The government today cut excise duty and service tax rates by 2 percentage points – from 10 per cent to 8 per cent and to 10 per cent from 12 per cent – across the board, to help the economy out of a slump caused by falling production and consumption levels.
Excise duties across the board has been cut to 8 per cent from 10 per cent while the service tax rate stands reduced to 10 per cent from 12 per cent on all taxable services, acting finance minister Prance Mukherjee announced while replying to a debate on the 2009-0 interim budget.
The 4 per cent reduction in excise duty announced earlier as part of a stimulus package would be extended into the new fiscal year, he said.
To give a boost to the infrastructure and real estate sector hit hard by the economic slowdown, Mukerjee announced a reduction in the excise duty on bulk cement to 8 per cent. He also extended the reduction in customs duty on naphtha beyond 31 March 2009.
Mukerjee said the government was confident of overcoming the impact of the global economic crisis on the domestic economy. "We will overcome the crisis," Mukherjee said.
He also said banks had been provided with enough liquidity to improve credit flows to the productive sectors of the economy.
Opposition members in the Lok Sabha, meanwhile, attacked the government for "failing" to check price rise and address the situation caused by recession which has led to massive job losses.
Participating in the discussion on the interim budget, opposition members - Kashiram Rana (BJP) and K Yerran Naidu (TDP) - pointed to the high prices of essential goods despite the rate of inflation coming down to four per cent.
Rana, a member of Parliament from Surat, sought unemployment dole for workers engaged in the diamond cutting industry, hit hard by the recession.
Naidu alleged that the Congress-led coalition was not sympathetic to the plight of farmers whose suicides were still continuing in parts of the country.
Chander Kumar (Congress) praised the government for ''bringing a new hope to the poor through the NREGA'' and helping to check migration from rural areas.