Excise waiver list to be pruned

RUN-UP TO THE BUDGET

Product-related exemptions in focus.

As the country moves towards a single Goods and Service Tax (GST) by 2010, the finance ministry is likely to prune the list of 160-odd product-related excise exemptions in the Budget.

Information technology, telecommunication, pharmaceuticals, medical and textile products are some of the items exempt from excise duty. These items are likely to attract an excise duty of about 8 per cent.

In the light of an expected realignment of tax rates, the Cenvat rate will stay at 16 per cent, and there are indications that GST may be set at around 20 per cent.

Reducing product-related exemptions is expected to yield significant revenue. Excise collections have been growing at around 6 per cent this year, much below the average of 25 per cent for overall revenue growth.

Corporate India enjoys two kinds of excise exemptions "" product-related and area-related (in some states). The latter have been extended till 2010.

Saying that the government should limit the number of product-related exemptions, S Madhavan, leader-indirect tax practice, PricewaterhouseCoopers, pointed out that "they were almost three times the area exemptions."