Interim budget: Cars, scooters to be cheaper as excise duty cut by 4-6 % till 30 June
17 February 2014
Presenting the interim budget for the 2014-15 financial year in Parliament today, finance minister P Chidambaram announced an across-the-board reduction in excise duty to give a boost to the manufacturing sector that has seen a big slump in recent times.
Announcing the changes in indirect tax rates, Chidambaram, however, said, in keeping with the conventions (in an election year), he does not propose to make any announcements regarding changes to the tax laws.
However, he said, the current economic situation demands some interventions that cannot wait for the regular budget.
Accordingly, Chidambaram proposed to reduce the excise duty on all goods falling under in the capital goods and consumer non-durables from 12 per cent to 10 per cent. The rates can be reviewed at the time of the regular budget.
To give relief to the automobile industry which is registering unprecedented negative growth, the finance minister proposed to reduce the excise duty as follows for the period up to 30 June 2014:
- Small cars, motorcycles, scooters and commercial vehicles - from 12 per cent to 8 per cent
- SUVs - from 30 per cent to 24 per cent
- Large and mid-segment cars - from 27/24 per cent to 24/20
Accordingly, Chidambaram proposed to make appropriate reductions in the excise duty on chassis and trailers as well.
To encourage domestic production of mobile handsets and reduce the dependence on imports, the finance minister has proposed to restructure the excise duties for all categories of mobile handsets.
The rates will be 6 per cent with CENVAT credit or 1 per cent without CENVAT credit.
Chidambaram proposed to rationalise the customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols at 7.5 per cent in order to encourage domestic production of soaps and oleo chemicals.
To encourage domestic production of specified road construction machinery, the finance minister proposed to withdraw the exemption from CVD on similar imported machinery.
He also proposed to provide a concessional customs duty of 5 per cent on capital goods imported by the Bank Note Paper Mill India Pvt Ltd in order to encourage indigenous production of security paper for printing currency notes.