Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: TDS :: VAT Audit :: ACCOUNTING STANDARDS :: VAT RATES :: ACCOUNTING STANDARD :: cpt :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: due date for vat payment :: form 3cd
Service Tax »
 IT infrastructure firm of GST under scrutiny for tax evasion
 GST council OKs draft law on relief to states
 GST Network gets notice for avoiding service tax
 GSTN contract may attract tax
 GST Council may discuss tax rate on gold at Udaipur meet
 Govt may rework indirect tax estimates mid-way after GST
 GST Council meeting: States allowed to tweak taxpayer division after consulting Centre
 Government may rework indirect tax maths mid-way after GST entry
 Govt may rework indirect tax mid-way after GST entry
 GST rollout will reduce disparity among states
 GST: E-tailers oppose tax laws

Government plans to impose additional levies on cigarettes and diesel cars
November, 02nd 2011

The finance ministry is exploring plans to impose additional levies on cigarettes and diesel cars, measures that some officials think could help it earn much needed revenues without stoking inflation or hurting growth.

Taxes on services could also be increased under these plans aimed at helping the cash-strapped government cope with lower-than-budgeted revenues in a slowing economy, two finance ministry officials familiar with the proposals told ET.

"Various options, including raising duties on diesel cars and cigarettes, are on the table," said one official, asking not to be identified. The second official said a frantic search was on for all options to boost revenues as the finance ministry was also keen to demonstrate its fiscal prudence at a time of great stress. "All efforts are being made to ensure the fiscal deficit target of 4.6% of GDP is met and there is no slippage."

Finance Minister Pranab Mukherjee is expected to take a final decision on the levies after a review of the indirect tax collection figures for October, which will become available later this week. An increase in excise duty and service tax is said to have figured in the discussions at Prime Minister Manmohan Singh's meeting with economists on October 15.

Excise duty collections fell for the first time in 16 months in September while customs duty collections remained flat, raising fears the government may fail to meet the revised target of Rs 4.40 lakh crore for indirect taxes. On Monday, data showed the government has run up a fiscal deficit of 70% of budget estimates half-way into the financial year despite a near-freeze in expenditure.

The officials said relevant departments had been asked to study the implication of any increase in levies on the two sectors, including calculating the revenues these proposals can fetch. The finance minister is not keen on an across-the-board increase in taxes for fear of hurting already faltering growth, said one of them, who is familiar with the minister's thinking. Economic growth slipped to 7.7% in the fiscal first quarter and there is now near-consensus that this year's GDP growth will be about 7.5% and not the near-9% budgeted at the start of the fiscal.

Cigarettes have long been considered a favourite target for any government facing revenue challenges. Increasing levies on them does not prick ministers' conscience and neither does it impact growth in the sector. The finance ministry feels topping up the excise levy on diesel cars will not make a material dent in demand.

Reluctant to hike diesel price

There exists a waiting period of 2-3 months on most diesel models because of the steady rise in petrol prices. The government has been reluctant to increase prices of diesel for fear of stoking inflation. The finance ministry reasons that since the government is not able to raise diesel prices, it is justified in levying more tax on diesel cars. Officials say raising levies on these items could be politically expedient and administratively simple.

Imposition of duties on these products would also not the hurt common man, a crucial consideration for the government ahead of major assembly elections next year. Duties on diesel cars can be increased though a simple notification although to do the same on cigarettes, it will need to issue an ordinance. The government earns about Rs 8,000 crore from duty on diesel cars and Rs 10,000 crore on cigarettes each year.

Excise duty on cigarettes ranges from Rs 509 to Rs 1948 per thousand sticks, which is the maximum that the government can impose without seeking Parliament's approval. At present the duty on cars is based on the length and not the fuel. Small cars attract an excise duty of 10%, while cars with engine capacity more than 1500 cc attract 22% duty. An expert panel headed by former Planning Commission member Kirit Parikh last year recommended imposition of additional excise duty on diesel vehicles of up to Rs 80,000.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Vision

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions