Budget 2003: Expect cars, liquor to cost less

NEW DELHI: Luxury may become more affordable with the Finance Minister likely to bring down the excise duty on lifestyle products like cars and air-conditioners in Budget 2003.
Consumers can also look forward to cheaper soft-drinks and imported liquor.
While excise duty on cars, airconditioners and soft-drinks is expected to be reduced from the existing rate of 32 per cent, the Finance Minister may not bring it down to 20 per cent as recommended by the Vijay Kelkar taskforce on indirect taxes.
A view in the finance ministry is that the excise cuts may be staggered. Budget 2003 may cut duties to about 25 per cent as revenue considerations may not permit the drastic cut to 20 per cent.
The revenue implications are significant: For instance, if the excise duty on cars is levied at 20 per cent instead of 32 per cent, it will result in Rs 6,000 crore by way of lower revenues for the exchequer, according to finance ministry estimates.
"We should look at how cutting excise duty rates will fuel demand in these goods in the long-term," says a finance ministry official.
According to finance ministry calculations, goods which attract a 32 per cent rate of excise duty contribute to only 12 per cent of the total indirect tax collections. On the other hand, goods subject to a 16 per cent excise rate contribute to 65 per cent of the collections.
The revenue shortfalls caused by a cut in excise duty on most goods which currently attract the 32 per cent rate can be also offset by exemptions likely to be taken away from the textile industry.
As for foreign liquor that includes whiskies, rum, gin and liquors, the government is likely to bring down the customs rate from 182 per cent to 175 per cent.
Median rate for customs tariffs will be brought down from the 30 per cent to between 20 and 25 per cent.