Indian industry welcomes tax breaks

Singh offered tax breaks for investors

Indian industry has welcomed new tax breaks announced by the finance minister, saying they should boost personal saving and the economy.

Indian Finance Minister Jaswant Singh on Wednesday made tax concessions to offset a tough annual budget by his predecessor Yashwant Sinha.

Singh took over as finance minister last month

"Singh's tax breaks are aimed at boosting savings among the middle income class of salaried people, a demand which industry has been talking [about] for quite some time now," said K.C. Ravi, director of economic affairs at the Confederation of Indian Industry (CII).

"Although the freebies offered by Singh are worth only 10.0bn rupees (£131.6m), it would help create a buoyant environment that can have a multiplier effect on revenue generation," Mr Ravi said.

Mr Singh, who took office last month, also promised to simplify the taxation laws.

The CII is the country's leading industrial lobby group.

Tax measures

Measures announced by Mr Singh included removing a limit of 200,000 rupees on a central bank investment scheme which offers investors tax-free interest income.

He also removed taxes on dividend income from shares, increased the minimum income threshold for some taxes and offered new tax benefits for small investors who put money in government-run savings schemes.

But he forecast the economy would grow at 5.5% in the financial year ending March 2003, below the central bank's forecast of 6-6.5%.

The Bombay Stock Exchange closed down 0.4% at 2,975.8 points, a nine-month closing low after initially rising 1%.