Centre cuts service tax to 10% from 12%
Finance Minister Pranab Mukherjee today, 24 February 2009, announced a surprise cut indirect tax levies. While the general excise duty has been reduced to 8% from 10%, the service tax has been cut to 10% from 12%. Excise duty on bulk cement has been reduced to 8% from 10%.
A previously announced 4% across-the-board cut in excise duty will continue beyond 31 March 2009, Mukherjee said in his reply to a debate on the interim budget for 2009-2010 in parliament. At the time of announcing a first fiscal stimulus package for the economy in December 2008, the government had announced an across-the-board 4% cut in excise duties till 31 March 2009.
Mukherjee also announced that goods that attract 10% excise duty will now be charged at 8%. However, excise rates on items that attract 8% and 4% excise duty will not be changed.
With regard to cement, the rate of central excise on bulk cement has been cut from 10% or Rs 290 per metric tonne (PMT) whichever is higher to 8% or Rs 230 PMT whichever is higher.
All changes in the indirect taxes are effective from today, 24 February 2009
The Lok Sabha later approved the interim budget by voice vote, amidst a walkout by the Opposition BJP and Left parties.
Interestingly, the government has announced the changes in indirect taxes just a week after it presented the interim budget for 2009-2010 on 16 February 2009. There were no changes in direct or indirect taxes in the interim budget.
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