The government on Wednesday extended the tax relief provided to the auto and consumer durables and capital goods sector in the Interim Budget, a move that will provide a shot in arm to the automobile sector and help in reviving the manufacturing sector.
“Considering the present situation in various sectors, the government today has decided to extend the facility of this reduced excise duty to all those sections for a further period of six months. They will continue till December 31, 2014,” finance minister Arun Jaitley told the reporters here.
He said that the move might have an impact on the revenue collection in short term, but will benefit the economy in the long run.
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The Indian Express had earlier reported that the sops given to the auto sector and consumer and capital goods would be retained in the upcoming Budget 2014-15. Though the impact of the measure on revenue collection is not immediately known, former finance minister P Chidambaram in the Interim Budget had said that while about Rs 300-400 crore was the estimated loss in the remaining period of the last fiscal, in April and May, it was likely to be about Rs 700-800 crore.
The industry cheered the move and called for extension of the sops till the end of the current fiscal.
“We are certain that the extension of the reduced excise duty will contribute positively to improve the buyer sentiment and would help in bringing about a sustained recovery… This will go a long way in bringing back growth, investments in the industry as well as encourage higher employment,” Vikram Kirloskar, president, Siam said.
The Budget is scheduled to be presented on July 10 while the sops were coming to an end on June 30. The development puts an end to the uncertainty that was expected after the expiration of the deadline.
Krishan Sachdev, MD, Carrier Midea India, said, “The extension of excise duty will help the industry overall. The AC industry has shown growth this season and this measure would further strengthen the positive sentiment of the industry.”
The stimulus was given in wake of decline in car sales in the last two consecutive financial years. Car sales in India fell for the second consecutive fiscal in 2013-14, down 4.65 per cent. The tax incentives, however, have reflected in the car sales, which grew 3.08 per cent in May.