Indirect tax proposals

Sinha abolishes 16% SED and concessional rate of 8% excise duty on certain items

In his fifth budget speech for Union Budget 2002-03, Sinha specified that in his earlier budget, he had made strenuous efforts to address the issues of cascading, distortions, anomalies and inequities in the commodity tax structure. He further said that he had managed to achieve significant rationalization of tax structures relating to both excise and customs duties. The number of rates are now few and procedures more transparent.

In 2000-2001, he had introduced a 16% Central Value Added Tax (CENVAT) in the excise duty structure. In 2001-02, he had reduced the three rates of special excise duty to a single rate of 16%. He explained that this rationalization in the duty had has considerably reduced disputes and litigation and the cost of compliance to the assessees.

In this budget of 2002-03, Sinha abolished the 16% special excise duty (SED) on a number of items. Henceforth, SED shall be confined only to polyester filament yarn, motor cars, multi-utility vehicles, tyres for replacement, aerated soft drinks and soft drink concentrates, air conditioners, pan masala and chewing tobacco & miscellaneous tobacco preparations.

He has also abolished the concessional rate of 8% excise duty applicable to LPG, kerosene, auto CNG and diesel engines upto 10 HP which will now attract the cenvat rate of 16%. He proposed that Cenvat will be reduced to a single rate of 16% over the next two years.

Powered by

YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
The Rediff-Capital Market Budget Analysis
More Budget Stories
Money