Government is planning to increase the rate of service tax and excise duty by 2 percent to 14%. Currently the rate of service tax and excise duty is 12%. Finance ministry is planning to increase the rate in the forthcoming budget 2013. Finance ministry is also planning to roll back some exemptions from excise duty and service tax. The increase will help the finance ministry about 30000 crore more.
Finance ministry is seriously debating now days about increasing the rate of excise and service tax. Some exemptions may be removed like custom duty on crude may be back. Final decision on increasing the rate and stop the exemption will only be taken near to budget.
Government is planning to increase the gross domestic product (GDP) and the harsh decision will be taken in the coming budget. However peak custom duty to be remain as it as at 10%.
The chance in service tax and excise duty comes in effect immediately after the announcement in the parliament in budget speech. Like if the budget is presented on 29 February and the rate of service tax or excise increases, the rate will be in effect from March itself.
Government is also planning to implement GST (goods and service tax) in which the rate of service tax and central excise may be 16%. Service tax will be equally divided to center and the state while excise duty belongs to center only.
So the inflation is tend to rise in the coming months as government is likely to stop exempting crude oil from custom duty as well as increases the rate of service tax and excise duty. This will definitely affect the growth rate which is very down 5.5%.
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