Maintain customs, excise, service tax rates in Budget 2015
February, 11th 2015
The rates of service tax, central excise and customs duties be maintained at the current level in the Budget in order to aid the success of the 'Make in India' initiative, industry body CII has said.
At present, the rate of service tax and excise duty is 12 per cent each, while the customs duty stands at 10 per cent. For the success of 'Make in India', Budget 2015-16 should avoid the temptation of raising excise duties.
"Moreover, manufacturing sector continues to be vulnerable. Under these circumstances, it would be prudent to allow excise duties to remain at current 12 per cent," the industry body said.
Besides, CII said it hopes for early roll out of the much-delayed Goods & Services Tax (GST), saying the indirect tax regime should subsume all taxes, be applicable to all products and services and involve a reasonable Revenue Neutral Rate (RNR).
"Industry should be allowed to participate in the Task Force on RNR and other significant issues such as Integrated GST, Place of Supply Rules and draft GST legislation," CII Director General Chandrajit Banerjee said.
To provide a stimulus to the manufacturing sector, excise duties on automobiles, capital goods, consumer durables, etc were lowered in February 2014, but this rebate expired in December 2014.
However, demand continues to be weak, said CII, adding that reduction in rates was desirable but may not be aligned to the government's fiscal situation.
The industry body has advocated reduction in excise duty on automotive parts where the applicable rate is higher than that applicable on automobiles, thus leading to anomalies.
It has also called for reduction in excise rates on various goods, including Active Pharmaceutical Ingredients (API), fly ash products, packing materials for food processing industry, etc.
Regarding customs duties, CII maintains that peak rates should be retained at the current 10 per cent.
"Lowering peak customs duties will act against the 'Make in India' campaign. Many products already attract lower rate of customs duty. Further, due to free trade agreements, concessional rates are applicable to a large range of goods coming from countries like Malaysia, Thailand, ASEAN, and others," the chamber said.
"There is a need to exempt 4 per cent Special Additional Duty of Customs (SAD) on certain metal scraps, while SAD should be imposed on all projects which involve import of capital goods to counter-balance domestic taxes," it added.
The chamber has also called for duty reduction on several key products, including LNG, coking coal, wine, and parts for air conditioners and safety equipment, among others.