Tax experts have hailed Finance Minister P Chidambaram's decision to slash excise duty, saying the move will give the much-needed boost to auto, capital goods and whitegoods sectors which have borne the brunt of slowdown.
"The excise duty reduction will save the automobile sector from going into the emergency ward. It will boost capital good sectors so that it is ready when the investment demand rises," Desai, Haribhakti & Co Chairman Shailesh Haribhakti said.
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Dinesh Kanabar, Deputy CEO at KPMG India, said: "The interim budget is on expected lines. The significant positive is the reduction in excise duty on capital goods, which should give impetus to capital spends, and white goods that should give impetus to consumer spends. The auto sector has a lot to cheer for. Clearly, with the elections round the corner, the current proposals will be viewed as interim ones and their true impact will be felt when these are incorporated in the final budget."
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He also said the finance minister deserves credit for containing the fiscal deficit at 4.6 per cent and CAD at $45 billion in 2013-14.
Chidambaram reduced the excise duty on capital goods from 12 to 10 per cent and on mobile handsets to 6 per cent and in the case of automobile having different duty rate the reduction is by 2-6 per cent.
These reductions will be applicable till June 30, 2014.
The customs duty has been reduced on the non-edible oils used in soap making it 7.5 per cent and exemption of countervailing duty on specified machinery for road construction has been withdrawn. The minister also exempted service tax on warehousing of rice and blood banks.