Mrp Levies

Although P Chidambaram has submitted several good proposals in the Finance Bill, the provision related to excise duty, , namely, Section 4A(I), whereby he wants to levy duty on the minimum retail price (MRP) on the packaged goods, must be termed as atrocious and unwarranted.

Hitherto, the assessable value for excise levy was determined on the basis of the value at which the manufacturer clears his goods at the factory gate or from the depot. Even this kind of assessment created a lot of litigation problems and there were disputes as to what was meant by assessable value.

With the proposed amendment, there will be thousands of cases before the court of law. Besides, since it is proposed to levy excise duty on MRP, the quantum of duty shall definitely go up and, therefore, there is bound to be spiralling inflation in this country.

 

Inflation will lead to demand for higher wages, and in turn, due to more money supply in the market, it may again flare up. Who will stop this cascading effect?

The best approach is to encourage production, which in turn, will lead to collection of not only indirect taxes, but direct taxes too.