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Experts Say Excise Duty Hike was Expected
New Delhi: Finance Minister Pranab Mukherjee proposed a two percentage point hike in peak excise duty from 10 percent to 12 percent. Market analysts said the increase was expected.
Mukherjee, in his budget proposals for 2012-13, also proposed to increase excise duty on 'demerit' goods such as certain cigarettes, bidis, pan masala, gutka, chewing tobacco, unmanufactured tobacco and zarda scented tobacco.
Presenting the budget in parliament, at the juncture of economic and political crossroads, the finance minister also proposed to enhance cess on crude petroleum oil produced in the country to 
4,500 per tonne from 2,500 per tonne under the COIL Industries Development Act.
In order to garner additional resources from indirect taxes, Mukherjee has proposed to enhance basic duties on completely built units of large cars.
"Large cars currently attract excise duty depending on their engine capacity and length. In keeping with the increase proposed in the standard rate, I propose to enhance the duty from 22 percent to 24 percent," he said.
BNK Capital managing director Ajit Khandelwal said the excise duty hike of two percent was nothing unexpected.
"This was expected. The excise duty was 12 percent before the crisis period during 2008-09. Now the Indian economy is stabilising, the finance minister today brings it to that level. The market was expecting it," Khandelwal said.
"He has to garner more revenue now to tame the rising fiscal deficit," he added.
Biswajit Datta, former chief commissioner of customs, Central Excise and Service Tax, agreed.
"It was expected. As there was no provision for the finance minister to garner more revenue from direct taxes, he resorted to a hike in excise duty. With this hike about 45,000 crore more revenue is expected in the next fiscal," he told IANS.
On whether the hike in duty would adversely affect the industry, which already shows signs of slowing down, Datta said: "I do not think manufacturing sector will be affected as the hike in taxes would ultimately be passed to end customers."
Source: IANS
4,500 per tonne from 2,500 per tonne under the COIL Industries Development Act.
In order to garner additional resources from indirect taxes, Mukherjee has proposed to enhance basic duties on completely built units of large cars.
"Large cars currently attract excise duty depending on their engine capacity and length. In keeping with the increase proposed in the standard rate, I propose to enhance the duty from 22 percent to 24 percent," he said.
BNK Capital managing director Ajit Khandelwal said the excise duty hike of two percent was nothing unexpected.
"This was expected. The excise duty was 12 percent before the crisis period during 2008-09. Now the Indian economy is stabilising, the finance minister today brings it to that level. The market was expecting it," Khandelwal said.
"He has to garner more revenue now to tame the rising fiscal deficit," he added.
Biswajit Datta, former chief commissioner of customs, Central Excise and Service Tax, agreed.
"It was expected. As there was no provision for the finance minister to garner more revenue from direct taxes, he resorted to a hike in excise duty. With this hike about 45,000 crore more revenue is expected in the next fiscal," he told IANS.
On whether the hike in duty would adversely affect the industry, which already shows signs of slowing down, Datta said: "I do not think manufacturing sector will be affected as the hike in taxes would ultimately be passed to end customers.".jpg "Gurbinder Singh Punn: Enabling Leaders To Achieve Unencumbered Success Through Effective Coaching")
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