Govt may increase excise, service tax rates: Deloitte

Written by Agencies | New Delhi | Updated: Jun 26 2009, 20:42pm hrs
International accounting and consulting firm Deloitte expects that the Indian government will increase excise duty and service tax rates in the upcoming Budget to harmonise 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 six per cent and service tax by two per cent in three stimulus packages, which Deloitte expects to be partially rolled back.

"The Government may cut back indirect taxes reductions made as part of fiscal stimulus packages in December-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," opined Deloitte Touche Tohmatsu India Senior Director (Indirect Tax) M S Mani.

He 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.

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 Finance Minister Pranab Mukherjee on July 6, 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.