Presenting the interim budget for the 2014-15 financial year finance minister P Chidambaram announced no changes in the direct tax rates, including personal income tax and corporate taxes even as he announced a 4-6 per cent reduction in excise rates for cars and two-wheelers.
This means that the 10-per cent surcharge on 'super-rich' having income above Rs1 crore in a year, and the up to 5-per cent surcharge on corporates imposed last year, will continue.
The finance minister, however, announced a sharp 4 percentage point reduction in excise duty rates on cars, bikes and telecom handsets - a move that will make most cars and mobiles handhelds cheaper (See: Interim budget: Cars, scooters to be cheaper as excise duty cut by 4-6 % till 30 June).
He announced tax cuts for the consumer durable industry that could make TVs and refrigerators cheaper.
Together, the indirect tax cuts would act as a stimulus to sagging manufacturing production.
While the interim budget does not provide a platform to announce new programmes and tax sops, the excise duty cuts on autos and consumer goods will surely act as an indirect sop for both the consumer and the producer.
Also, with the high fiscal deficit, the finance minister has little leeway for tinkering with the tax rates.
The economic slump has mainly been due to high prices that have hit Indian households amidst flat income growth and fewer job opportunities.
Two of India's biggest tax reform initiatives - the Direct Taxes Code (DTC) and the Goods and Services Tax (GST) - will have to wait until a new government is in place in May.
Chidambaram said the Direct Taxes Code will be put on the web site of the ministry of finance for a public discussion.
If adopted, the GST can dramatically alter tax administration by giving a one-shot solution to a welter of levies such as excise, value added tax and octroi and stitch together a common national market.