Budget 1997-98: Full Text
- I now come to my proposals on central excise.
- Our excise structure is far too complex. Till some time
ago, we had a multiplicity of rates, innumerable end-use
exemptions and other distortions. Considerable
simplification has taken place. Last July, I promised
that within three years we shall have a four rate tax
structure. I find that, in the first instance, it is
necessary to reduce the dispersion in excise rates. I
believe that we can eventually gravitate towards a mean
rate around 18%. With this objective in view, I have
introduced three new rates, namely, 8%, 13% and 18%. In
the process I have done away with the rates of 20% and
10% (except in the case of some petroleum products). In
the interest of revenue, I have perforce to continue, for
the time being, the rate of 15% which will apply to
metals and a few other commodities.
- However, the excise duty structure is still punctuated
with many exemptions. All commodities, with some
unavoidable exceptions, should be subject to excise duty
at a minimum rate. I propose to undertake this exercise
in the next year's budget.
- Cotton yarn will continue to bear an excise duty of 5%
- I propose to withdraw the exemption in a few cases like
jams, jellies, sauces and soups where I propose to impose
a nominal duty of 8%. Similarly, I propose to levy a duty
of 8% on pens and ball point pens exceeding a value of
Rs.100 per piece and on non-power sun glasses. However,
writing ink will be free from excise duty.
- On a number of items of mass consumption like biscuits,
sugar confectionery, laundry soap, tooth paste, tooth
powder, kitchen and tableware of glass, and clocks and
watches of a value upto Rs.600 per piece, I propose to
reduce the excise duty from 10% to 8%. A rate of 13%
would be applied for watches and clocks above Rs.600 per
piece and other items like machinery and parts, tyres and
tubes of two-wheeled motor vehicles, fluorescent tubes,
and computers and parts thereof. A reduced rate of 13%
will also apply to X-ray films, sanitary towels, napkins
for babies and similar sanitary articles.
- In respect of a large number of products, I propose to
reduce the excise duty by percentages ranging from 2% to
7% and apply the mean rate. Accordingly, the mean rate of
18% would be applicable to many commodities including
cocoa and cocoa preparations, instant coffee, sherbats,
organic and inorganic chemicals, paints and dyes,
electric wires and cables, toilet soaps, detergents,
articles of leather, synthetic rubber, fibres and blended
synthetic yarn, paper and paper board, plywood,travel
goods and a host of consumer durables.
- Agricultural and horticultural machinery are fully
exempt from excise duty. I propose to extend the
exemption from excise duty to milking machines, dairy
machinery and their parts.
- In order to revive and give a thrust to the ailing jute
industry, I propose to fully exempt all jute and jute
products from excise duty.
- At present, import of equipment and consumables by
recognized research institutions is exempt from customs
duty. In the interest of the domestic producer, I propose
to allow the purchase of indigenous equipment and
consumables by such institutions free of excise duty.
- I also propose to reduce the duties of excise on certain
items in order to bring about a more balanced excise
structure on the whole. The changes proposed are:
- Reduction of duty on taxis and cars for the
physically handicapped from 30% to 25%.
- Reduction of duty on polyester filament yarn from
40% to 30%.
- Reduction of duty on cosmetics and toilet
preparations from 40% to 30%.
- Reduction of duty on glazed tiles from 30% to 25%
- Reduction of duty on airconditioners from 40% to
- Mr. Speaker, Sir, smoking in public is banned in Delhi.
The fight against cancer and respiratory diseases
continues. My contribution will be to increase the excise
duty on non-filter cigarettes, not exceeding 60 mm in
length, popularly called mini cigarettes, from Rs.75 per
thousand to Rs.90 per thousand. I have also increased the
excise duty on other categories of cigarettes. The
increases range from Rs.20 to Rs.70 per thousand. There
has been no increase in the excise duty on biris since
1993. I, therefore, propose to increase the excise duty
on biris from Rs.5 per thousand to Rs.6 per thousand. The
impact of this duty change on the retail price would only
be 2 paise for a bundle of 20 biris. As regards
cigarettes, the increase would be 15 times more for every
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