what I am providing is really legal services and, therefore, I am out of the net."

(Contd. by kls/3k)


SHRI P. CHIDAMBARAM (CONTD): Now, I salute the ingenuity. But the point is having got the Chartered Accountants, having given this Notification, in order to get over an interpretation of the ingenuity, we have now said, we are withdrawing this and all the Chartered Accountants are brought. But I agree lawyers have to be brought under the Service Tax net, doctors have to be brought under the Service Tax net; ultimately, all services must be brought under the Service Tax net barring a negative list of very essential services.

Sir, I think, I have done most the points. There were some questions about computers. Well, I did not make the Customs Duty on computers zero. This is an international agreement called ITA and under the ITA Agreement computers have to come at zero. There is an Excise Duty and there is a CVD, there is a level playing field. Computers are at zero because the world has agreed that all IT items have to be imported at zero....(Interruptions)... But I cannot help that. We are a signatory to an international agreement. All computers have to be imported at zero. CST and VAT, I agree that there has to be a phase out of CST. The State Finance Ministers Empowered Committee is meeting me, I believe, day after tomorrow. We are making progress just as we made progress on VAT. I am confident; State Finance Ministers, I have found them extremely objective, extremely cooperative, extremely progressive, and I am absolutely confident, Sir, that we will reach an agreement with the State Finance Ministers on how to phase out CST. ...((Interruptions)...

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SHRI P. CHIDAMBARAM: We will try. Now, Section 139 (b) is a new scheme that we are preparing for unemployed graduates. We think a large number of small taxpayers do not need to go to expensive Chartered Accountants and Auditors because for them we have got software today, we have got simplified tax form, SARAL which introduced by their Government, and it is undergoing further simplification, we think a well-trained unemployed graduate can prepare this tax return. So, we are devising a scheme, we are going to train them, we are going to give them a stipend, we are going to call them Income-tax Return Preparers. Therefore, we are going to train people so that these young men and women can get some income by being Income-tax Return Preparers. I think, the House should welcome this effort to give some kind of income to unemployed young men and women who are there in our country.

Sir, there were questions about why did I replace expression 'commercial concern' by the expression 'person'. Well, the simple answer is, commercial concern is not defined, and, therefore, it led to litigation. Virtually, every Act in this country, Mr. Jethmalani will bear me out, uses the word 'person' and 'person' is defined in the General Clauses Act. There is a Rs.4 lakh threshold. So, an individual who provides service up to Rs.4 lakh is not covered. So, instead of having this term of art 'commercial concern' and not defining it, I am not able to define it, we simply substituted it by the word 'person' and, I think, this is simplification rather than any attempt to complicate it.

Sir, I did not attempt to say that refractories were part of inversion. In fact, I do not know where he got the word 'inversion'. You read the Budget Speech, nowhere does any previous paragraph talk about inversion. In refractories and materials used for refractories, we have brought it down from 10 per cent to 7.5 per cent because in metals we have brought it down to 7.5 per cent. If I had not brought it down to 7.5 per cent, there would have been an inversion because non-ferrous metals and metals have been brought to 7.5 per cent, refractories, materials used in manufacture of refractories would have also been brought down to 7.5 per cent. Sir, I am sure, I may have missed one or two small points, but, Sir, in view of the paucity of time, you will kindly bear with me that I have answered the major points. This Finance Bill is a balanced Bill, it takes care of gross tax revenues, it gives relief to industries, which we have identified as deserving of relief, it is intended to give a bias to the manufacturing sector. We have also given a thrust to many sectors which would require some help in order to stimulate domestic demand and to expand capacity, I think, we have adhered to the fundamental principles of taxation, moderate, stable and in order to incentivise sectors which require to be incentivised, I humbly and respectfully request the House to return the Bill. Thank you.


MR. CHAIRMAN: Thank you, Mr. Finance Minister. (Followed by 3L)




That the Bill to give effect to the financial proposals of the Central Government for the financial year 2006-2007, as passed by Lok Sabha, be taken into consideration.


The question was put and the motion was adopted.


MR. CHAIRMAN: Now, we shall now take up Clause-by-Clause consideration of the Bill.

Clauses 2 to 76 were added to the Bill.


The First Schedule, the Second Schedule, the Third Schedule, the Fourth Schedule, the Fifth Schedule, the Sixth Schedule, the Seventh Schedule, the Eighth Schedule, the Ninth Schedule and the Tenth Schedule were added to the Bill.


Clause 1, the Enacting Formula and the Title were added to the Bill.


That the Bill be returned.

The question was put and the motion was adopted. (Ends)






THE MINISTER OF STATE IN THE MINISTRY OF HOME AFFAIRS (SHRI SHRIPRAKASH JAISWAL): Sir, I beg to move for leave to introduce a Bill further to amend the Code of Criminal Procedure (Amendment) Act, 2005.

The question was put and the motion was adopted.

SHRI SHRIPRAKASH JAISWAL: Sir, I introduce the Bill.



THE MINISTER OF STATE IN THE HOME AFFAIRS (SHRI SHRIPRAKASH JAISWAL): Sir, I beg to move for leave to introduce a Bill to consolidate and amend the law relating to the governance of the Assam Rifles, an Armed Force of the Union for ensuring the security of the borders of India, to carry out Counter Insurgency Operations in the specified areas and to act in aid of civil authorities for the maintenance of the law and order and for matters connected therewith.

The question was put and the motion was adopted.

SHRI SHRIPRAKASH JAISWAL: Sir, I introduce the Bill.






DR. KARAN SINGH (NCT OF DELHI): Sir, I beg to move:

"That the Sixth Report of the Committee on Ethics presented to the Rajya Sabha on the 15th December, 2005, be taken into consideration."

I also move:

"That this House agrees with the recommendations contained in the Sixth Report of the Committee on Ethics presented to the Rajya Sabha on the 15the December, 2005."


The questions were proposed.




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MR. CHAIRMAN: The question is,

"That the Sixth Report of the Committee on Ethics presented to the Rajya Sabha on the 15th December, 2005, be taken into consideration."

and the question is,

"That this House agrees with the recommendations contained in the Sixth Report of the Committee on Ethics presented to the Rajya Sabha on the 15the December, 2005."


The questions were put and the motions were adopted. (ENDS)






"That the Eighth Report of the Committee on

Ethics presented to the Rajya Sabha on the 24th February, 2006, be taken into consideration."

I also move:

"That this House agrees with the recommenda-

tions contained in the Eighth Report of the Committee on Ethics presented to the Rajya Sabha on the 24th February, 2006."

The questions were put and the motions were adopted. (Ends)



"That the Bill further to amend the Companies

Act, 1956, be taken into consideration."


The motion was adopted.

MR. CHAIRMAN: We shall, now, take up Clause-by-Clause consideration of the Bill.

Clauses 2 to 4 were added to the Bill.

Clause 1, the Enacting Formula and the Title were added to the Bill.


SHRI PREM CHAND GUPTA: Sir, I beg to move:

That the Bill be passed.

The question was put and the motion was adopted. (Ends)