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« Indirect Tax »
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Budget 2012: Times guide to indirect tax
March, 19th 2012

Proposal: Standard excise duty rate is increased from 10.3% to 12.36%.

Impact: Consumer durables and other goods such as washing machine, airconditioner , laptops, toys, wrist watches, two-wheelers , perfumes, etc will now be costlier by 1% to 1.5%.

Proposal: Concessional rate of excise duty of 1.03% and 5.15% is increased to 2.06% and 6.18% respectively on many specified products.

Impact: Basic and necessary goods such as tooth powder, spectacles/ lenses, sewing machines, pens, pencils, sugar confectionary, pastry, cakes, paper, drugs, medical equipment, etc will now be costlier by 0.5% to 0.7%.

Proposal: Service tax rate to increase from 10.3% to 12.36%.

Impact: Services such as telecommunication/ mobile, internet, pest control, commercial coaching, beauty and health treatment, courier, etc will be costlier by 2.06% flat. Households bill for a monthly spend of Rs 10,000 on services likely to go up by Rs 200.

Proposal: Basic excise duty on petrol cars with engine capacity between 1200cc to 1500cc is increased from 22.66% to 24.72%.

Impact: A mid-sized salon car with ex-showroom price of Rs 7 lakh will be costlier by Rs 8,000 to Rs 10,000.

Proposal: Excise duty abatement on branded readymade garment for excise duty is increased from 55% to 70%.

Impact: A branded jeans costing Rs 2,000 is likely to be cheaper by Rs 20.

Proposal: Excise duty on cigarettes of length exceeding 65 mm increased by adding an ad valorem component of excise duty of 10% and such rate shall apply on 50% of retail selling price.

Impact: A pack of cigarettes of length exceeding 65 mm costing Rs 120 will now cost between Rs 125 and Rs 130.

Proposal: Service tax is proposed to be levied on passenger travel by rail in first class or airconditioned coach with or without unaccompanied goods on a value equal to 30% of fare.

Impact: In addition to proposed rise in first class and air-conditioned coach fares by the Railway Budget, service tax of 3.7% will apply. Thus, a 3-tier AC ticket in Rajdhani Express from Mumbai to Delhi costing Rs 1,470 will now cost Rs 1,525.

Proposal: Abatement of 50% in value available to hotels, inns, guest houses, clubs, campsites for residential or lodging purposes has been reduced to 40%.

Impact: Stay in five-star hotel costing Rs 6,000 per night will now be expensive by Rs 136.

Proposal: Service tax on air travel is proposed to be changed from existing lump sum payment per ticket to ad valorem tax rate on specified value of air fare. Effectively service tax at 4.8% would be payable on the air fare.

Impact: A Mumbai-London return air ticket in an economy class with a fare of Rs 30,000 will cost dearly by at least Rs 700.

Proposal:Basic excise duty of 1% on branded silver jewellery to be done away with.

Impact: Silver jewellery costing Rs 20,000 will be cheaper by Rs 200.

Proposal: Basic excise duty on LED lamps reduced to NIL.

Impact:Now on a Rs 150 LED lamp, one should save as much as Rs 10.

Proposal: Basic customs duty raised from existing 10% to 30% on imported bicycles .

Impact: Now a branded luxury bicycle costing Rs 15,000 will now cost between Rs 17,000 and Rs 19,000.

Proposal: Limit of duty-free allowance on return to India from international journey hiked from Rs 25,000 to Rs 35,000 for an overseas stay of more than three days (it is hiked from Rs 12,000 to Rs 15,000 for a shorter stay).

Impact: The change, for example, ensures an additional savings of approximately Rs 3,500 for passengers who have shopped for at least Rs 35,000 with an international stay of more than 3 days

Proposal:Basic excise duty on gold coins with 99.5% purity reduced from existing 1.03% to NIL.

Impact: A 10 gm 99.50% pure gold coin costing Rs 28,000 set to be cheaper by approximately Rs 275.

Proposal: limit for levy of service tax on monthly maintenance charges payable to a housing society for an apartment has been increased from Rs 3,000 to Rs 5,000. Impact: The tax outgo will stand reduced and the flat owner will benefit to that extent. Methodology: We have taken the MRP of popular brands across each item in this table, factored in a tentative distributor's margin and then computed the indicative impact of budget announcements.

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