The centre has reached an agreement with state governments to phase out CST. The rate would be reduced from 4 per cent to 3 per cent with effect from April 1, 2007. A provision of Rs5,495 crore has been made for compensation for losses, if any, on account of VAT and also on account of CST. The government is preparing a roadmap for introducing a national level goods and services tax (GST) with effect from April 1, 2010.

Customs duties

* Peak rate for non-agricultural products to be reduced from 12.5 per cent to 10 per cent.

*Duty on most chemicals and plastics to be reduced from 12.5 per cent to 7.5 per cent.

* Duty on seconds and defectives of steel to be reduced from 20 per cent to 10 per cent.

*All cooking coal irrespective of ash content to be fully exempt.
* Duty on polyester fibres and yarns to be reduced from 10 per cent to 7.5 per cent.

* Duty on raw-materials such as DMT, PTA and MEG to be reduced from 10 per cent to 7.5 per cent>

* Duty on cut and polished diamonds o be reduced from 5 per cent to 3 per cent.

* Duty on rough synthetic stones from 12.5 per cent to 5 per cent.

* Duty on unworked corals to be reduced from 30 per cent to 10 per cent.

* Dredgers to be fully exempt from import duty.

* Duty on drip irrigation systems, agricultural sprinklers and food processing machinery to be reduced from 7.5 per cent to 5 per cent.

* General rate of import duty on medical equipment to be cut to 7.5 per cent.

* Crude and refined edible oils to be exempt from additional CV duty of 4 per cent.

* Duty on refined and crude sunflower oil reduced by 15 percentage points.

* Reduction in duty on pet foods from 30 per cent to 20 per cent.

*Duty on watch dials and movements and umbrella parts reduced from 12.5 per cent to 5 per cent.

* Concessional rate of 5 per cent duty for all research institutions registered with the Directorate of Scientific and Industrial Research.

* Duty on 15 specified machinery for pharma, biotech sector to be reduced from 7.5 per cent to 5 per cent.

* Duty of 3 per cent (WTO bound rate) to be levied on all private import of aircraft, including helicopters; such import to also attract countervailing duty and additional customs duty.

* Duty of Rs300 per metric tonne to be levied on export of iron ores and concentrates and Rs2,000 per metric tonne on export of chrome ores and concentrates.

Excise Duties

* Ad valorem component of excise duty on petrol and diesel to be reduced from 8 per cent to 6 per cent.

* Exemption limit for small scale industry (SSI) to be raised from Rs1 crore to Rs1.5 crore.

* Biscuits costing Rs.50 or less per kg and instant food mixes to be fully exempt.

* Duty on umbrellas and footwear parts and plywood reduced from 16 per cent to 8 per cent.

* Biodiesel to be fully duty-exempt.

* Water purification devices operating on specified membrane technologies and domestic water filters not using electricity to be fully exempt.

* Duty exemption for water supply pipes to be extended to all pipes of diameter exceeding 200 mm.

* Duty reduced from Rs400 to Rs350 per tonne on cement sold in retail at not more than Rs190 per bag; and to Rs600 per tonne on cement that has a higher MRP.

*Specific rates of duty on cigarettes to be increased by about 5 per cent;

*Duty (excluding cess) on hand-made biris to be raised from Rs7 to Rs11 per thousand and from Rs17 to Rs24 per thousand for machine-made biris.

*Duty on pan masala not containing tobacco to be reduced from 66 per cent to 45 per cent.

* Duty exemption given to units in the North Eastern states for pan masala containing tobacco and other tobacco products withdrawn.

Service tax

* Exemption limit for small service providers to be raised from Rs400,000 to Rs800,000.

* Tax to be levied on services outsourced for mining of mineral, oil or gas and renting of immovable property for use in commerce or business (residential properties, vacant land used for agriculture and similar purposes and land for sports, entertainment and parking purposes and immovable property for educational or religious purposes to be excluded).

* Service tax extended to content supplied for use in telecom and advertising purposes, asset management services provided by individuals and design services.

* Services involved in optional schemes of a works contract will be levied tax at only 2 per cent of the total contract value.

* Tax exemption to services provided by resident welfare associations to their members who contribute Rs3,000 or less per month; Services provided by technology business incubators to incubatees whose annual turnover does not exceed Rs50 lakh (for three years); and clinical trial of new drugs.

* Department of telecommunications to constitute a committee to study the present duty structure n telecom industry.