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Prices of colour televisions, air conditioners and computer monitors may come down soon, as the Finance Ministry has decided to apply uniform rate of abatement for levying excise duty on various electronic consumer durables. The rate of abatement determines the portion of retail sales price or maximum retail price (MRP) on which central excise duty will be levied.
A senior Finance Ministry official told Business Line : “Now, the uniform rate of abatement would be 35 per cent.”
It means if the retail sale price is Rs 100, then, excise duty will be levied only on Rs 65. If the rate of duty is 12 per cent, then with the rate of abatement, the effective rate of central excise duty would come down to 7.8 per cent.
Uniform rate
At present, various electronic items have various rates of abatement. For example, this rate is 30 per cent for colour televisions, while it is 25 per cent for air-conditioners. It is 20 per cent for monitors and 35 per cent for fridges, washing machines and mobile phones. Now, all these items will attract the same rate. The Central Board of Excise and Customs (CBEC) has issued a notification in this regard.
The latest development may cheer the durables sector, which is facing tough times.
The Budget had raised the general rate of excise duty from 10 to 12 per cent. The rupee has depreciated almost 10 per cent in last two months, raising costs of imported components. This necessitated the industry to hike the prices last month.
Pass-through of benefits
With the latest development, the industry might not need to raise prices anytime soon, especially for colour TVs and air-conditioners, the official added.
Consumer electronic majors Samsung and Godrej Appliances have welcomed the move.
Mr Mahesh Krishnan, Vice-President (Home Appliances), Samsung India, said: “The increase in the rate of abatement is definitely a welcome initiative and will bring us relief in categories like colour televisions and split ACs.”
“Improvement in abatement will bring down the excise element. It is a welcome change for the industry. Benefits would be passed on to the consumers,” Mr Kamal Nandi, Vice-President (Sales and marketing), Godrej Appliances said.
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