Restructuring in Duty structure in process : Budget

Posted on    09 February 2008

Rejig in Duty structure in process : Budget

A re-arrangement in Duty Structure to correct the current tax structure in certain sectors maybe on the cards as said by Finance minister P Chidambaram.

Certain manufacturing sectors like colour television, tyre, certain chemicals and electric fans may enjoy this relief . These sectors have also been affected by the rapid rise in the value of the rupee, which has taken the sheen off exports.

Inverted duty structure implies a tariff structure where raw material attracts higher duty than the finished product. This structure renders manufacturing process uncompetitive and impacts the domestic industry adversely.

The government is facing pressure from industry to correct anomalies in the tariff structure.

The government had in 2006 set up a committee under Anwar-ul Hoda to examine the inverted duty structure. Although the committee’s report came in well before the last Budget, it was not implemented.

The general structure can be tinkered with only if an inverted duty is a product of the existing duty structure and not an outcome of concessions offered in bilateral agreements. The peak customs duty at present, is 10% and may experience a downfall.

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