India cuts excise duty, service tax to boost economy
Thursday, 26 February 2009
NEW DELHI, Feb 25 (PTI): The Indian government yesterday announced a fresh stimulus to the slowing economy by cutting excise duty and service tax, entailing a revenue loss of Rs 30,000 crore, as part of the interim budget ahead of the general elections for the 15th Lok Sabha.
The two per cent excise cut is applicable only to items like a section of cars, metals and white goods, which at present attract 10 per cent duty.
India's Finance Minister Pranab Mukherjee, who refrained from changing tax rates in the interim budget on February 16, said in the Lok Sabha (Lower House of Parliament) that four per cent excise cut announced earlier in the stimulus package in December will continue beyond March 31.
"The rate which was 10 per cent has been reduced to 8 per cent. The rate which was 8 per cent and the rate which was 4 per cent, they remain the same," the Central Board of Excise and Customs (CBEC) Member V Sridhar told reporters here.
Welcoming the duty cut commercial vehicle majors said they will pass on the benefit to customers. "We will pass on the benefit as and when the reduction will be applicable," Ashok Leyland Managing Director R Seshasayee told PTI.
Winding up the debate on the interim budget in the Lok Sabha Tuesday, the Finance Minister also announced a cut in excise duty on bulk cement by two per cent or Rs 60 per metric tonne, whichever is higher.
Besides, Mukherjee also announced a two per cent cut in service tax to bridge the difference between excise duty and service tax to restore confidence in the service sector.
The telecom and IT industry welcomed this step and said it would benefit directly the end users.
"We warmly welcome this as a step in the right direction which will directly benefit the end user and customers on their monthly costs," T V Ramachandran, Director-General of Cellular Operators Association of India (COAI) told PTI.
Mukherjee also allowed states the flexibility to deviate from fiscal consolidation targets by 0.5 per cent beyond March 31, 2009 to boost infrastructure spending and enable them to generate more employment.
He also extended exemption from customs duty given to naphtha imported for power generation beyond this fiscal-end.
Mukherjee also promised to remove anomalies in calculating profits between those having units in SEZs as well as in domestic tariff area and those having units only in SEZs at the time of regular Budget.
The two per cent excise cut is applicable only to items like a section of cars, metals and white goods, which at present attract 10 per cent duty.
India's Finance Minister Pranab Mukherjee, who refrained from changing tax rates in the interim budget on February 16, said in the Lok Sabha (Lower House of Parliament) that four per cent excise cut announced earlier in the stimulus package in December will continue beyond March 31.
"The rate which was 10 per cent has been reduced to 8 per cent. The rate which was 8 per cent and the rate which was 4 per cent, they remain the same," the Central Board of Excise and Customs (CBEC) Member V Sridhar told reporters here.
Welcoming the duty cut commercial vehicle majors said they will pass on the benefit to customers. "We will pass on the benefit as and when the reduction will be applicable," Ashok Leyland Managing Director R Seshasayee told PTI.
Winding up the debate on the interim budget in the Lok Sabha Tuesday, the Finance Minister also announced a cut in excise duty on bulk cement by two per cent or Rs 60 per metric tonne, whichever is higher.
Besides, Mukherjee also announced a two per cent cut in service tax to bridge the difference between excise duty and service tax to restore confidence in the service sector.
The telecom and IT industry welcomed this step and said it would benefit directly the end users.
"We warmly welcome this as a step in the right direction which will directly benefit the end user and customers on their monthly costs," T V Ramachandran, Director-General of Cellular Operators Association of India (COAI) told PTI.
Mukherjee also allowed states the flexibility to deviate from fiscal consolidation targets by 0.5 per cent beyond March 31, 2009 to boost infrastructure spending and enable them to generate more employment.
He also extended exemption from customs duty given to naphtha imported for power generation beyond this fiscal-end.
Mukherjee also promised to remove anomalies in calculating profits between those having units in SEZs as well as in domestic tariff area and those having units only in SEZs at the time of regular Budget.