Cars, 2-wheelers, mobiles set to be cheaper

NEW DELHI: Wooing the middle class ahead of elections, Finance Minister P Chidambaram Monday slashed excise duty on cars and two-wheelers, capital goods and a variety of consumer items like TV and refrigerators to boost demand and manufacturing while accepting the long-standing demand of ‘one-rank-one-pension’ for ex-servicemen.

Price of cars and two-wheelers are set to come down after Finance Minister announced a reduction in excise duty on small cars, motorcycles and scooters from 12 per cent 8 per cent.

Mr Chidambaram also brought down excise duty on large and mid-segment cars from 27-24 per cent to 24-20 per cent, while duty on Sports Utility Vehicles or SUVs has been brought down to 24 per cent from 30 per cent.

The cut in duty will be applicable up to June 20, 2014, when the new government is likely to present the full year budget.

The finance minister also cut duty on consumer durables from 12 per cent to 10 per cent. 

Mobile phones manufactured in India could also see price moderation with the finance minister announcing a proposal to boost domestic manufacturing. However, a majority of mobile phones sold in India, even by domestic firms like Micromax, Lava and Karbonn, are imported.

However, Samsung and Nokia have manufacturing facilities in the country and the excise duty rejig may lower their cost of production.

He also announced that the excise duties on mobile handsets will be restructured to six per cent for all categories.

Another daily use item, soaps that are manufactured in India can also witness a softening of prices.

Chidambaram rationalized customs duty structure on non-edible grade industrial oil and its fractions, fatty acids and fatty alcohols at 7.5 per cent.

Rice can also be expected to be cheaper with the finance minister exempting service tax on loading, unloading, packing, storage and warehousing of the commodity.

Representatives of electronics and consumer durables industry welcomed the tax cut. “Reducing excise duty on electronics items from 12 per cent to 10 per cent is a welcome move that will benefit the consumers. Televisions, refrigerators, mobiles phones, etc, will be cheaper and this will give a big boost to electronics industry,” said Kamal Vachani, group Director of Al Maya Group.

Leading car manufacturers such as Tata Motors, Mahindra & Mahindra and Maruti Suzuki India said that they will pass on tax cuts to consumers with immediate effect and hope that the significant price reduction will spur a demand revival in the sector.

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