Govt to extend excise duty concessions on cars, capital goods, says Jaitley

Finance Minister Arun Jaitley announced today announced that the government has decided to extend excise duty concessions for automobiles, consumer and capital goods by six months to 31 December. The excise duty concessions, which were granted in February this year, were to have lapsed on 30 June. However, the government decided to extend it and announced it before the budget. [caption id=“attachment_1588539” align=“alignleft” width=“380”]  Arun Jaitley. PTI[/caption] When asked if it will affect the government revenue, Jaitley told reporters, “If the economy benefits in the long run, government will also benefit.” Automobile stocks rose on Jaitley’s announcement. Maruti Suzuki stocks ended up 2.56 percent, stocks of Mahindra & Mahindra closed 1.58 percent up. Earlier, Commerce and Industry Minister Nirmala Sitharaman, who also doubles as Minister of State for Finance, had indicated that she would be lobbying for the government to continue with the excise concessions offered by P Chidambaram in his interim budget of 17 February. Due to the severe slowdown in the auto sector, Chidambaram had cut excise duties on small cars, motor bikes and commercial vehicles from 12 percent to 8 percent. However, the decision, though bringing cheer to the automobile industry, isn’t necessarily that augurs well for the economy at large. Firstbiz editor R Jagannathan says the Finance Minister should not have followed Chidambaram’s footsteps. “For a country that is talking of going towards a uniform goods and services tax (GST) over the next two years, sector-specific sops are precisely the thing to avoid. This is not to suggest that the auto industry is not in pain, but pain should lead to restructuring and reform, not just more placebos,” he writes in this Firstbiz article.