Budget 2012: 2% across the board hike in excise, service tax in Budget

In a Budget that raised fears of furthering inflationary pressures, Finance Minister Pranab Mukherjee today hiked excise duty and service tax by 2% across-the-board to raise Rs 45,940 crore while offering marginal relief to individuals in income tax foregoing Rs 4,500 crore.

Prices of all non-oil goods are likely to go up on account of the 2% raise in the effective rate of excise duty of 10% and service tax as well as on account of the widening of tax net to all services, except 17. Quoting from Shakespeare's immortal words in the 'Prince of Denmark' that "I must be cruel only to be kind", Mukherjee sought to raise an additional Rs 27,280 crore through customs and central excise levies and Rs 18,660 crore through service tax.
While the Opposition slammed the Budget as inflationary that will further burden the common man, a view shared by the corporates which found in it a missed opportunity, Prime Minister Manmohan Singh and Mukhejree said it will help in fiscal consolidation and take the economy on growth path.
The Budget left untouched the corporate taxes and the peak customs duty and gave tax concessions to infrastructure sectors like power, airlines, road and bridges and hospitals, cold-chain facility and affordable housing. Mobile phones, branded silver jewellery, branded garments, imported LCD and LED TV panels of over 20 inch and matches will be cheaper on account of duty reduction while two-wheelers, cars, refrigerators, air-conditioners, washing machines, watches, soaps, cigarettes and bidis, air travel, pan masala and chewing tobacco, gold and unbranded metal jewellery and imported bicycles will cost more.
Providing marginal sops to the salaried class, the Minister proposed a tax relief up to Rs 2,000 for those at the threshold stage by raising the exemption limit from Rs 1.8 lakh to Rs 2 lakh.