Excise rationalisation takes a step forward

The government has decided to reduce excise on small cars and aerated drinks from 24 per cent to 16 per cent, even as it reintroduced this levy on computers and set-top boxes.

The Budget also announced that many user-based exemptions on excise were slated to be withdrawn, but added that the list of such notifications would be put on the finance ministry's website, before taking a final view on the issue. The exemption for the small-scale sector would, however, remain unchanged, it added.

The only item where the Budget has effected a rise in excise is cigarettes, where this duty has been increased by 5 per cent. Recognising that man-made textile industry as both a growth- and employment-driver, the Budget reduced the excise on this to 8 per cent from 16 per cent and the import duty to 10 per cent from 15 per cent.

For the information technology sector, while the Budget imposed an 8 per cent excise duty on packaged software sold over the counter, it exempted this duty for customised software and software packages downloaded from the Internet, DVD drives, flash drives and combo drives.

The Budget also exempted from excise products such as condensed milk, ice-cream, preparations of meat, fish and poultry, pectins, pasta and yeast, and also reduced excise on ready-to-eat packaged foods and instant food mixes, like dosa and idli mixes, to 8 per cent, from 16 per cent earlier.

The leather and footwear sector was also given reason to cheer as two vegetable tanning extracts, quebracho and chestnutm, were exempted from excise, while the excise on footwear with a retail sale price between Rs 250 and Rs 750 was reduced to 8 per cent from 16 per cent.

The Budget also proposed to extend the concessional rate of 8 per cent excise on all LPG stoves and reduced the excise duty on compact fluorescent lamps to 8 per cent.

The Budget has also reduced the excise on specified printing, writing and packing paper to 12 per cent from 16 per cent. Additionally, the cess for domestically produced crude oil has been increased to Rs 2,500 per metric tonne, from Rs 1,800.