Budget 2014: Impact on Consumers
Heetesh Veera, Tax Partner, EY
The Union Budget 2014 by Modi Government has been one of the most awaited budgets. There have been huge expectations from this budget, though factors of a slowing economy and high inflation have been constraints at the Government’s end.
From a consumer perspective, ever increasing prices has been a matter of grave concern. While on a personal tax front, the Budget has granted certain tax breaks, from an indirect tax perspective, primarily giving impetus to the manufacturing sector has been the thrust, which would ultimately benefits the consumers, through reduced prices and employment generation.
On an overall basis, to provide fillip to capital goods, consumer durables and automobile sectors, excise duty rates and concessions extended till 31 December 2014. Consumers could also look at reduced prices of televisions on account of reduction in customs duty on certain products such LCD and LED TV panels (of below 19 inches) and colour picture tubes. Similarly, purchase price of personal and tablet computers could reduce on account of exemption from Special Additional Duty (SAD) on components used in their manufacture.
Reduction of excise duty on footwear, on specified food processing and packaging machinery and on RO membrane element used in household water filter could also result in some savings. However, in order to encourage domestic production of goods, education cess and Secondary and Higher Education Cess (3%) levied on all imported electronic products making such products costlier.
In order to mobilise revenue, excise duty has been increased on cigarettes, gutkha and chewing tobacco, pan-masala and aerated products.
From a service tax perspective, local road transportation price would increase as service tax levy extended on all radio taxis/ metered cabs. However, service tax exemption expanded to cover all life micro-insurance schemes where the sum assured does not exceed 50,000 per life insured.
Free baggage allowance increase from INR 35,000 to INR 45,000 is welcome, though higher limits could be prescribed.
On an overall basis, the Budget could have positive impact on consumer goods, though a broader impetus on fiscal and other measures would be required to address the current economic scenario.
(Views expressed are personal)