non-agricultural items: Peak
customs duty rate on non-agricultural items are down from 12.5 to
10 per cent. That means, all imported machinery and non-agricultural
commodities just got cheaper-in theory. How much of the gains reach
the consumer is a different issue.
and food mixes: Biscuits and food mixes have been fully
exempted from excise duty. In doing so, Finance Minister P. Chidambaram,
he said, was trying to show that he is not biased towards idli
and dosa mixes. Mixes majors such as mtr, recently acquired by
Finnish company Orkla, must be licking their chops.
Duties on seconds and defective steel have been reduced from 20
to 10 per cent. That should correct an anomaly that some in the
industry have been complaining about, which is that duty on prime
steel is only 5 per cent. Impact on local prices will depend on
the demand for steel.
Dog and cat lovers, rejoice. While you enjoy your cheaper
dosa and sambhar fare, your pet can chew on imported chow, which
will now attract just 20 per cent customs duty from 30 per cent
before. And if you are feeding your dog home-cooked food, it's
time you indulged him a bit.
Excise duty on pan masala without tobacco (mouth fresheners) has
been slashed from 66 to 45 per cent. However, pan masala with
tobacco will continue to attract 66 per cent excise duty. Worse
for the pan masala manufacturers, exemptions given to units in
North Eastern states stand withdrawn.
and umbrellas: Perhaps the unseasonal rain the night
before the Budget had nothing to do with it, but customs duty
on umbrella parts has been cut from 12.5 to 5 per cent. Ditto,
watch dials. Chinese manufacturers must be grinning from ear to
equipment: Customs duty has been dropped from 12.5
to 7.5 per cent. It's a small concession, but the healthcare industry
must be grateful. Equipment are among some of the biggest investments
that hospitals make.
yarn: A reduction in customs duty on polyester from
10 to 7.5 per cent means yarn just got cheaper. What's more, customs
duty on raw materials such as DMT, PTA and meg has also been reduced
from 10 to 7.5 per cent.
First the good news: "Water purification devices operating
on specified membrane-based technologies" have been fully
exempt from excise duty. The bad news: It will only impact purifiers
that do not use electricity (Zero B, Thermax), and will not include
your Aquaguard at home. Why? They use electricity and, ergo, haven't
Budget 2007-08 fully exempts bio-diesel from excise.
Who gains? Not too many people, since bio-diesel still sells in
very limited quantities. Just the same, it's an incentive for
manufacturers to start producing more bio-diesel.
Just like umbrella parts, those used in the manufacture of footwear
will now attract just 8 per cent excise duty, compared to 16 per
cent earlier. That's great for buyers of Liberty, Bata and Action
shoes, but not for those who buy imported shoes.
A favourite whipping boy, the tobacco industry, and
cigarettes in particular, have been slapped with an extra 5 per
cent excise duty. The petty smokers haven't been spared either.
Excise duty on biris (which was last fixed in 2001) will be raised
from Rs 7 to Rs 11 per thousand for hand-rolled biris and from
Rs 17 to Rs 24 per thousand for machine-made biris.
Probably in a move to curb the rising cement prices
over the last one year, the fm has decided to levy excise duty
of Rs 600 per metric tonne on cement bags (50 kg) costing more
than Rs 190 per bag. The silver lining? The fm has promised to
reduce the present rate of excise duty of Rs 400 per metric tonne
to Rs 350 per metric tonne on cement sold at Rs 190 per bag.
property: Banks, beauty salons, clinics...just about
any such service providers who use rented property to operate
their business, will have to pay more in terms of rents, since
such immovable properties will now attract service tax. And who
will they pass on the cost to? Of course, you, the consumer.
management: Your personal wealth manager may start
charging you more for his services, since the Finance Minister
has brought him under the service tax net as well. So, just hope
that the stock markets don't tank any more; otherwise, you may
not have much wealth left to pay him out of.
services: Yet another service that will start paying
tax starting 2007-08. Design services is a broad terminology that
covers designing of furniture, consumer products, industrial products,
packages, logos, graphics, websites, and three-dimensional models.
downloads: Apparently, "development and supply
of content" includes everything from mobile value added services
to music to movie clips to ring tones, besides things like wall
paper, mobile games, news, and animation films. Will your mobile
phone service provider pass on the cost to you? Most likely, yes.
Low-cost carriers may not remain so low cost any more.
All private aircraft, including helicopters, imported into the
country will attract a 3 per cent import duty. That apart, such
imports will attract countervailing duty and additional customs
duty. Perhaps the last thing the beleaguered industry needed.
work: When the Finance Minister said that he was going
to bring works contract under services tax, he was talking about
a wide variety of installation work. Consider the list: erection,
commissioning or installation of plant, machinery equipment or
structures; plumbing, sound insulation, fire proofing or water
"I propose to expand the tax base of capital gains to include
certain works of art," the Finance Minister said pithily,
but mysteriously. Given that some art funds have been launched
of late, their effective returns to investors may be affected.
Sure, the shareholder doesn't pay any tax on dividends,
but the company paying out does. The Finance Minister has not
just upped dividend distribution tax from 12.5 to 15 per cent,
but in the case of money market mutual funds and liquid funds,
increased it to 25 per cent. Investors are going to howl.