Highlights of Union Budget 2007- 08

A. Main Highlights

1. Budget focused on Agriculture, infrastructure and social sector.
2. Plan allocation increased by 18% - However, Capital expenditure increase only 9% against Revenue expenditure increase of 20%.
3. Focus on Roads including NHDP allocation which is 7.2%; PPP model to be encouraged further.
4. Increased outlay on JNURM from Rs 4595 cr to Rs 4987 cr.
5. Use of Foreign Exchange reserve for infrastructure finance.
6. Emphasis on developing skilled and trained manpower; Increased funds and Interest free loan for upgradation of ITIs.
7. Setting up of Green House Gas Emission Committee.

B. Excise Duty Structure (in %)

1. Bio-Diesel is exempted from excise duty.

C. Customs Duty Structure

1. Peak Rate of Customs Duty reduced to 10% from 12.5%.
2. Customs Duty on various Components & Raw Materials reduced.

D. Central Sales Tax

1. CST reduced to 3% from 4%.
2. GST to be introduced with effect from April 1, 2010.

E. Education Cess

1. Additional Cess of 1% on all taxes for secondary and higher education.
2. 2% Education Cess continued on Income Tax, Corporate Tax, Customs Duty, Excise Duty & Service Tax.

F. Direct Taxes

1. Weighted deduction for R&D U/s 35(2AB) of Income Tax Act extended for a period of five years.
2. No change in rate of Income Tax on individuals or firms.
3. Personal Income Tax exemption raised by Rs 10,000.
4. Increase in Dividend Distribution Tax from 12.5% to 15%.
5. Bringing of ESOPs under FBT.

G. Service Tax

1. No change in the Service Tax rate.
2. Service tax net widened; Service tax imposed on design services.