By adding 130 items such as, coffee, tea, ready-to-eat packaged foods and ketchups, the Budget has hiked expenses further.
“I rate this Budget 3 on 10,” says a disappointed Shubha Ojha, a 50-year-old housewife from Amritsar. She attributes the low rating to the absence of any substantial relief for households from the spiralling cost of fuel and daily necessities. Instead, the finance minister has offered duty cuts on exotic foodstuffs like raw pistachios, raisins and cranberry products.
The Budget has reduced the basic Customs duty on raw pistachios and cranberry products from 30 per cent to 10 per cent and on raisins from 100 per cent to 30 per cent. According to Ernst & Young tax partner Saloni Roy, “Usually, tax benefits given to businesses get passed on to consumers. However, a price rollback is not guaranteed.”
However, households do stand to gain from indirect benefits of Customs duty cuts on certain medical products. It has been dropped from 10 per cent to five per cent on some life saving drugs. Similarly, the Customs duty has been reduced from 25 per cent to 10 per cent on the lactose used in the manufacture of homeopathic medicines. Tax experts feel this has been done with a view to making drugs affordable. But, businesses will take at least six months to pass on any benefits to the consumers.
Further, in a move to bring more items under the tax ambit, the Budget has imposed an excise duty of one per cent on 130 specified items, which were exempt from the tax till date. These include consumables like coffee, tea, sauces, ketchups, soups, broths, all kinds of food mixes, ready-to-eat packaged foods and milk containing edible nuts with sugar. At the same time, the excise duty on other essentials like sanitary napkins, baby and adult diapers has been brought to one per cent from the existing 10 per cent.
“This move is geared towards widening the base of products to be covered under the Goods and Services Tax, when it gets implemented. The logic is to tax more goods at a lower rate,” explained Ashutosh Thaker, tax partner, BDO. Besides, the actual price hike, if any, passed on to the consumers, will be marginal due to the low rate of taxation, feels Thaker. Besides, most of these items are also exempt from the value added tax and therefore the actual impact should not be very significant, adds Roy Brand aficionados will be especially disappointed this time. In a first, the Budget has imposed an excise duty of 10 per cent on branded clothing and a per cent on branded jewellery and other articles of precious metals.