Misuse may spell end of N-E excise benefits
Area-based excise exemptions, being prone to rampant misuse, may be clipped in Budget 2007. The government may put in place a roadmap for curtailing exemptions given to north-eastern states.
NEW DELHI: Area-based excise exemptions, being prone to rampant misuse, may be clipped in Budget 2007. The government may put in place a roadmap for curtailing exemptions given to north-eastern states.
However, the sops for Uttaranchal and Himachal Pradesh may continue as they were extended by the government recently. The exemption given to north-east is slated for review in early 2007. The government is also looking at bringing in various checks and balances to prevent misuse of those that will continue.
While it may be difficult politically to do away with the exemptions at one go, the government is, therefore, looking at putting in place a roadmap for doing away with the exemptions. An announcement to the effect may be made in Budget 2007.
The government has already initiated a study to examine the cost-benefit analysis of the exemptions. The exemptions have come under criticism for various reasons. Besides misuse, there is a strong view in the government that the exemptions have not served the objective with which they were put in place like industrial development.
The states that do not have the benefits and are in close vicinity of the exempt states have been complaining about flight of capital. In the case of Uttaranchal and Himachal Pradesh, the manufacturers are not even expected to register with the central excise department for excise rebate while in north-east, it is given as a credit.
ADVERTISEMENT
So, while in case of north-east there is some kind of monitoring by the Centre, in case of Himachal Pradesh and Uttaranchal there are absolutely no counter-checks. It may be noted that excise duty collections have witnessed the lowest growth compared to other indirect taxes in the current fiscal. The government’s excise duty collections grew by 7.1% against 6.8% estimated in the Budget. All the other indirect taxes have witnessed a double-digit growth.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
