CII calls for two per cent cut in excise duty

New Delhi, Dec 17 (UNI) In a move that could reduce incidence of tax in the country, Confederation of Indian Industries (CII) today suggested the government to reduce the excise duty rate from 16 per cent to 14 per cent.

India has one of the highest incidences of indirect tax on goods, where most of the manufactured products attract 16 per cent excise duty and 12.5 per cent value added tax (VAT), it said.

The chamber, in its pre-budget memorandum, also urged for reduction of excise duty on processed foods, pesticides for agriculture, energy efficient triphosphor fluorescent lamps, electric fans, caprolactum and two-wheelers from 16 per cent to eight per cent, on all type of cars from 24 per cent to 16 per cent and on cement from Rs 400 to Rs 350 per tonne.

CII's memorandum called upon the government to indicate and initiate concrete steps for implementing Goods and Services Tax (GST) so that the common tax can be in place by 2010, as has been committed by the Finance Minister in this year's budget.

To make the excise procedure simpler, the Cenvat credit on capital goods on the date of the receipt should be allowed, it said.

Secondly, payment of excise on used capital goods at the time of removal either on transaction value or on the depreciated value, as against the present provision of reversal of full Cenvat credit should should be permitted, CII opined.

Cenvat credit on low dropout (LDO) and High Speed Diesel (HSD) should be allowed, when used for generation of power or in the process of manufacture. The requirement of pre-authentication of invoices for assessees paying excise duty of more than Rs five crore need to be relaxed.

CII also suggested fixing a time limit for review of abatement rate by Advisory Committee on abatement and give feedback of the findings of the committee to the applicant.

Its pre-budget memorandum also drew attention of the government for implementing its earlier proposal of bringing down CST rate from four per cent to two per cent from April 1, 2007 and thereafter announcing a roadmap for further reduction of CST to NIL. As the reduction in the CST will have adverse revenue impact to the states, CII has urged the government to announce the acceptable compensation package for neutralising the said impact.

On service tax, CII recommended that the present rate of 12 per cent should remain unchanged. For increasing the revenue from service tax, it has suggested that more services should be brought under the tax net.

For making the service tax levy simpler in case of the comprehensive annual maintenance contract (AMC) covering labour and replacement of parts for consumer durable such as computer, refrigerator, CII has urged that service tax be charged on specified percentage of the contract value.

UNI KR PV GC1207