BUDGET - BMR Advisors

Excise duty on bulk cement revisedIn order to bring parity in the excise duty rates on bulk cementand packaged cement, the excise duty rate of bulk cement hasbeen revised from Rs 400 per tonne to the higher of 14 percentor Rs 400 per tonne.This is likely to increase excise duty incidence on cement in caseof price increase and consequently affect the cost ofinfrastructure projects for which cement is the key input.Service tax55 percent of the GDP is contributed by the services sector.Services sector being a growing sector, the budget proposalsaim to enhance its share of revenue to the exchequer.Composition rate in works contract servicesincreasedThe works contractors have been inclined to opt for payment ofservice tax on composition basis owing to a lower effective rateof 2 percent. On opting for composition scheme in respect of aworks contract, the works contractor is not allowed to opt out ofthe composition scheme in respect of that contract.The composition rate under works contract services has beenincreased from 2 percent to 4 percent.The additional levy of service tax is likely to double the servicetax cost for the existing as well as future infrastructure projectssince most infrastructure projects do not have output service taxor excise duty liability to enable them to absorb the additionalservice tax.Right to use tangible goods made taxableService tax has been introduced in relation to supply of tangiblegoods including machinery, equipment and appliance for use,without transferring right of possession and effective control.The Ministry of Finance circular has specified where goods suchas excavators, wheel loaders, dump trucks, crawler carriers,compaction equipment, cranes, etc, offshore constructionvessels & barges, geo-technical vessels, tug and barge flotillas,rigs and high value machineries are supplied for use with no60indiaBUDGET2008