Budget 2019: Government To Earn Rs 25,000 Crore From Hike In Customs, Excise Duties
The government will earn a net Rs 25,000 crore from the increase in customs and excise duty on a host of products, including cigarettes. The surcharge on the super-rich would help garner an additional income of around Rs 12,000 crore this fiscal on the direct tax side.
The budget widened the benefit of lower corporate tax of 25 percent to companies with annual turnover of upto Rs 400 crore. This would cover 99.3 percent of the companies in India.
Speaking on the move, Finance Minister Nirmala Sitharaman said, “We are sending out a signal that we are not trying to stick to rigidity on rates of corporate tax.”
The budget also enhanced surcharge on individuals with taxable income between Rs 2 crore-Rs 5 crore, and Rs 5 crore and above so that the effective tax rates for these two categories would increase by 3 percent and 7 percent respectively.
In a joint press conference, Sitharaman and her team of senior finance ministry officials explained in detail the various provisions of the Modi 2.0 government’s first budget.
Revenue Secretary Ajay Bhushan Pandey said the revenue loss on account of extending the 25 percent corporate tax rate to companies with turnover of up to Rs 400 crore would be around Rs 4,000 crore.
Besides, the government estimates getting Rs 12,000 crore on account of increased surcharge on the super-rich.
“Our indirect tax proposal, we have increased duty on some items but at the same time we have also reduced customs duty on raw material and capital goods. So if you see the net, what we estimated in current financial year is around Rs 25,000 crore,” Pandey said.
“On the direct tax side, corporate tax we have reduced the tax rate and (tax rate for) high-net worth individuals we have increased. So net increase that we expect is around Rs 6,000-7,000 crore,” he said.
The budget also hiked excise duty on filter cigarettes of length exceeding 65 mm but not exceeding 70 mm and that exceeding 70 mm but not exceeding 75 mm to Rs 5 per thousand.
Besides, excise duty has been hiked on various tobacco items including chewing tobacco, jarda-scented tobacco, and tobacco extracts and essence.
On the customs duty side, the levy has been increased on items such as cashew kernels, PVC, vinyl flooring, tiles, auto parts, marble slabs, optical fibre cable, CCTV cameras, IP cameras and digital and network video recorders.
Besides, special additional excise duty and road cess on petrol and diesel has been hiked by Re 1 per litre each, while customs duty on gold and other precious metals has been increased from 10 percent to 12.5 percent.
The government in 2015-16 budget said the corporate tax rate would be gradually lowered to 25 percent from 30 percent over the next four years and exemptions available to companies would be phased out.
For 2016-17 budget, the government reduced corporate tax rate to 25 percent for companies with turnover less than Rs 50 crore in financial year 2015-16. This benefitted 96 per cent of the total companies filing tax returns.
In 2018-19 budget, the reduced rate of 25 percent was extended to companies with turnover of up to Rs 250 crore in 2016-17, a move which benefited micro, small and medium enterprises.
With regard to personal income tax for individuals, taxable income up to Rs 2.5 lakh is exempt. Income between Rs 2.5-5 lakh attracts 5 percent tax, while that between Rs 5-10 lakh is levied with 20 percent tax. Income above Rs 10 lakh is taxed at 30 percent.