Govt cuts excise duty, service tax by 2 per cent
February 24, 2009
New Delhi: The government on Tuesday announced a fresh stimulus to the slowing economy by cutting excise duty and service tax by two per cent, thereby entailing a revenue loss of nearly Rs 30,000 crore, as part of the interim budget ahead of the general elections for the 15th Lok Sabha.
While the general excise duty has been reduced from 10 per cent to 8 per cent, the rate of service tax cut from 12 per cent to 10 per cent.
The excise cut is applicable only to items like a section of cars, metals and white goods, which at present attract 10 per cent duty.
Finance Minister Pranab Mukherjee, who refrained from changing tax rates in the interim budget on February 16, said in the Lok Sabha that four per cent excise cut announced earlier in the stimulus package in December will continue beyond March 31.
“The rate which was 10 per cent has been reduced to 8 per cent. The rate which was 8 per cent and the rate which was 4 per cent, they remain the same,” the Central Board of Excise and Customs (CBEC) Member V Sridhar told reporters.
Welcoming the duty cut commercial vehicle majors said they will pass on the benefit to customers. Ashok Leyland Managing Director R Seshasayee said “we will pass on the benefit as and when the reduction will be applicable”.
Winding up the debate on the interim budget in the Lok Sabha today, the Finance Minister also announced a cut in excise duty on bulk cement by two per cent or Rs 60 per metric tonne, whichever is higher.
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