Indirect taxes
28 Feb 2006
1
Customs Peak rate for non-agricultural products reduced from 15 per cent to 12.5 per cent
- Alloy steel, primary and secondary non-ferrous metals and ferro-allloys: Duty reduced from 10 per cent to 7.5 per cent.
- Steel melting scrap: Duty raised to 5 per cent, brought on part on par with primary steel.
- Mineral products: Duty reduced to 5 per cent, with a few exceptions.
- Ores and concentrates: Duty reduced from 5 per cent to 2 per cent.
- Refractories and materials for their manufacture: Duty reduced to 7.5 per cent.
- Basic inorganic chemicals: Duty reduced from 15 per cent to 10 per cent.
- Basic cyclic and acyclic hydrocarbons and their derivatives: Duty reduced to 5 per cent.
- Catalysts: Duty reduced from 10 per cent to 7.5 per cent.
- Major bulk plastics like PVC, LDPE and PP: Duty reduced from 10 per cent to 5 per cent.
- Naphtha for plastics: nil.
- Styrene, EDC and VCM (raw materials for plastics): Duty reduced to 2 per cent.
- 10 anti-AIDS and 14 anti-cancer drugs: Duty reduced to 5 per cent.
- Specified life saving drugs, kits and equipment: Duty reduced from 15 per cent to 5 per cent. These drugs also exempted from excise duty and CVD.
- Packaging machines: Duty reduced from 15 per cent to 5 per cent.
- Pipeline projects for transportation of natural gas, crude petroleum and petroleum
- Products: Concessional project rate of 10 per cent.
- Vanaspati: Duty to be increased to 80 per cent.
- Man-made fibres and yarns: Duty reduced from 15 per cent to 10 per cent.
- Their raw materials like DMT, PTA and MEG: Duty reduced from 15 per cent to 10 per cent.
- Paraxylene: Duty reduced to 2 per cent.
- CVD of 4 per cent to be imposed on all imports, with a few exceptions.
- Full credit to be allowed to manufacturers of excisable goods.
- Rates on clearances by EOUs to the Domestic Tariff Area (DTA) adjusted at 50 per cent of basic customs duty plus excise duty on like goods.
Excise The intention is to converge all rates at the CENVAT rate of 16 per cent.
- Aerated drinks: Duty reduced to 16 per cent.
- Small cars: Duty reduced to 16 per cent.
- Packaged software sold over the counter: 8 per cent duty imposed. Customised software and software packages downloaded from the internet exempt.
- DVD Drives, Flash Drives and Combo Drives: Fully exempt from excise duty.
- Man-made fibre yarn and filament yarn: Duty reduced from 16 per cent to 8 per cent.
- Condensed milk, ice cream, preparations of meat, fish and poultry, pectins, pasta and yeast: Fully exempt.
- Ready-to-eat packaged foods and instant food mixes, like dosa and idli mixes: Duty reduced from 16 per cent to 8 per cent.
- Vegetable tanning extracts, quebracho and chestnut: Exempt.
- Footwear with a retail price between Rs250 and Rs750: Reduced from 16 per cent to 8 per cent.
- All LPG stoves: Concessional rate of 8 per cent.
- Compact fluorescent lamps: Duty reduced from 16 per cent to 8 per cent.
- Glassware: Duty of 16 per cent, on par with ceramicware and plasticware.
- Specified printing, writing and packing paper: Duty reduced from 16 per cent to 12 per cent.
- Computers: Excise duty at 12 per cent re-imposed to enable domestic manufacturers to take CENVAT credit and face competition from imports. No impact on prices, as duty is eligible for full input tax credit.
- Set top boxes: Duty of 16 per cent, with reduction in customs duty from 15 per cent to nil.
- Cigarettes: Increase in excise duty by about 5 per cent.
- Cess under the Oil Industries Development Act to be increased from Rs1,800 per MT to Rs2,500 per MT.
- Excise and customs tariff exemptions that are end-use based, have outlived their utility, need certification or give rise to disputes rescinded; but exemption for the SSI sector will remain.
Service tax Service tax rate increased from 10 per cent to 12 per cent, as another step to converge service tax rates and CENVAT rates. The net impact is likely to be very small, in view of the credit available for service tax or excise duty payable.
Proposal to set April 1, 2010 as the date for introducing a unified national-level Goods and Service Tax (GST);
- New services to be covered include:
- ATM operations, maintenance and management.
- Registrars, share transfer agents and bankers to an issue.
- Sale of space or time for advertisements, other than in the print media.
- Sponsorship of events, other than sports events, by companies.
- International air travel, excluding economy class passengers.
- Container services on rail, excluding railway freight charges.
- Business support services.
- Auctioneering.
- Recovery agents.
- Ship management services.
- Travel on cruise ships.
- Public relations management services.
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- Coverage of certain services now subject to service tax to be expanded.
- Leasing and hire purchase to be treated on par with loan transactions; interest and installment of principal amount to be abated in calculating the value of the service.
VAT and CST In order to moderate domestic LPG prices, it is included in the list of 'declared goods' under the CST Act.
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