Finance Bill passed in LS – candles exempted

By Vijay Kumar

The Lok Sabha passed the Finance bill yesterday after the FM replied to the debate literally holding a candle, with the noble candle being exempted from excise duty.

A new Section 93A has been inserted into the Finance Act , 1994 (Service Tax) to give the government power to grant rebate of service tax paid on taxable services which are used as input services for the manufacturing or processing of such goods or for providing any taxable services. Section 94 has also been amended to provide for making rules for rebate.

Information technology software will attract 8% excise duty instead of nil.

Other changes:

CUSTOMS

· Basic customs duty on Carbon Black Feed Stock reduced from 12.5% to 10%.

· Basic customs duty on Polyester chips reduced from 12.5% to 10%.

· Customs duty on Coronary stents and coronary stent systems for use with cardiac catheter fully exempted from customs duty as well as additional CV duty of 4%.

CENTRAL EXCISE

· Scented supari, where the retail sale price is declared on the packages and such retail sale price does not exceed 50 paisa per package fully exempted.

· Candles fully exempted from central excise duty.

· Specified building Bricks fully exempted from central excise duty.

· Hand operated rubber roller machines and hand operated copra dryers have been fully exempted from central excise duty.

Thus said the FM:

· On the Customs side, the direction is moving towards ASEAN levels of taxation. We have taken, as some would say, a half step this year, bringing down to 12.5 per cent, the peak rate of customs duty. The goal is to have customs duties ranging between 5 and 10 per cent, which will make India comparable to the ASEAN countries.

· On the Excise side, there is a broad consensus emerging in this country that we must converge upon the CENVAT rate. What the ultimate CENVAT rate will be, cannot be predicative now. But, broadly going by international experience, it should be somewhere between 14 per cent and 16 per cent.

· At the same time, we must also converge the Service Tax rate because the proposal is to have Goods and Service Taxes in this country. We have allowed ourselves a four-year time period.

· selective industries have been identified in order to give them a boost. Some of them are leather, paper and most importantly the food processing industry

· There is no reason to tinker or tamper the tax rates year after year. There must be a certain stability in tax rates. Today, I think, most people are comfortable with the personal and corporate tax rates. This is the year of consolidation.

· Revenues are growing at about 20 per cent a year, which means that our tax policies are very balanced and right.

· tax laws and exemptions cannot be permanent