Budget 2012: Govt proposes hike excise duty on cement to 12%

Cement prices are likely to go up after the government's proposed hike in excise duty on the building material from 10% to 12%. The duty will be on the retail sale price after abatement of 30%. The proposal to raise excise duty is in sharp contrast with the expectations of the industry, which was demanding to slash it down to 6-8%.

The industry was of the view that a reduction in the excise duty would have encouraged it to create more capacity and bring the sector at par with other core and infrastructure sectors. However, when contacted, cement companies declined to comment on whether they would pass on the increased burden on the customers immediately or not, but almost all agree that the move would give an upward push to prices.

The Finance Minister in the Budget for 2012-13 also rationalised the excise duty structure on cement. "The graded retail sales price slabs for the purpose of charging of duty on cement manufactured and cleared in packaged form are being done away with," Mukherjee said.