The stand-in Finance Minister, Pranab Mukherjee, on Tuesday evening announced the third and probably the last stimulus package providing some relief to beleaguered industries and distressed aam admi (common man) in an atmosphere of global meltdown, skyrocketing prices and scare of losing jobs.
To woo the aam admi for the coming election, the ministry has announced Rs.30,000-crore of revenue in the form of indirect tax deduction, including the service tax and excise duty by 2%. Mukherjee has also deducted the excise duty on bulk cement and made absolute exemption on naphtha to boost the industries growth and demand.
In his last budget speech on Feb 16, Pranab Mukherjee had not announced any attractive declaration for the common man as well as industries too. This announcement was missing on 6th budget speech of UPA government, which had disappointed the industrialists and common man.
But Mukherjee’s latest announcement can heal the wounds of the aam admi and the business persons as the prices of almost 90 percent of necessary goods and commodities will come down if the benefit of this reduction reaches to the consumers.
About 96 percent of excise revenue generates from the 10% duty slab, in which FM has made changes by cutting 2% duty from 10% to 8% while the duties on other slabs will remain as it is. The 10% slab covers the auto (truck) sector, consumer durables, fast moving consumer goods (FMCG), and steel and IT peripherals.
The excise duty on bulk cement has also been reduced from 10 per cent or Rs 290 a tonne, whichever is higher, to 8 per cent or Rs 230 a tonne, whichever is higher.
A slash of 2% from 12% to 10% has also been announced on service tax, which will benefit telecom, tourism, hospitality, credit/debit cards and aviation sectors.
FM has also announced to extend the previous announced 4% deduction on December 7, 2008 in excise duty beyond March 31, 2009.
To reprieve the power sector, the naphtha imported for power generation has been fully exempted from basic customs duty and this exemption will carry on till the next budget, Mukherjee announced.
All the revised rates have been made effective from Tuesday midnight.
For the states, minister has allowed to borrow more up to 0.5% of the Gross State Domestic Product (GSDP) in 2009-10 to invest in infrastructure and to incite employment generation, which exemption will continue in the next fiscal too, Pranab said.
The Lok Sabha on Tuesday passed the interim budget 2009, the Finance Bill 2009 and the relevant appropriation Bill for the first four months of 2009-10 with voice votes.
“It is another stimulus to the economy. I hope it will have beneficial impact. This will also help boost exports. The tax concessions would entail revenue sacrifice of Rs 30,000 crore (for a financial year)”, Mukherjee told reporters after the budget approval.
The latest figures confirm that the two fiscal packages (December 2008 and January 2009) were steps in the right direction, he added.
The chairman of the Central Board for Excise and Customs (CBEC) later revealed that the board would have to bear a total revenue loss of Rs.29,100 crore – Rs 14,000-crore from service tax, Rs 8,500-crore from excise and Rs 6,600-crore from customs.
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