The finance ministry's recently formalised committee for excise rationalisation is considering a revised structure with lower rates to increase compliance.
The committee is also considering introduction of a modified tax structure wherein raw materials attract the least rate, intermediate goods a higher rate and final products the highest rate of duty. It is also considering extension of the input credits scheme to the service sector besides deriving ways to improve the mindset of tax collectors as well as taxpayers.
The committee will submit its recommendations by the end of November.
The committee's proposals are expected to be incorporated in the budget proposals for the next financial year. It has sent questionnaires to various central excise commissionerates seeking views on various tariff rates, excise duty valuation methods, Modvat rules, procedures and tax administration.
It has also enquired if moving the budget to the winter session of Parliament was desirable which would enable the government to implement the revamped excise administration from the beginning of the next financial year.
On Modvat credit, the committee has enquired whether the input credits scheme could be extended to the service sector and if streamlining the verification procedures of Modvat invoices is possible. It has also asked the commissionerates to identify commodities on which there is excess Modvat credit accumulation.
The committee is also considering modifying valuation methods for excise duty imposition to make the process more transparent. It has asked the commissionerates whether the existing maximum retail price-based assessment has led to more certainty regarding the incidence of taxation and also if the ad valorem rates of duty are preferred to specific rates.
The committee is chaired by Gopinath Sarangi, chief commissioner, Central Excise, Mumbai. Other members of the committee include H R Ghera from the Confederation of Indian Industry, K K P Nair and A S Kasliwal from the Federation of Indian Chamber of Commerce and Industry, Tarun Das, economic advisor to the finance ministry and S K Bhardwaj and S K Sawhney from the Central Excise Department.