Sunday, February 26 2006 11:20 Hrs (IST) - World Time -

New Delhi: With the economy cruising along, the Budget is expected to give a big push to agriculture and infrastructure while carrying forward indirect tax reforms, laying down a roadmap for Goods and Services Tax, simplifying Fringe Benefit Tax and cutting deficits in 2006-07.

As five states go for assembly polls in May, the budget to be presented on Tuesday is unlikely to have hard reforms like cutting subsidies, as Prime Minister Manmohan Singh is understood to have given a directive to hold the price line as it hits the common man the most.

While there may not be any reduction in income and corporate tax rates, the salaried class is expected to breathe easy as FBT is likely to be modified or may provide an option to India Inc to pay at a flat rate.

Both Prime Minister and Finance Minister P Chidambaram have already stated that Customs duties would be brought down to Asean level of 8-9 per cent peak duty. It is to be seen if Chidambaram will reduce the present peak customs duty of 15 per cent in one go or in phases.

Around a dozen services are likely to be added to the list of 81 taxable services, as the sector contributes to around 52 per cent of GDP. The tax has recorded a buoyant grwoth of 66 per cent this year and would far exceed the target of Rs 17,500 crore.

Employment generating sectors like textiles, leather, food processing and auto components may get fiscal incentives in the Budget.