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Cars, cement to be cheaper

NEW DELHI: The government on Sunday notified with immediate effect four per cent across-the-board reduction in excise duty in its bid to induce demand through lower prices of cars, consumer products, steel, cement and a host of other products to provide relief and lessen the impact on various sectors of the manufacturing industry.

The loss to the exchequer by way of revenue forgone during the remaining months of the current fiscal is estimated at Rs.8,700 crore.

An official statement here said the three slabs of excise duty — 14, 12 and eight per cent — which are applicable to non-petroleum products have been cut by four percentage points each to 10 per cent, eight and four per cent respectively.

Tax incentives have also been announced for export, iron and steel sectors and the changes in excise and customs duties are expected to stimulate demand through lower prices.

Elaborating on the tax concession, the statement noted that the ad valorem component of the excise duty on passenger cars of 1,500 cc and above stand reduced from 24 to 20 per cent, while in the case of cement, the ad valorem duty has been reduced from 12 to eight per cent. The specific rates have also been reduced proportionately by four per cent. As for the mini-cement plants, the concessional rates have also been reduced accordingly.

For cotton textiles and other textile articles, the duty has been reduced from four per cent to zero. The statement made it clear that no changes have been made in the excise duty rates on petroleum products, specific rated items and tobacco products.

To provide relief to the power sector, naphtha, if imported for generation of electric energy, is to be fully exempted from basic customs duty. The exemption will be effective up to March 2009. For iron ore, the eight per cent export duty on iron ore fines has been withdrawn completely while the export duty on iron ore lumps stands reduced by 10 per cent to five per cent.

The government has also allowed refund of service tax to exporters on foreign agent commission of up to 10 per cent of the value of export. The benefit of such refund has now been extended to services provided by a clearing and forwarding agent to exporters. Also, the duty drawback benefit can now be availed of simultaneously with refund of service tax paid in respect of exports.

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