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HindustanTimes Fri,18 Apr 2014

Excise duty, service tax may go up

HT Correspondent, Hindustan Times  New Delhi, January 14, 2013
First Published: 00:11 IST(14/1/2013) | Last Updated: 01:07 IST(14/1/2013)

The government is looking at an increase in excise duty on most goods and service taxes by two percentage points to 14%, a move that could make most consumer products, including cars and white goods such as refrigerators, costlier.

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The higher duty would also make nearly all services dearer but will earn the exchequer Rs. 30,000-40,000 crore to fund welfare schemes to spin jobs and generate income in an election year.

“The option of raising service tax and excise duty on standard non-petroleum goods from 12% to 14% is being examined,” a source told HT.

These tax rationalisation steps are being examined as a precursor to the eventual rollout of a nationwide goods and services tax (GST) that will replace a welter of local levies such as value- added tax (VAT) and octroi by a single tax. The measure is expected to be part of the budget proposals for financial year 2013-14.

If implemented, the excise duty hike will restore the tax rate to pre-2008 levels when the government slashed it to 8% in a phased manner amid a global economic slowdown.

At 14%, service tax, however, will be the highest ever since it was introduced 19 years ago.

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