With an eye on early Lok Sabha polls, the government on Thursday came out with a 'mini Budget,' bringing down the peak customs duty rate on non-agricultural goods, abolishing the 4 per cent special additional customs duty, and made cell phones, computers, laptops, life-saving drugs and air travel cheaper.

With the government all set to take a decision on a possible vote-on-account later this month, instead of presenting a regular Budget in February, it effected these changes through notifications that will bring down peak rate of customs duty on non-agricultural products from 25 per cent to 20 per cent.

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As part of overall duty structure changes, customs duty on project imports with investment of at least Rs 5 crore (Rs 50 million) in plant and machinery has been brought down by 15 per cent from 25 per cent and on nickel and other articles by 5 per cent.

Air travel is bound to become cheaper with the excise duty on Aviation Turbine Fuel (ATF) being slashed by half from 18 per cent and the 15 per cent Inland Air Travel Tax (IATT) abolished along with the Foreign Travel Tax of Rs 500 per passenger.

As part of simplifying procedures under direct taxes, the government exempted salaried class with up to Rs 1.5 lakh income from filing tax returns along with pensioners, who will be exempt from the purview of the one-by-six scheme.

The government did not give figures of the likely revenue loss to the exchequer on account of the sops, but Finance Minister Jaswant Singh said there would be no major impact, and even that too would be temporary.

While the changes in indirect tax would be effective from tomorrow, those regarding direct taxes would apply from April 1, an official press note on the rate changes said.

The government also cut down duty by 5 per cent on specified life-saving bulk drugs, formulations, medical equipment and artificial limbs.

Centre also cut the customs duty by 15 per cent to 10 per on power transmission and distribution projects and exempted the countervailing duty on specified life saving bulk drugs.

It extended customs and excise exemptions, now available only to drinking water projects, to all industrial and farm purposes.

The Centre bestowed a one-time income tax exemption for the infrastructure projects, while it sought to create hassle-free regime for the salaried class and professionals like doctors and accountants by going in for paperless filing of returns and cutting the number of challan forms for payment of TDS (tax deducted at source) to one from the present four.

The government also extended electronic filing of service tax returns to all 58 taxable sectors from the present 10 services.

To give a boost to emerging IT and electronics sector, it brought down customs duty to 0-5 per cent on specified raw materials and inputs for manufacturing electronic components and optic fibres.

It also exempted from custom duty specified capital goods used for manufacture of electronic goods, which now attract 10-15 per cent duty.

Recorded video compact discs and digital video discs have also been exempted from excise duty.

Liberalising baggage rules, government said laptops and cinematographic films, exposed but not developed, brought as part of baggage have been exempted from customs duty. It enhanced the duty-free limit of quantity of liquor and wines to two litres from the present one litre.

Besides, manufacturers would now be allowed to remove semi-finished goods and finished goods for further processing or testing without payment of excise duty.

A day ahead of the meeting of Indian Diaspora, the Centre also accorded duty-free status to VCDs/VCRs, washing machines, PCs, laptop computers, refrigerators of up to 300 litre capacity and cooking range under transfer of residence.

Also, customs duty on 17 other items under transfer of residence has been halved to 15 per cent.