Finance Minister Proposes Indirect Tax Across Various Products In The Budget (02-Mar-2010)
The Finance Minister Pranab Mukherjee today presented the Union Budget 2010-11.
Regarding the indirect tax, he said that the rate reduction in Central Excise duties will be partially rolled back.
He also said that the standard rate on all non-petroleum products will be enhanced from 8% to 10% ad valorem.
Meanwhile, he also said that the specific rates of duty applicable to portland cement and cement clinker will be adjusted upwards proportionately.
Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports-utility vehicles will be increased by 2% points to 22%.
He said that the basic duty of 5% will be restored on crude petroleum, 7.5% on diesel and petrol and 10% on other refined products.
He also said that the Central Excise duty on petrol and diesel will be enhanced by Re.1 per litre each.
Moreover, he also said that there will be some structural changes in the excise duty on cigarettes, cigars and cigarillos to be made along with some increase in rates.
The Excise duty on all non-smoking tobacco such as scented tobacco, snuff, chewing tobacco etc will be enhanced.
On the other hand, the compounded levy scheme for chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch packing machines will be introduced.
Previously, a Finance Ministry official had stated that the government''s pool from indirect tax collections will fall short of the projected figures for this fiscal.
This was said in the midst of speculations of partial roll back of stimulus in the upcoming Budget.
The Central Board of Excise and Customs (CBEC) official said that there will be some shortfall in meeting budget estimates of indirect tax collections.
As the government cut excise duty by 6%, service tax by 2% in phases since December, 2008 in order to provide stimulus to the declining economy, indirect tax collections came under heavy impact.
Indirect tax kitty contracted by 12.42% to revised estimates of Rs 2.81 lakh crore last fiscal against Budget estimates of Rs 3.21 lakh crore.
Meanwhile, for this fiscal, Budget estimates were even lowered to Rs 2.69 lakh crore whereas these estimates seem to be missed when the current fiscal ends.
The government''s indirect tax kitty has been able to net just Rs 1,89,000 crore up to January this fiscal.
Meanwhile, this means around Rs 80,000 crore is needed to be collected in the remaining 2 months, which seems almost impossible.
On the other hand, it was said that due to the increasing industrial growth numbers, the government''s excise, customs and service tax collections for the month of January this fiscal seem to have turned a corner.
Total indirect tax collections in January have risen by over 15% as compared to the same period last year at over Rs 22,000 crore.
Customs collections also increased by 23% at over Rs 7000 crore, with excise collections up by 25% at over Rs 9000 crore.
Service tax has shown a decline due to the tax rate being lower this fiscal as compared to the previous year, the collections for jan stand at Rs 5900 crore.
Moreover, Revenue Secretary, Mr. PV Bhide said the target of Rs. 2.7 lakh crore for Indirect Tax collections comprising customs, excise and service tax could fall by Rs 20,000 crore to Rs 22,000 crore this financial year mainly due to poor realisation of customs and excise duties.
During 2008-09, the Indirect Tax collected by the government accumulates around Rs 2.81 Lakh crore. However,
Finance secretary Mr. Ashok Chawla said it is very disappointing for the country that the expectations for the Indirect Tax collections will be not be met, but the Direct Tax is still maintaining its level.
During the first 7 months of the current financial year, the Indirect Tax collection fall by more than 20 % to Rs. 1.26 lakh crore as compared to Rs. 1.61 lakh crore during the same period last year, mainly due to the economic meltdown and subsequent boost to increase growth.
On the other hand, despite an unexpected GDP growth of 7 per cent and industrial output growth of 7.1 per cent till October, the indirect tax receipts for the period between April-November 2009 declined 21 per cent to stood at Rs 1,45,824 crore.
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