We have seen indirect taxes change with the Budget, and here are the key changes:

Consumer Goods

  • Soaps get cheaper as customs duty on input chemicals is cut (Helps the FMCG companies like Godrej Consumer Products, HUL, Jyothy Labs)
  • Lower end TVs (19” LCD or less, or CRT) will get even cheaper as input customs duties are exempted. (Mirc Electronics perhaps?)
  • Footwear taxes reduced to 6% from 10/12% (Relaxo, Bata)
  • 5% more for the Coke and Pepsi types – sugared waters.
  • Increased duty of 11% to 72% on cigarettes. (Bad for ITC, VST Industries)
  • Excise on RO membranes for households cut to half.
  • Some telecom equipment duties go up, but we don’t know if this includes mobile phones.
  • A Kindle will cost lesser: Customs duty on E-Book readers cut to zero.
  • Input components for laptops and tablets will see no special additional duty.
  • Branded petrol sees a cut of duty from Rs. 7 to Rs. 2.35 per liter. (The more expensive petrols at stations will see a big price cut)

Energy: Solar

  • Lower 5% customs duty for machinery to setup a solar project
  • No customs duty for certain key inputs
  • Removal of excise duty for input items manufactured in India as well, to even the field
  • Also, 400 cr. spending on solar agricultural pump sets, 100 cr. for Solar parks on canals, and 500 cr. as a starting point for ultra mega power projects.
  • This is good for solar manufacturers and importers, but the question is whether the market is too far gone to be rescued.

Healthcare

  • Customs and Excise duty on HIV drugs and diagnostic kits is exempt.
  • Excise on DDT only manufactured by Hindustan Insecticides to give to Ministry of Health exempt. (Jeez, why? You might as well pay the tax, and declutter this section.)

 

Energy: Everything Else

  • Coal gets 2.5% +2% customs duty. Not sure why. We have a coal shortage. But apparently this is to “eliminate disputes”.
    • Exemptions for inputs into bio-gas plants and wind power. (Suzlon?)

Textiles

  • Lots of positives for the sector because of reduction in import duties, if the finished textiles are exported
  • PET bottle scrap that’s used to manufacture PSF of PFY will now pay excise duty of 2% to 6% (Earlier exempt)

Others

  • Service tax will be there for online advertisements. Print ads, though, remain exempt. (Strange)
  • Radio taxis to pay service tax. It’s not apparent if this will hurt taxi services like Ola, TaxiForSure or Uber, but it’s negative for them if it does.
  • Service tax on goods transported by ships will come down to about 5% from 6.2%.
  • Bring in Rs. 45,000 worth goods from abroad as baggage allowance ($750) instead of Rs. 35,000.
  • In a genius move, only duty free allowance for cigarettes is cut from the original 200 cigarette duty free allowance. Why genius? Because all cartons are 200 cigarettes (usually)!
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