Budget highlights: Customs, Service Tax, Excise and other Indirect Taxes

The following are the highlights of the Union Budget proposals with regard to all indirect taxes — including service tax, custom duties, excise and all other central taxes.

 Standard rate of excise duty to be raised from 10 per cent to 12 per cent, merit rate from 5 per cent to 6 per cent and the lower merit rate from 1 per cent to 2 per cent with few exemptions.

 Excise duty on large cars also proposed to be enhanced.

 No change proposed in the peak rate of customs duty of 10 per cent on non-agricultural goods.

Agriculture and Related Sectors

 Basic customs duty reduced for certain agricultural equipment and their parts;

 Full exemption from basic customs duty for import of equipment for expansion or setting up of fertiliser projects upto March 31, 2015.


 Proposal for full exemption from basic customs duty and a concessional CVD of 1 per cent to steam coal till 31st March, 2014.

 Full exemption from basic duty provided to certain fuels for power generation.


 Full exemption from basic customs duty to coal mining project imports.

 Basic custom duty proposed to be reduced for machinery and instruments needed for surveying and prospecting for minerals.


 Basic custom duty proposed to be reduced for equipments required for installation of train protection and warning system and upgradation of track structure for high speed trains.


 Full exemption from import duty on certain categories of specified equipment needed for road construction, tunnel boring machines and parts of their assembly.

Civil Aviation

 Tax concessions proposed for parts of aircraft and testing equipment for third-party maintenance, repair and overhaul of civilian aircraft.


 Relief proposed to be extended to sectors such as steel, textiles, branded ready-made garments, low-cost medical devices, labour-intensive sectors producing items of mass consumption and matches produced by semi-mechanised units.

Health and Nutrition

 Proposal to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to 6 specified life saving drugs/vaccines.

 Basic customs duty and excise duty reduced on Soya products to address protein deficiency among women and children.

 Basic customs duty and excise duty reduced on Iodine.

 Basic customs duty reduced on Probiotics.


 Concessions and exemptions proposed for encouraging the consumption of energy-saving devices, plant and equipment needed for solar thermal projects.

 Concession from basic customs duty and special CVD being extended to certain items imported for manufacture for hybrid or electric vehicle and battery packs for such vehicles.

 Proposal to increase basic customs duty on imports of gold and other precious metals.


 Proposals to increase excise duty on ‘demerit’ goods such as certain cigarettes, hand-rolled bidis, pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco.

 Cess on crude petroleum oil produced in India revised to `4,500 per metric tonne.

 Basic customs duty proposed to be enhanced for certain categories of completely built units of large cars/MUVs/SUVs.

 Excise duty rationalised for packaged cement, whether manufactured by mini-cement plants or others.

 Levy of excise duty of 1 per cent on branded precious metal jewellery to be extended to include unbranded jewellery. Operations simplified and measures taken to minimise impact on small artisans and goldsmiths.

 Branded Silver jewellery exempted from excise duty.

 Chassis for building of commercial vehicle bodies to be charged excise duty at an ad valorem rate instead of mixed rate.

 Import of foreign-going vessels to be exempted from CVD of 5 per cent retrospectively.

 Duty-free allowances increased for eligible passengers and for children of upto 10 years.

 Proposals relating to Customs and Central excise to result in net revenue gain of `27,280 crore.

 Indirect taxes estimated to result in net revenue gain of `45,940 crore.

Service Tax

 Proposal to tax all services except those in the negative list comprising of 17 heads.

 Service tax law to be shorter by nearly 40 per cent.

 Number of alignment made to harmonise Central Excise and Service Tax. A common simplified registration form and a common return comprising of one page are steps in this direction.

 Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution.

 Utilization of input tax credit permitted in number of services to reduce cascading of taxes.

 Place of Supply Rules for determining the location of service to be put in public domain for stakeholders’ comments.

 Study team to examine the possibility of common tax code for Central Excise and Service Tax.

 New scheme announced for simplification of refunds.

 Rules pertaining to point of taxation are being rationalised.

 To maintain a healthy fiscal situation proposal to raise service tax rate from 10 per cent to 12 per cent, with corresponding changes in rates for individual services.

 Proposals from service tax expected to yield additional revenue of `18,660 crore.