The proposed changes are revenue neutral, and I have been assured that there will be no increase in the retail prices of these products as a result of the changes in the duty structure.

Consequent upon the changes made in Customs and excise duties, the drawback rates for exported goods will be reviewed and modifications, wherever necessary, will be notified by April 30, 2005.

Abatement: Hon'ble members are aware that many goods are chargeable to excise duty on a value with reference to their maximum retail price (MRP), after allowing suitable abatement. The system of quantifying the abatement should be made transparent.

There should also be a mechanism to review the rate of abatement to reflect changed circumstances.

Hence, as a trade facilitation measure, I propose to set up an advisory committee to advise the Government on the extent of abatement for both excise duty and service tax.

Service tax: The other indirect tax is service tax. Since the services sector accounts for about 52 percent of the GDP it is necessary to cast the net wide.

Last July, I raised the rate of service tax to 10 per cent. I propose to maintain that rate.

I also propose to grant relief to small service providers.

Accordingly, I propose to exempt from service tax those service providers whose gross turnover does not exceed Rs 4 lakh per year. According to my calculation, 80 per cent of the present service tax payers will gain from the exemption.

I propose to include some additional services in the service tax net. New services to be covered include pipeline transport of goods; site formation, demolition and like services; membership fees of clubs and associations; packaging and specialised mailing services; survey and map making services; dredging services in rivers and harbours; cleaning services for commercial buildings and similar premises; and construction of planned residential complexes, with more than 12 dwelling units, developed by builders.

I also propose to expand the coverage of certain services.

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