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Peak rate of customs duty reduced by 5 per cent

Finance Minister Yashwant Sinha on Tuesday announced reduction in peak rate of customs duty from 40 per cent to 35 per cent and reduced the slabs from five to four.

The four slabs of import duty are: 5 per cent, 15 per cent, 25 per cent and 35 per cent.

The finance minister retained the 10 per cent surcharge, which will also apply to new peak rate of 35 per cent.

Crude oil and petroleum products and also a few World Trade Organisation-bound items and gold and silver would continue to be exempted.

The budget, while continuing with the special additional duty of customs, also extended it to manufacturers-importers.

Presenting the 2000-2001 budget in Parliament, the finance minister also announced major cuts in customs duty in the areas of information technology (IT), telecommunications, entertainment sector, jewellery, petroleum and crude oil.

Agricultural and horticultural products will attract custom duty at peak rate of 33 per cent (plus surcharge). This will provide adequate protection to farmers in the light of proposal of several hundred items being placed on the free list of imports from April 1, 2000.

In IT sector 5 per cent duty reduction has been announced for computers, mother boards, floppy diskettes, microprocessors, memory storage devices, CD-ROMs, integrated circuits and micro-assemblies and data graphic display tubes. Duty on specified capital goods for manufacture of semiconductor and ICs has been reduced from 15 per cent to 5 per cent.

In telecommunications, specified raw materials for manufacture of optical fibres as been reduced from 15 per cent to 5 per cent. On cellular phones reduction has been from 25 per cent to 5 per cent and on their battery packs from 40 per cent to 15 per cent. Now Internet Service Providers will also be benefited from the concessional rate of 5 per cent basic duty applicable to specific telecom equipment.

Basic custom duty on platinum and non-industrial diamonds has been reduced from 40 per cent to 15 per cent in order to boost jewellery exports. In order to give effect to agreements with the Eureopean Union and United States, several varieties of fabrics and garments would be subjected to higher of ad-valorem or specific rates of duties prescribed for them.

Basic customs duties on crude oil has been reduced from 20 per cent to 15 per cent and on petroleum products from 30 per cent to 25 per cent.

However, on kerosene for parallel marketing, the basic duty will be raised to 35 per cent from 30 per cent.

In order to encourage payment of tax due, the finance minister has proposed that if the amount of tax evaded is paid along with interest within 30 days of communication of order, a penalty equal to only 25 per cent of the duty evaded would be payable as against 100 per cent earlier.

UNI

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