4 Customs, 2 excise slabs by 2006

Providing a time-schedule for implementing the committee's report, Revenue Secretary Vineeta Rai has said a switchover from the present three-tier excise duty structure of 8 per cent, 16 per cent and 24 per cent, to a two-tier structure of 6 per cent and 14 per cent would be implemented in phases by 2006.

Further, pointing out that the peak Customs duty was slashed to 25 per cent from 30 per cent in Budget 2003-04, she has noted in a letter to the Planning Commission that duty moderation was a continuous process and the needs of the domestic industry too had to be considered.

The Kelkar committee had recommended a four-tier Customs duty structure of 5 per cent for basic raw materials, 8 per cent for intermediates used for further manufacture, 10 per cent for finished goods and 20 per cent for consumer durables. Rai has said that this could be undertaken by 2006.

Rai has also said to widen the tax base and improve the tax-GDP ratio, excise and Customs exemptions on all items would be up for review in Budget 2004-05. In the Budget for this fiscal, the revenue department had withdrawn excise exemptions on 79 items.

Full coverage of the services will also be achieved in the next two years by bringing them into the tax net.

While this year's Budget increased the service tax rate to 8 per cent from 5 per cent, 10 new services too were brought under the tax. There are 61 services now which attract the 8 per cent tax.