Changes in Excise rates by Budget 2011
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The document analyzes changes to India's central excise tariff rates in the 2011-12 Union Budget. [1] It discusses how 130 previously exempt goods will now be subject to a 1% duty without Cenvat credit or a 5% duty with credit. [2] Key sectors impacted include automobiles, cement, capital goods, and food processing. [3] The standard 10% excise rate remains, but the rate on goods previously at 4% increases to 5%.
Changes in Excise rates by Budget 2011
- 1. Presented by: CA Amarpal, 09717105008 ANALYSIS OF UNION BUDGET 2011-12 CHANGES IN CENTRAL EXCISE TARIFF RATES CHANGES AT A GLANCE On 28/ 02/2011, Honble Finance Minister presented the Union Budget for the financial year 2011-12. He has proposed many changes in the Indirect Taxes. Among them, in order to create a path towards GST (likely to be implemented by 2012), he has taken a step in removing the exemption regime by levying duty on 130 items out of 370 where VAT is charged by the States. The items covered are mainly consumer goods. Before the Budget 2011-12, the manufacturers of such excisable goods were enjoying exemptions from the levy of central excise. Now the exemption has been withdrawn and these products will be liable for payment duty of 1%/5% as the case may be. They are required to comply with the provisions of the Central Excise law. The products introduced into the levy include those where the rate of duty is Nil by tariff. The SSI exemption shall be available to such manufactures but subject to some conditions. This change shall be applicable from 1st March 2011 itself. Duty Rates: The standard rate of central excise is maintained at 10% however the rate of Central Excise has been increased from 4% to 5% across all goods which were chargeable to 4%. The changes would be effective from 1st March 2011. In this budget vide notification, as many as 130 entries of goods have been brought under the excise net and chargeable to duty at the rate of 1% duty without the benefit of Cenvat credit on Copyright@2011 Proprietary material of CA Amarpal
- 2. Presented by: CA Amarpal, 09717105008 inputs and input services vide notification no.1/2011 i.e. w.e.f. 01.03.2011 as a part of budget changes the following are the options available: a) A nominal duty of 1% ad valorem is being imposed on all 130 items with a condition that the benefit of Cenvat credit paid on inputs and input services is not availed. (refer notification 01/2011 CE dated 01st March 2011) b) A rate of 5% ad valorem is being imposed on most of the products covered under notification 01/2011 CE dated 01st March 2011 without any condition i.e. the benefit of credit of duty paid on inputs and service tax paid on input services would be available. (Refer notification 02/2011 CE dated 01st March 2011). The products covered under notification 02/2011 CE are those products where the tariff rate is not nil. SECTOR WISE ANALYSIS (A) GENERAL CHANGES IN EXCISE TARIFF (i) An excise duty of 1% without Cenvat credit facility is being imposed on about 130 specified items, which were hitherto either fully exempt from excise duty or chargeable to nil rate of excise duty. (ii) A mandatory excise duty of 10% is being imposed on branded readymade garments. Such duty shall be charged on the tariff value @ 60% of their retail sale price. (iii) The concessional rate of excise duty of 4% is being increased to 5%. (iv) An excise duty of 5% is being imposed on automatic looms and projectile looms. Copyright@2011 Proprietary material of CA Amarpal
- 3. Presented by: CA Amarpal, 09717105008 (v) Clearance based exemption to units manufacturing papers from non-conventional material is being withdrawn. (vi) The exemption on computer hardware items, is being withdrawn. These will be charges the duty @ 5%. (vii) Full exemption from excise duty to colour, unexposed cinematographic film in jumbo rolls of 400 feets and 1000 feets (B) AUTOMOBILE SECTOR (i) Concessional rate of excise duty @10% is being extended to factory built ambulances. Other vehicles retrofitted as ambulances subsequent to their removal from the factory shall continue to be eligible for refund based concession. (ii) The scope of the Taxi Refund Scheme is being extended to include vehicles carrying 13 persons including the driver. (iii) To provide refund of 20% of the excise duty paid on vehicles if they are registered as a taxi subsequent to removal. (iv) Full exemption from excise duty is being extended to parts of power tillers when cleared to another factory of the same manufacturer for manufacturing power tillers. Copyright@2011 Proprietary material of CA Amarpal
- 4. Presented by: CA Amarpal, 09717105008 (C) CEMENT The quantity based rates for different types of cement plants and different types of packaging form is being proposed to be changed to ad valorem rate of 10%. Proposed rates of ad valorem in some cases have been combined with quantity based duty also. (D) CAPITAL GOODS (i) Exemption to capital goods required for expansion of an existing mega/ultra mega power project (ii) Reduction in excise duty from 10% to 5% on specified textile machineries. (iii) Full exemption to specified parts of sewing machines which does not have inbuilt motors. (E) ENVIRONMENT FRIENDLY AND ENERGY SAVING GOODS (i) Concessional rate excise duty of 10% on hydrogen vehicles based on fuel cell technology. (ii) Reduction in duty from 10% to 5% on hybrid kits for conversion of fossil fuel vehicles to hybrid vehicles. (F) FOOD PROCESSING Full exemption on - AC Equipments, panels and refrigeration for setting up of cold chain infrastructure meant for agricultural produces Copyright@2011 Proprietary material of CA Amarpal
- 5. Presented by: CA Amarpal, 09717105008 - Conveyor belt systems for use in cold storage for agricultural produces (G) PAPER & PAPER BOARD (i) Full exemption from excise duty to cotton stalks particle (ii) Concessional rates of 5% excise duty on corrugated boxes (iii) Reduction in excise from 10% to 5% on greaseproof and glassine papers (H) PRECIOUS METALS (i) Reduction of duty from Rs. 280/- per 10 gram to Rs. 200/- per 10 grams on serially numbered gold bars other than tola bars. (ii) Imposition of excise duty of Rs. 300/- per 10 gram on serially numbered gold bars manufactured during the process of copper smelting. (iii) Imposition of Rs. 1500/- per Kg on silver, manufactured during the process of copper smelting (iv) Imposition of duty of 1% on branded jewellary and branded articles of precious metals. THE END Copyright@2011 Proprietary material of CA Amarpal