New Delhi: To spur manufacturing, hit by rising interest rates, the Finance Minister on Friday proposed a two per cent cut in excise duty — from 16 per cent to 14 per cent — on all goods, besides giving further duty concessions to specific sectors like auto and pharma.
"The manufacturing sector is the backbone of any economy. It is consumption that drives production and it is production that drives investment. I believe there is a need to give a stimulus to the manufacturing sector," Chidambaram said while presenting the General Budget for 2008-09 in Parliament.
Besides a two per cent general cut in excise duty on all goods, the Finance Minister proposed to lower the duty on all goods produced in pharmaceutical sectors to eight per cent from 16 per cent.
Excise duty on small cars, two, three wheelers, buses and their chassis will come down to 12 per cent from the current level of 16 per cent, while in case of hybrid cars the duty will be lowered to 14 per cent from the current 24 per cent.
However, in the software segment excise duty on packaged software would be raised to 12 per cent from 8 per cent to bring it on par with customised software, which will attract service tax of 12 per cent.
Non-filter cigarettes, which were enjoying favourable tax regime, will now be brought on par with filter cigarettes which attract higher taxes.
Goods of mass consumption like composting machines, wireless data cards, packaged coconut water, tea and coffee mixes and puffed rice will be exempted from excise duty against the current level of 16 per cent.
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