Peak rate for customs duty on non-agricultural products reduced from 15.0% to 12.5%.

Rate of service tax increased from 10.0% to 12.0% and service tax net widened to include 15 more services.

MAT increased from 7.5% to 10.0% and period for availing MAT credit extended from 5 years to 7 years.

Further, this year’s Budget has fewer industry-specific proposals. The likely impact of some of the industry-specific proposals is presented below.

Automobiles & Ancillaries

There has been reduction in excise duty on small cars (cars with length lesser than 4,000 mm, with engine capacity not exceeding 1,500 CC for diesel cars and not exceeding 1,200 CC for petrol cars) from 24% to 16%, which will enable manufacturers of small cars to reduce prices. In fact, some car manufacturers like Maruti and Santro have already announced price reductions for cars in the specified category by Rs. 27,000 and Rs. 23,000 respectively. This is expected to result in volume growth, leading to increased revenue for car manufacturers.

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* Contributed by -
Sumit Bihani, a CA and B.Com. (Hons.) graduate from Calcutta Univ, has worked with PricewaterhouseCoopers and Microsec Commerze Ltd.
Currently, student of PGP1 at BIM, Trichy,
Article published in KRIYA, March 2006 Issue, BIM's monthly magazine.