CII seeks cut in excise duty by 2%

The Confederation of Indian Industry (CII) has recommended the reduction of excise duty from 16 per cent to 14 per cent. In its pre-budget memorandum, CII has asked for reduction of excise duty on processed foods, pesticides, energy efficient triphosphor fluorescent lamps, electric fans, caprolactum and two wheelers to 8 per cent from 16 per cent, on all types of cars to 16 per cent from 24 per cent, and to Rs 350 per tonne from Rs 400 on cement.

Currently, most manufactured products attract 16 per cent excise duty and 12.5 per cent Value Added Tax (VAT).

In the memorandum, CII has suggested full Central Value Added Tax credit (Cenvat) on capital goods on the date of receipt and allowing payment of excise on used capital goods at the time of removal either on the transaction value or on the depreciated value, as against the present provision of reversal of full Cenvat credit.

The government should allow Cenvat credit on light diesel oil and high speed diesel used for generation of power or in manufacturing and relax the requirement of pre-authentication of invoices for assessees paying excise duty of more than Rs 5 crores.

The chamber also said there should be a fixed time limit for the review of abatement rate by the Advisory Committee on Abatement and it must provide feedback on its findings to the applicant.

The CII has also drawn the government's attention to its earlier proposal for bringing down the Central Sales Tax from 4 per cent to 2 per cent from April 1, 2007 and later reducing it to nil.

For increasing the revenue from service tax, CII has suggested that more services be brought under the tax net, though the tax rate must be maintained at the existing level of 12 per cent.

CII has also urged the government to initiate concrete steps for implementation of the Goods and Services Tax (GST) so that the common tax could be in place by 2010, as had been committed by the finance minister in this year's budget.