Thursday, February 28, 2013

One of the major reasons India is facing a current account deficit is because exports have slowed and imports have increased. Most of the Finance Minister's budget proposals on indirect taxes were to address these concerns. Plus there were a few proposals to protect domestic industries. The duty on machinery to manufacture leather was reduced to 5% from 7.5%. The duty on precious and semi-precious stones was reduced to 2% from 10% earlier. On the other hand duties on imported luxury motor cycles, vehicles and yachts were increased. Domestic production of set-top boxes was encouraged. Protection was also given to the domestic sericulture industry by increasing duties on raw silk. The manufacture of environment-friendly vehicles and the aircraft manufacture, repair and overhaul (MRO) industry was encouraged. No changes were made in the rates of basic customs duty, normal excise duty and service tax. This was as per expectations. All in all there weren't any fireworks on the indirect tax front. We just hope that the economy revives next year, so that taxes don't pinch as much as they do now.