INDIA: Govt Proposes To Give More Teeth To FM

The Indian government plans to issue a decree to scrap restrictions on raising excise duties in a move aimed at shoring up sagging revenue collections.

The government has approved a proposal to, which will be issued by the government after it secures presidential approval, will allow the Finance Minister to increase excise duties on any commodity without any restrictions. Currently, the Finance Minister can only double the excise duty on a commodity.

Parliamentary Affairs Minister, Pramod Mahajan, said an ordinance has been necessitated as presently there is a cap on raising excise duty beyond twice the rate on various items.

"In some cases, it has been necessary to increase this rate to more than twice and we have decided to enhance this restriction," Mahajan said.

Mahajan, however, said no list of items had been prepared for raising excise duty.

The relaxation in rules could affect a range of items such as cars, electronic gadgets and consumer goods on which the government currently levies excise duty.

The amendment to the Central Excise Tariff Act of 1985 will help the cash-strapped government raise additional revenues at a time when India's economy is headed for a third straight year of slower growth on the back of a demand slowdown.

Tax revenues in the first eight months of 2001/02 (April-March) were 665.21 billion rupees ($13.78 billion), just 40.8 percent of the full year target. Last year, they stood at 50 percent of the target for the same period.

Indirect taxes, which include customs and excise duty collections upto December 15, were 767.11 billion rupees compared with 796.88 billion rupees in the year-ago period.

January 8, 2002

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Added: January 8, 2002
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