New Delhi, Feb 24 (ANI): The government on Tuesday cut factory gate duties and service taxes in an effort to boost demand and revive growth in economy as it reels under the impact of the global economic crisis.
External Affairs Minister Pranab Mukherjee, who is also acting as the stand-in Finance Minister concluded the discussion on the Interim Budget in Lok Sabha.
"General reduction in excise duty by four percent points was made with effect from December 7, 2008. It is now being extended beyond March 31, 2009. In addition, it has now been decided to reduce the general rate of central excise duty from ten percent to eight percent, retain the rate of central excise duty on goods currently attracting ad valorem rates of eight percent and four percent respectively, reduce the rate of central excise duty on bulk cement from ten percent or Rs. 290 Per Metric Ton, whichever is higher to eight percent or Rs. 230 Per Metric Ton, whichever is higher," Mukherjee said.
Tax rate on services has been trimmed to 10 percent from 12 percent.
"It is also our objective that the dispersal between CENVAT rate and the service tax rate is reduced with a view to move towards the stated goal of a uniform goods and services tax. In line with this objective, it has been decided to reduce the rate of service tax on taxable services from 12 percent to 10 percent," Mukherjee added.
Mukherjee said the move would be a stimulus to the strained economy.
"It is another stimulus, I hope it will have its desired impact because we have given some concessions for the export sectors, particularly those export sector which are employment generated like gems jewellery, garments sectors, handicraft sectors, these are employment oriented. I do hope it will boost the export," he told media persons at the parliament.
Mukherjee said government was confident to overcome the impact of the global economic crisis on the domestic economy. The Indian economy is estimated to grow 7.1 percent in the current fiscal year, which ends in March, slower than the 9 percent in the previous year and some economists say expansion could slow to below six percent in 2009-10.
The government has already announced two stimulus packages, including 4 billion dollar in extra spending and an earlier four percentage point cut in general excise duty.
Along with spending on a pay hike for civil servants and a massive programme to write off the debt of small farmers, the extra spending has helped swell the fiscal deficit to an estimated six percent of gross domestic product in 2008-9.
Mukherjee further said that duty on bulk cement has been reduced from 10 percent to 8 percent.
The Lok Sabha later gave its assent to the Interim Budget by a voice vote.
However, the main opposition Bharatiya Janata Party and other Left parties remains unsatisfied. (ANI)