130 items Brought under Tax Net with 1% Excise Duty

In the General Budget 2011-12, certain changes in the Central Excise Rate structure has been proposed to prepare the ground transition to GST. The exemption has been withdrawn on 130 items that are exempt from Central Excise Duty but chargeable to VAT.

A nominal central excise duty of one% is being imposed on these 130 items that are mainly in the nature of consumer goods. No Cenvat credit would be available for the manufacture of these items. Presenting the Budget, the Union Finance Minister, Shri Pranab Mukherjee in the Lok Sabha today said that basic food and fuel would continue to be exempt. This levy would also not apply to precious metals and stones.

In case of jewellery and articles of gold, silver and precious metals, the levy would apply only to goods sold under a brand name. The remaining 240 items would be brought into the tax net when GST is introduced.

The lower rate of Central Excise Duty has been enhanced from 4% to 5%, in line with the States' increased merit rate of VAT.

Source : Equity Bulls

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