NEW DELHI – Leaving direct taxes untouched, Finance Minister P. Chidambaram on Monday slashed excise duty on cars, SUVs and two-wheelers, and capital goods and consumer durables to boost manufacturing and growth. Presenting the interim union Budget for 2014-15, he also provided service tax exemption for storage and warehousing of rice like it was done in case of paddy last year.
Also, blood banks have been exempted from its purview. The 1% surcharge on the “super-rich” with income above Rs. 1 crore a year, and the 5% surcharge on corporates, imposed last year, will continue. The budget document does not give figures of the indirect tax concessions, which are valid till June 30, and could be reviewed later. They will be notified later in the day.
Chidambaram justified the excise duty relief. "However, the current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost,” he said.
To encourage domestic production of mobile handsets, he restructured the excise duty for all categories fixing it at 6% with CENVAT credit or 1% without CENVAT credit. Customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has been pegged at 7.5% to encourage to domestic production of soaps and oleo chemicals.
Similarly, a concessional customs duty of 5% on capital goods imported by Bank Note Paper Mill India Pvt. Ltd. has been provided to encourage to indigenous production of security paper for printing currency notes.
Giving budget estimates, the minister said the current financial year will end on a satisfactory note with the fiscal deficit at 4.6%, below the red line of 4.8%, and the revenue deficit at 3.3%. The fiscal deficit for 2014-15 has been pegged at 4.1%, below the targeted 4.2% set by the new fiscal consolidation path. Revenue deficit is estimated at 3%. Small cars, motorcycles, scooters and commercial vehicles will attract a lower excise duty of 8%, from the current 12%, while SUVs will see a 6% reduction in duty from 30% to 24%. Large and middle segment cars will enjoy an excise duty of 24/20%, down from 27/24%.
Outlining a 10-point vision for the future, the finance minister said India must achieve the target of fiscal deficit of 3% of GDP by 2016-17 and remain below that level always.
Expressing disappointment over not being able to introduce the proposed Goods and Services Tax, he said, "I leave it to you to answer the question, ‘who blocked the GST when an agreement on the game-changing tax reform was around the corner?’"
Chidambaram justified the excise duty relief. "However, the current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost,” he said.
To encourage domestic production of mobile handsets, he restructured the excise duty for all categories fixing it at 6% with CENVAT credit or 1% without CENVAT credit. Customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has been pegged at 7.5% to encourage to domestic production of soaps and oleo chemicals.
Similarly, a concessional customs duty of 5% on capital goods imported by Bank Note Paper Mill India Pvt. Ltd. has been provided to encourage to indigenous production of security paper for printing currency notes.
Giving budget estimates, the minister said the current financial year will end on a satisfactory note with the fiscal deficit at 4.6%, below the red line of 4.8%, and the revenue deficit at 3.3%. The fiscal deficit for 2014-15 has been pegged at 4.1%, below the targeted 4.2% set by the new fiscal consolidation path. Revenue deficit is estimated at 3%. Small cars, motorcycles, scooters and commercial vehicles will attract a lower excise duty of 8%, from the current 12%, while SUVs will see a 6% reduction in duty from 30% to 24%. Large and middle segment cars will enjoy an excise duty of 24/20%, down from 27/24%.
Outlining a 10-point vision for the future, the finance minister said India must achieve the target of fiscal deficit of 3% of GDP by 2016-17 and remain below that level always.
Expressing disappointment over not being able to introduce the proposed Goods and Services Tax, he said, "I leave it to you to answer the question, ‘who blocked the GST when an agreement on the game-changing tax reform was around the corner?’"
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