Union Budget 2016: Beedi escapes duty on tobacco

Union finance minister Arun Jaitley on Monday announced that excise duties on various tobacco products, other than beedi, have been raised by about 10 to 15 per cent.

He also proposed tax to be deducted at source at the rate of 1 per cent on purchase of luxury cars exceeding a value of Rs 10 lakh and purchase of goods and services in cash exceeding '2 lakh.

However, in some relief 13 cesses, levied by various ministries in which revenue collection is less than Rs 50 crore in a year, will be abolished. In his Budget speech, Mr Jaitley proposed to increase excise duty by 10-15% on tobacco products, excluding beedis. However, he did not elaborate on the details of the increase on cigarettes of various lengths and other tobacco products.

Since July 2014, when Jaitley presented the NDA government’s first budget, taxes on cigarettes have increased substantially. In the 2015 budget, Mr Jaitley hiked excise duty by 25 per cent on cigarettes of length not exceeding 65mm, and by 15 per cent on cigarettes of other lengths.

Meanwhile, the government on Monday proposed Krishi Kalyan Cess and Infrastructure Cess, raised incidence of environment levy. Krishi Kalyan Cess will be levied on all taxable services at the rate of 0.5 per cent with effect from June 1, 2016, to finance and promote initiatives to improve agriculture, the finance minister said in his Budget speech.

Besides, Infrastructure Cess has been imposed at the rate of 1 per cent on small petrol, LPG, CNG cars, 2.5 per cent on diesel cars of certain capacity and 4 per cent on other higher engine capacity vehicles, SUVs and bigger sedans.

However, three wheelers, electrically-operated vehicles, hybrid vehicles andhydrogen vehicles based on fuel cell technology would be exempt from the infrastructure levy.

Besides, motor vehicles which after clearance have been registered for use solely as taxi, ambulances or cars for physically handicapped persons will also be exempt from this cess. ‘Clean Energy Cess’ levied on coal, lignite and peat has now been renamed as ‘Clean Environment Cess’. Its incidence was increased to Rs 400 per metric tonne, from Rs 200 per metric tonne. The ‘Oil Industries Development Cess’ will be levied at the rate of 20 per cent, instead of specific rate of Rs 4,500 per metric tonne.