Budget 2011: Highlights of the Indirect Tax Proposals

The key points in the speech of the Hon’ble Finance Minister, Mr. Pranab Mukherjee in relation to Indirect Taxes are highlighted hereunder: 

EXCISE:

 o Standard rate of excise duty held at 10 percent; no change in CENVAT rates

o Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted.

SERVICE TAX:

o Service tax rate kept at 10 percent

o Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests.

o Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes, it will be ten per cent flat.

CUSTOMS:

o Iron ore export duty raised to 20 percent

o Peak rate of customs duty maintained at 10 per cent in view of the global economic situation.

o Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent.

o Works of art exempt from customs when imported for exhibition in state-run institutions; this now extended to private institutions.

o Customs and excise proposals to result in net revenue gain of 73 billion rupees.