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In order to boost the automobile sector, excise duty has been reduced for small cars from 12 per cent to 8 per cent, and for SUVs from 30 per cent to 24 per cent in the interim budget presented by Finance Minister P Chidamabaram.
Nihal Kothari, Executive Director of law firm Khaitan & Co, said the Finance Minister “has announced reduction in excise duty in the case of three sectors facing deceleration in manufacturing growth. The excise duty on capital goods has been reduced from 12 per cent to 10 per cent, on mobile handsets to 6 per cent, and in the case of automobile having different duty rate the reduction is by 2 per cent to 4 per cent.”
Relief for someAccording to Sachin Menon, National Head-Indirect Tax, KPMG, “The vote on account gave the much needed relief to capital goods, consumer durables and auto sector at a time when the demand is low. This would spur demand in the interim, provided the benefit is passed on.”
Stating that “manufacturing productivity was low for the past few months,” Menon said with “the concessions for capital goods, auto and consumer durables, we hope to increase demand and therefore productivity.”
Customs duty has been reduced on non-edible oils used in soap bringing it to 7.5 per cent. Exemption of countervailing duty on machinery has also been announced.
Stating that these changes would come into effect immediately on issue of the notification, Kothari added the changes would give temporary relief to selected sectors.
As Daksha Bakshi, Executive Director, Khaitan & Company, added, “In the face of election, the Finance Minister was bringing to the attention of the nation the “growth” and “development” achieved by the UPA government, to negate the allegation of policy paralysis. An important statement was that the current account deficit needs to be contained through foreign currency inflows whether through FDI, FPI investments or through ECB and that there is no case for doing anything to reduce these flows.”
Bakshi added that some small measures were made to ease the immediate pressure on some of the ailing sectors of the economy by reducing excise duties.
Chidambaram has also announced relief for students who had taken education loans prior to 2009.
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