Budget 2009-10 did not announce any big bang change in the country?s indirect tax regime, but yet succeeded in making the Centre?s intent very clear.
Finance minister Pranab Mukherjee on Monday continued with the existing rates for central excise duty, service tax and customs duty in the backdrop of the economic slowdown, while ?reinforcing? the Centre? role in introducing GST from April 1, 2010
The three stimulus packages have reduced the median slab for excise duty to 8% and service tax to 10%. The peak customs duty rate is 10%.
The domestic economy is yet to revive from the global downturn. Growth in the index of six core infrastructure industries slipped to 2.8% in May 2009 as against 5% in April and 3.1% a year ago.
Revenue secretary PV Bhide however said, ?A call on rolling them back will be taken when the economy revives. This can be done through notifications,?
But, signalling GST could be levied at about 16%, Mukherjee has reviewed the list of items that attract a 4% excise duty??the only rate below the mean rate.?
He also stressed that the deadline for GST would be met?despite the recent reservations of states?but did not lay out any roadmap for it, such as Constitutional amendments that would be required. Despite the continuation in the excise duty and service tax cuts, the Exchequer is expected to earn an additional Rs 2,000 crore from indirect taxes in 2009-10 at Rs 2,69,477 crore.
For this, the Budget has included transport services by railways and inland water services, legal consultancy and cosmetic and plastic surgery under service tax. Customs duty on gold and silver bars has also been hiked to Rs 200 for 10 grams and Rs 1,000 per kg each.
Providing relief to exporters, the Budget has exempted them from service tax on services received from goods transport agents and commission agents. ?The Budget has taken steps keeping in mind the economic situation. The extension in duty cuts will help in reviving industry,? said R Muralidharan, executive director PricewaterhouseCoopers.