NEWSLINKS
BUDGET 2000 LIVE!
BUDGET ON REDIFF
D&B BUDGET SPL
ECONOMIC SURVEY
RLY BUDGET
BUDGET: RUN-UP
BUDGET PROCESS
BUDGET HOTLINKS
Y2K BIZ FEATURES
INDIA & THE WTO
GOVT&ECONOMY
SPECIALS
INTERVIEWS
COMMENTARY
CREDIT POLICY
BUDGET 1999-2000
USEFUL INFO
ARCHIVES
SEARCH REDIFF

CENVAT to replace MODVAT

BUDGET 2000

Finance Minister Yashwant Sinha today replaced the modified value-added tax (MODVAT) with a central value-added tax (CENVAT) promising that old rules would be replaced with a simpler, more transparent structure.

He said CENVAT would provide long-term stability, remove uncertainty in the minds of industry and eliminate disputes of classification.

CENVAT would also encourage the states to implement their agreed programme for converting salex tax into VAT from April 1, next year.

The three advalorem rates of basic excise duty -- eight per cent, 16 per cent and 24 per cent -- introduced in last year's budget have been converged into a single rate of 16 per cent. As a result, the eight per cent excise rate is being abolished and most of the items at this rate are being moved to 16 per cent.

However, certain items like medicine-grade oxygen and hydrogen peroxide, anaesthetics, postassium iodate and medical and surgical gloves have been exempted from excise duty.

Some items of common use like cutlery, knives, tooth powder, soap for distribution through the Public Distribution System and electric bulbs of maximum retail price (MRP) upto Rs 20 per bulb have also been exempted too.

In the larger public interest, specified cold chain equipment have also been exempted.

There is no price increase on items like kerosene, LPG and laundry soap on account of their exceptional nature and sensitivity to price fluctuations.

The budget provides three rates of special excise of eight per cent, 16 per cent and 24 per cent in addition to 16 per cent CENVAT rate.

Unlike the CENVAT rate the special excise duties will not generally be modvatable -- that is users will not be able to avail of MODVAT credit on these duties.

Items like plastic material, films, sheets of plastics and trade rubber are no longer at the current level of 24 per cent with excise duty on these items lowered to 16 per cent CENVAT.

In addition, duty burden has been reduced from 24 per cent to 16 per cent on items like sterile contact lense solutions, shikakai powder with additives and cars for physically handicapped.

The items that are now charged to a total duty of 30 per cent would be subjected to a total duty of 32 per cent, composed of 16 per cent CENVAT and 16 per cent special excise duty which is only a marginal increase of two per cent.

Items presently charged to a total duty of 40 per cent will now be composed of 16 per cent CENVAT and 24 per cent special excise duty.

However, soft drink concentrate supplied to bottlers would be charged to CENVAT at 16 per cent only, being modvatable.

Peak rate of customs duties reduced from 40 to 35 per cent:

Basic customs duty raised to 35 per cent on the following:
-- Agricultural goods (other than cereals)
-- Horticultural and floricultural products
-- Dairy products
-- Processed foods
-- Marine products

Basic customs duty in telecom sector reduced:

-- Specified raw material for manufacture of optical fibre: 15 per cent to 5 per cent to 5 per cent.
-- Cellular phones: 25 per cent to 5 per cent.
-- Battery packs for cellular phones: 40 per cent to 15 per cent.
-- Concessional rate of 5 per cent for specified equipment for basic telephone service, cellular service, pager service, PMRTS and satellite communication extended up to March 31, 2001.

Implementation of Indo-US and Indo-EU Agreement on Textiles.

-- Composite Tariff rate fixed in accordance with textile agreements with effect from March 1, 2000.
-- Continuation of surcharge on imports.

UNI

Budget 2000 Live! | Budget on Rediff | Dun & Bradstreet Budget Special | The Run-up
Budget Process | Budget Hotlinks | NDA Government & Economy
Ministry of Finance: Economic Survey 1999-2000 | Budget 2000 document

Tell us what you think of this Budget 2000 coverage