Indian Budget 2003-2004

Indirect taxes: excise
 
Rationalisation and relief

154. Rationalisation of excise rate structure and reduction of the multiplicity of rates are integral to the total tax reform process. In this regard, I propose to prescribe a 3-tier excise duty structure of 8 per cent, 16 per cent and 24 per cent. These rates would, however, not apply in the case of petroleum and tobacco products, pan masala, and items attracting specific duty rates. I have already announced a separate package for textiles, and some changes in the duty structure relevant for some other key sectors while dealing with those sectors. I will now refer to the changes proposed in various other commodities.

155. Currently, tyres, aerated soft drinks, polyester filament yarn, air-conditioners and motor cars attract excise duty of 32 per cent. I propose to reduce the duty on these items to 24 per cent.

156. Certain exempt items were brought under the tax net during the last two years with an optional duty of 4 per cent without CENVAT, or 16 per cent with CENVAT. I propose to eliminate the 4 per cent duty without CENVAT. However, keeping in view the number of representations received for exemptions, I propose to fully exempt the following items of the ordinary citizen’s use, currently attracting 4 per cent excise duty:

• Unbranded surgical bandages
• Registers and account books
• Umbrellas
• Kerosene pressure lanterns
• Articles of wood
• Imitation zari
• Adhesive tapes
• Tubular knitted gas mantle fabrics
• Walking sticks
• Articles of mica
• Bicycles and parts
• Toys
• Mosaic tiles
• Utensils and kitchen articles
• Knives, spoons and similar kitchenware/tableware
• Glasses for corrective spectacles

157. Rest of the items attracting 4 per cent without CENVAT will now attract duty at 8 per cent with CENVAT.

158. I also propose to fully exempt from excise duty matches made by the non-mechanized sector. However, matches made by semi-mechanized and mechanized sector will attract an ad-valorem duty of 8 per cent without CENVAT.

159. I also propose to reduce the excise duty chargeable under the Medicinal and Toilet Preparations Act, on medicines and toilet preparations containing alcohol, from the present high rates of 20 to 50 per cent to a uniform rate of 16 per cent, at par with the rates on similar items not containing alcohol. However, exemptions on ayurvedic and unani medicines, containing self-generated alcohol, will continue.

160. I propose to reduce the excise duty on items like pressure cookers, ophthalmic blanks, biscuits, boiled sweets and dental chairs from 16 per cent to 8 per cent. Recorded audio compact discs (CDs) will be fully exempt from excise duty.

161. It is my conviction, Mr. Speaker, that these measures will result in "Grihini ki tukia mein anna": the second part of my assurance.

162. As I have earlier stated, efficient transportation is critical for rapid development. I have already announced major reduction in excise duty on motor cars and tyres. Further, on environmental considerations, I propose to reduce the duty on electric vehicles from 16 per cent to 8 per cent.

163. Presently, there is an inequitous duty structure between buses and trucks, manufactured by an integrated unit, vis-?-vis independent body builders, who are exempt from excise duty. To reduce the duty differential and to promote body building by integrated bus and truck manufacturers, as a measure of road safety, I propose to increase the duty on chassis from 16 per cent, to 16 per cent plus Rs.10,000 per chassis, cleared for outside body building. The body building activity in the unorganized sector would, however, continue to remain exempt.

164. It is an accepted principle that while taxation should be moderate, the tax base has to be large, so that every sector contributes moderately to the national economy. Following this principle, I propose to impose fresh excise levy of 8 per cent on the following items, with the CENVAT credit facility available to them: branded refined edible oil and vanaspati packed in sealed containers for retail sale - this will not apply to unbranded oil; lay flat tubing; chemical reagents; wood-free particle or fibre board made from agro base; paper and paper board made from non conventional raw material; and populated printed circuit board for black and white TV sets.

165. Considering that specific rates on cement and clinker have remained unchanged for a considerably long period of time, I propose to now increase these rates by Rs.50 per tonne. This will mean a modest increase of Rs.2.50 per 50 kg. bag of cement.

166. I also propose to impose additional excise duty of Rs.1.50 per litre on light diesel oil to further discourage its use as an adulterant.