Finance Minister Jaswant Singh promised a fresh look at every aspect of the taxation regime. The minister made the comment piloting the Taxation Laws (Amendment) Bill in Lok Sabha.

Singh's statement comes at a time when the finance ministry has started holding meetings with trade and industry chambers on tax proposals for the next year's Budget.

In the run up to Budget 2003-04, Singh had appointed two committees under Vijay Kelkar, adviser to the finance minister, on reforms in direct and indirect tax regimes. Singh, however, did not elaborate on his statement.

The Taxation Laws (Amendment) Bill reduces the rate of tax collection at source on Indian Made Foreign Liquor and country liquor to one per cent of the sale amount from the 10 per cent introduced in Budget 2003-04.

It also reduces the rate of interest on tax refunds to six per cent.

The bill replaces an Ordinance promulgated by the President on September 8.

Sales to public sector companies, central and state governments, clubs and embassies will, however, not come under the purview, as they will not be treated as buyers under section 206C of the Income Tax Act.

Under the Bill, the tax collection at source rates for industrial scrap has also been reduced to one per cent. The total annual turnover of the scrap business is estimated at Rs 1,000 crore (Rs 10 billion) and  for liquor at about Rs 28,000 crore (Rs 280 billion).

The bill has also scaled down the tax rates to 2.5 per cent for timber and other forest products and to 5 per cent for tendu leaves. Liquor companies were required to deduct the tax from the sale of their produce to dealers.

But the companies had argued that the rate was too high as it assumed a rate of profit of at least 30 per cent.

It also includes a new section 10BA in the Income Tax Act, 1961 to provide a 100 per cent deduction for profits derived from export of wood based handicraft items.

In addition interest payable to the Nordic Investment Bank has been exempted from income tax. Ship breaking industry has been given a relief by including it under the exempted category for the purpose of section 10(15)(iv) in respect of interest payable outside India.

On concern voiced by members relating to the ship-breaking industry, he said government was looking into the problems of the labour employed in this sector.