FM reduces excise duty on cement; Asks industry to cut prices

New Delhi, May 3 (UNI) Finance Minister P Chidambaram today announced a cut in excise duty on cement and abolition of import duty on gems and jewellery and export duty on cut diamonds.

Replying to the Lok Sabha debate on Finance Bill, Mr Chidambaram exempted from excise duty biscuits with retail price of not more than Rs 100 a kg and soya nuggets.

The Minister recast the tax on Employee Stock Options (Esops) and made the Fringe Benefit Tax applicable from the date of vesting.

Export duty on iron ore finds has been slashed to 50 per cent.

The House passed the Finance Bill by voice vote amid a walkout by the opposition NDA in protest against the rejection of its suggestions. NDA leaders dubbed the Budget proposals anti-poor.

The Finance Minister indicated that the tax brackets recast may be linked to inflation and proposed to increase the tax-GDP ratio by 0.3 per cent.

The Minister, who had announced a tax holiday for hotels coming up in the National Capital Region in view of the 2010 Commonwealth Games, said he would consider a similar benefit to the hotels falling within Buddhist tourist circuit which attracts tourists from Japan and other far East countries.

Venture capital funds would get tax incentives on investments made in infrastructure projects.

The government would also consider keeping the tax rates stable and moderate. The tax exemptions however would be pruned further and phased out eventually.

Customs duty on nickel has been reduced from five per cent to two per cent. Import duty has been abolished on refrigerated motor vehicles to give a boost to the food processing industry. Excise duty on such vehicles has been slashed from 16 per cent to 8 per cent.

Service tax on renting of commercial properties would continue, while the securities transaction tax rate also is there to stay.

Also, excise duty on pan masala would continue at 45 per cent.

The excise duty cuts on cement is expected to bring down the cement prices by Rs 7 per bag. Ad valorem duty for cement sold above Rs 190 per bag has been fixed at 12 per cent. Excise duty on cement costing not more than Rs 190 would continue at Rs 350 a tonne.

Mr Chidambaram warned the cement industry that the concessions would be reviewed unless the sector responded positively to the change.

UNI