97. Other measures of tax relief proposed by me include -

1. Allowing a special deduction of Rs.15,000 to the patient or guardian of a patient of protracted diseases like cancer or AIDS involving considerable expenditure on treatment.
2. Exempting under section 10(24) of the Income Tax Act the income of an Association of Registered Trade Unions.
3. Extending 100 per cent deduction under section 80G of the Income Tax Act to -
   • Donations made to Illness Assistance Funds established by the Central government and the State governments to meet the medical expenses of the poorest of the poor;
   • Donations made to State and National Councils of Blood Transfusion recently set up by the Ministry of Health and Family Welfare; and
   • Donations made to the three funds established by the armed forces of the country. These are the Army Central Welfare Fund, The Indian Naval Benevolent Fund and the Air Force Central Welfare Fund. This is my way of saluting the brave officers and jawans of our armed forces.

98. As a part of our obligation to SAARC I am exempting from income tax the income of SAARC Fund for Regional Projects (SFRP).

99. In order to promote industrial development in the North- Eastern region of the country, a North-Eastern Development Finance Corporation was established in August, 1995. I propose to exempt its income from tax.

100. These proposals are likely to result in an improvement of revenue under direct taxes which is estimated at Rs.912 crore.

101. I shall now come to the proposals relating to indirect taxes.

102. Over the last few years steps have been taken to reform our indirect tax structure by reducing the number of rates, removing exemptions and by switching over to ad-valorem rates. On the customs side the peak rate of duty was reduced to 50% in 1995-96 accompanied by reduction in rates down the line in respect of all commodities. Central excise duties were also revamped and moved closer to a Value Added Tax with the introduction of Modvat for capital goods and extension of input credit facilities to almost all items necessary for the manufacture of goods. These changes have contributed to the growth in industrial production, simplified the tax structure and brought about greater transparency. They have also led to strong growth in revenues, with indirect tax collections increasing by 19 per cent in each of the last two years, in spite of substantial reduction in rates. The Common Minimum Programme mandates the government to continue with tax reforms and I propose to do so.

103. Keeping in view the twin objectives of making our industry globally competitive and providing it reasonable levels of protection in the transitional period, I propose to take measured and calibrated steps in the matter of customs tariffs.

104. The salient features of my proposals are-

• Reduction in customs duties on crude oil and other basic petrochemical intermediates.
• Reduction in the rates of customs duties on raw materials and inputs such as chemicals, plastics, natural rubber and ferrous and non-ferrous metals.
• Substantial reduction in customs duties on raw materials and components required for giving a thrust to the electronic goods sector.
• Reduction in the rate of duty on computers for giving a boost to the software industry.
• Reduction in import duty on selected machinery to modernize the textiles and garment sector.
• Removal of several anomalies in duty rates.
• Unification of rates on similar items in order to substantially reduce disputes on classification and on rates.
• Retention of only such exemptions which are necessary, for the present.