Union Budget - Indirect Tax Highlights

FM Chidambaram has announced the Union Budget 2007-08. He has increased the excise duty on cement from Rs 400 to Rs 600 for retail price of over Rs 190/bag. This is likely to affect all the companies as majority of the cement prices are above Rs 190. Excise Duty on petrol and diesel has been reduced from 8% to 6%.

Following are the highlights of Indirect Tax for Service Tax, Excise and Custom Duty:

Indirect Tax

There has been an excise duty hit for cement companies. Excise duty is down from Rs 400 to Rs 300 for threshold Rs 190 retail price and the excise duty has been increased from Rs 400 to Rs 600 for retail price of over Rs 190. This is likely to affect all the companies as majority of the cement prices are above Rs 190. Excise Duty on petrol and diesel has been reduced from 8% to 6%, so petrol and diesel prices can be expected to come down, though the oil minister has ruled out any such move.

Service tax exemption limit has been raised to Rs 8 lakhs. Over 2 lakh small service providers to go out of service tax net. But there is no change in service tax rate, which stays at 12%. 5. Peak customs duty rate brought down to 10% from 12.5. Customs duty on polyster yarns, plastics, medical equipments reduced to 7.5%, gems and jewellery reduced to 3%. But 3% import duty has been imposed on private imported aircrafts.

Cuts central sales tax to 3% from 4%

Service Tax


Service tax exemption for tech business incubators
Drug testing clinical trials exempt from service tax
Service tax on rental of property for commercial use
Service tax on works' contract service

Excise

Excise duty on pan masala without tobacco cut to 40%
Excise duty on pan masals without tobacco cut to 40%
Non-electric water filters fully exempt from excise
To reward cement makers who hold prices of cement
Umbrella, footwear excise duty cut to 8% vs 16%
Bio diesel, food processing exempted from excise duty.
SSI excise exemption raised to 15 mln rupees vs 10 mln.
Excise on plywood cut to 8% from 16%.
Petrol, diesel ad valorem excise duty cut to 6% vs 8%.


Customs duty

General customs duty on medical equipment 5%
Customs duty on animal feed cut to 20% vs 30%.
Customs duty on watch dials, umbrella cut to 5% vs 12.5%
Coking coal exempt from customs duty.
Customs duty on cut, polished gems cut to 3% from 5%
Customs duty on PFY cut to 7.5% from 10%
Crude, refined edible oils to be exempt from customs duty
Customs duty on steel cut to 12% vs 20%
General customs rate on medical equipent 5%
Cut customs duty on DMT/PTA to 7.5%
Customs duty on drip irrigation cut to 5% vs 7.5%
Cut custom on cut and polished gems to 3% from 5%
Customs duty on polyester fibre yarn cut to 7.5% vs 10%
Fully exempts coking coal from customs duty
To cut peak rate for non-farm pdts to 10% vs 12.5%