Service tax, excise duty reduced

Service tax, excise duty reduced

NEW DELHI: The government on Tuesday announced a reduction of 2 percentage points in the rates of excise duty and service tax, bringing relief to industry and aam aadmi in an atmosphere of economic slowdown.

The Central excise duty stands reduced from 10 to 8 per cent while the service tax has been brought down from 12 to 10 per cent from midnight on Tuesday night. The rate of excise duty on goods attracting ad valorem rates of 8 and 4 per cent will remain unchanged.

These announcements were made by the External Affairs Minister Pranab Mukherjee, who holds charge of Finance, during his reply to the discussion on the interim budget 2009-2010.

He said the general reduction in excise duty rates by 4 percentage points, from December 7, 2008 would extend beyond March 31, 2009.

The rate of excise duty on bulk cement has also been reduced from 10 per cent or Rs. 290 per tonne to 8 per cent or Rs. 230, whichever is higher.

To provide relief to the power sector, naphtha imported for power generation has been fully exempted from basic customs duty. This exemption, already available up to March 31, 2009, is now being extended.

“The government is keen on restoring business confidence in the services sector. It is also our objective that the dispersal between CENVAT rate and the service tax rate is reduced with a view to moving towards the Uniform Goods and Service Tax,” the Minister said.

The Lok Sabha later approved the Interim Budget, including the Finance Bill, 2009 and related Appropriation Bills, by voice vote, amidst a walkout by the Opposition National Democratic Alliance and the Left parties.

The fiscal sops given to provide stimulus to the slowing down economy will be effective from midnight and will have revenue implications of over Rs. 29,000 crore.