Budget update - Excise and service tax hike likely
June, 29th 2009
The Financial Express reported that International accounting and consulting firm Deloitte expects that the Indian government will increase excise duty and service tax rates in the upcoming budget to harmonize them with the proposed Goods and Services Tax, which is scheduled to be introduced from next fiscal.
The Government has cut excise duty rates by 6% and service tax by 2% in three stimulus packages, which Deloitte expects to be partially rolled back.
Mr MS Mani senior director of Deloitte Touche Tohmatsu India said "The Government may cut back indirect taxes reductions made as part of fiscal stimulus packages in December to February, as the finance minister is expected to discuss the roll out of GST and lay down a framework plan for the introduction of the tax in the country."
Mr Mani said the government is expected to give some directional clarity on the GST and service tax and excise duty rates could be increased in order to facilitate transition to the proposed GST regime.
However, GST is supposed to converge almost all indirect taxes at the Centre and states. Broadly, it will replace excise duty, service tax at the Central level and VAT at the state level.
Among other expectation from the Budget, to be presented by Mr Pranab Mukherjee finance minister on July 6th, Deloitte predicts the custom duty on crude oil may be brought back to bring fresh revenue streams for the government to rein in mounting fiscal deficit.