The modified proposals, relating to excise duties, have been estimated to result in a revenue loss of Rs 192 crore in a year, while on the customs side the sacrifice per year has been estimated at Rs 71 crore. The Finance Bill was later approved by Lok Sabha by a voice vote. As far as direct taxes were concerned, Sinha modified the proposals with regard to infrastructure capital funds, restored the exemptions for persons belonging to "not ordinarily resident" category and on interest paid on external commercial borrowings, and diluted the norms for mandatory use of permanent account number (PAN).

In case of indirect taxes, Sinha withdrew the excise duty that was proposed to be imposed on sweetmeats and namkeens. He also restored the excise duty exemption on branded ghee, skimmed milk powder,butter and cheese. Branded spices too have been freed from levy of excise duty.

The finance minister, while replying to various points raised during the debate, said that he would set up a committee to examine the issue of business reorganisation in its entirety and the recommendations of the committee would be examined before the next budget.

As far as the proposal of mandatory use of PAN was concerned, the minister said that agriculturists and foreign tourists would be exempt from these provisions. For those not having PAN or a GIR number, the minister said, "I propose to provide that such persons can file a declaration and also proof of identity, if the transactions are made in cash." Also, the limit for transactions in shares has been increased from Rs 50,000 to Rs 10 lakh.

The minister also modified proposals relating to infrastructure capital funds. He said that the income of such funds, including capital gains, would continue to be exempt if the investee company was wholly dedicated toinfrastructure. The exemption would also be applicable in respect of secondary market transactions. There would be no restriction on lending institutions and the provision for a three-year lock-in period for venture capital funds would be removed. The minister also proposed to include infrastructure projects as eligible business for the purpose of exemption.

On the other side, the finance minister withdrew the proposal to tax the value of gifts as the income of the recipient. As a consequent, he clarified, all the gifts made on or after October 1, 1998 would be free from any tax.

Among other things, the finance minister also dropped the proposal to calculate capital gains tax on the basis of circle rates of stamp duty and extended the tax holiday benefit to trunk and EDI services. Referring to the Kar Vivad Samadhan Scheme, the minister said that "lack of clarity in regard to waiver of interest and penalty to settlement of tax arrears under the indirect tax enactments is being taken care by rewording therelevant clauses of the Finance Bill."

Sinha restored the excise exemption for coir mattress and writing ink. Spectacle lenses shall be exempt from excise duty as before. However, frames costing more than Rs 500 will attract a duty of 8 per cent.

The finance minister reduced excise duty on medical furniture from 13 per cent to 8 per cent. With regard to tea, he said, packages up to 100 gm would enjoy exemption, while packages ranging from 100 gm to 20 kg would attract an excise duty of 8 per cent.

As for the proposal to tax marble slabs and tiles, he said that the duty at the rate of Rs 40 per sq meter would be confined to slabs and tiles of value above Rs 400 per sq meter.

Sinha raised the duty exemption for shoddy fabrics and shoddy blankets from Rs 100 to Rs 150 per sq meter. He said that fabrics produced in a 100 per cent EOU from indigenous raw materials and sold for domestic consumption would shall henceforth be charged excise duty at the normal excise rate and not at the rate related to customsduty on imported fabrics. He also reduced the rate of compounded levy for embroidered fabrics from Rs 60 to Rs 45 per meter length of machine per shift. On the customs side too, he reduced the duty on carpet grade wool, flax fibre and nylon tyre yarn by 5 per cent ad valorem.

As a singular exception, he said the general restriction of 5 per cent in the availability of Modvat credit, as proposed in the budget, would not apply to POY used as input for making textured yarn and to removal of yarn and fabrics from one factory to another by multi-locational composite mills.

The finance minister withdrew excise duty on specified tyres for animal-drawn vehicles and, in a bid to encourage use of prefabricated buildings, exempted such buildings and their parts from the levy of excise. The minister also reduced the rate of excise duty applicable on fireworks from 18 per cent to 13 per cent.

Referring to the service tax, Sinha proposed to withdraw the service tax on tour operators, which yielded revenue of about Rs20 crore in a year for the current and next fiscal. The minister also restored the exemption from basic customs duty on glazed newsprint and exempted four specified drugs for AIDS treatment from customs duty. The duty on aluminum scrap was reduced to 10 per cent, carbon black feed stock and methanol by 5 per cent ad valorem and exempted waste paper - imported by actual users - from the special duty of customs.

With regard to 32 per cent customs duty on kerosene imported for parallel marketing, the minister said that duty would not be collected on the quantity of kerosene actually consumed as feedstock for extraction of N-paraffin which was used for making LAB. Also, no duty would be collected payable if the kerosene was sold to public sector company for PDS.

Sinha's Operation Rollback