M A I N   N E W S

Booster III
Excise duty, service tax cut by 2 pc
Tribune News Service

n 4% across-the-board excise duty cut to continue beyond March 31, 2009
n Service tax down 12 to 10%
n Excise duty down from 10 to 8%; highest excise revenue earning duty slab abolished
n Excise duty on bulk cement to be 8%, or Rs 230 per metric tonne, whichever is higher
n No customs duty on naphtha; extends customs duty on naphtha beyond March 31

New Delhi, February 24
Toeing the populist line, the Centre today announced a slew of sops for the ailing auto and cement sectors, reducing both excise duty and service tax rates by two per cent each to further stimulate the economy in the wake of a global financial crisis. UPA’s third economic stimulus package comes few days after Finance Minister Pranab Mukherjee presented an Interim Budget in the Lok Sabha, evoking cold response from the industry.

Admitting that the Indian economy would feel the heat of global economic turndown in future months, the government today slashed general excise duty from 10 to 8 per cent and the rate of service tax on taxable services from 12 to 10 per cent. Most significantly, it abolished the 10 per cent excise duty slab, which yields a whopping 96 per cent of the excise revenue earnings. With the abolition of this slab (now only two excise duty slabs remain), government’s revenue losses are pegged at Rs 30,000 crore, sources say.

That apart, the Centre extended the 4 per cent across-the-board excise duty cut announced in December last beyond March 31 this year and a cut in excise duty on bulk cement at 8 per cent or Rs 230 per metric tonne, whichever is higher. It also fully exempted naphtha used in power generation from customs duty to offer relief to power sector.

“The general relaxation in the excise duty rates by 4 per cent was made from December 7 last and is now being extended beyond March 31, 2009. In addition, it has now been decided to reduce the general rate of central excise duty from 10 per cent to 8,” Finance Minister Pranab Mukherjee said, replying to the debate on the Interim Budget in the Lok Sabha today.

He earlier expressed deep concern at the impact of global meltdown but said he had confidence in the resilience of Indian economy. “Let us have confidence in ourselves. We will overcome this crisis,” he said to the House, assuring the removal of anomalies in the exemption on export profits on goods sent out of special economic zones.

“The three per cent increase in deficit from 0.5 per cent to 3.5 per cent in the current fiscal needs to be extended in the coming fiscal to spur rural development and employment generation,” the FM said. Dissatisfied by his proposals, the opposition and Left walked out of the House, which later passed by a voice vote the Interim Budget, including a vote-on-account, to enable the government to spend until the next Budget is passed by Parliament.

All these reduced tax rates will come into force from midnight today.



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