Budget Speech - PART B
Central Excise
- I now come to my proposals on central excise.
- Our excise structure is far too complex. Till
some time ago, we had a multiplicity of rates, innumerable
end-use exemptions and other distortions. Considerable
simplification has taken place. Last July, I promised that within three
years we shall have a four rate tax structure. I find that, in the
first instance, it is necessary to reduce the dispersion in excise rates.
I believe that we can eventually gravitate towards a mean
rate around 18%. With this objective in view, I have introduced
three new rates, namely, 8%, 13% and 18%. In the process I
have done away with the rates of 20% and 10% (except in the case
of some petroleum products). In the interest of revenue, I
have perforce to continue, for the time being, the rate of 15%
which will apply to metals and a few other commodities.
- However, the excise duty structure is still
punctuated with many exemptions. All commodities, with some
unavoidable exceptions, should be subject to excise duty at a minimum rate.
I propose to undertake this exercise in the next year's budget.
- Cotton yarn will continue to bear an excise duty of
5% only.
- I propose to withdraw the exemption in a few cases
like jams, jellies, sauces and soups where I propose to impose a
nominal duty of 8%. Similarly, I propose to levy a duty of 8% on pens
and ball point pens exceeding a value of Rs.100 per piece and on
non-power sun glasses. However, writing ink will be free from
excise duty.
- On a number of items of mass consumption
like biscuits, sugar confectionery, laundry soap, tooth paste,
tooth powder, kitchen and tableware of glass, and clocks and
watches of a value upto Rs.600 per piece, I propose to reduce the
excise duty from 10% to 8%. A rate of 13% would be applied for
watches and clocks above Rs.600 per piece and other items like
machinery and parts, tyres and tubes of two-wheeled motor
vehicles, fluorescent tubes, and computers and parts thereof. A
reduced rate of 13% will also apply to X-ray films, sanitary towels,
napkins for babies and similar sanitary articles.
- In respect of a large number of products, I propose
to reduce the excise duty by percentages ranging from 2% to
7% and apply the mean rate. Accordingly, the mean rate of
18% would be applicable to many commodities including cocoa
and cocoa preparations, instant coffee, sherbats, organic and
inorganic chemicals, paints and dyes, electric wires and cables, toilet
soaps, detergents, articles of leather, synthetic rubber, fibres and blended
synthetic yarn, paper and paper board, plywood,travel goods
and a host of consumer durables.
- Agricultural and horticultural machinery are
fully exempt from excise duty. I propose to extend the exemption
from excise duty to milking machines, dairy machinery and their parts.
- In order to revive and give a thrust to the ailing
jute industry, I propose to fully exempt all jute and jute products
from excise duty.
- At present, import of equipment and consumables
by recognized research institutions is exempt from customs duty.
In the interest of the domestic producer, I propose to allow
the purchase of indigenous equipment and consumables by
such institutions free of excise duty.
- I also propose to reduce the duties of excise on
certain items in order to bring about a more balanced excise
structure on the whole. The changes proposed are:
- Reduction of duty on taxis and cars for the
physically handicapped from 30% to 25%.
- Reduction of duty on polyester filament yarn from
40% to 30%.
- Reduction of duty on cosmetics and toilet
preparations from 40% to 30%.
- Reduction of duty on glazed tiles from 30% to 25%
- Reduction of duty on airconditioners from 40% to 30%.
- Mr. Speaker, Sir, smoking in public is banned in Delhi.
The fight against cancer and respiratory diseases continues.
My contribution will be to increase the excise duty on
non-filter cigarettes, not exceeding 60 mm in length, popularly called
mini cigarettes, from Rs.75 per thousand to Rs.90 per thousand. I
have also increased the excise duty on other categories of
cigarettes. The increases range from Rs.20 to Rs.70 per thousand.
There has been no increase in the excise duty on biris since 1993.
I, therefore, propose to increase the excise duty on biris from
Rs.5 per thousand to Rs.6 per thousand. The impact of this duty
change on the retail price would only be 2 paise for a bundle of 20
biris. As regards cigarettes, the increase would be 15 times more
for every mini cigarette.
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