Finance Minister Pranab Mukherjee effected cuts in excise duty and service tax with effect from the 24th of February
As part of the third stimulus package announced by the Government of India to resuscitate the Indian economy and boost consumption, Finance Minister Pranab Mukherjee effected cuts in excise duty and service tax with effect from the 24th of February, 2009 and extended previous cuts beyond the 31st of March, 2009.
Service Tax has been cut across the board from 12 per cent to 10 per cent and Excise Duty has been reduced by 2 per cent on all items that previously attracted a 10 per cent levy. Most manufactured goods like white goods, metals, commercial vehicles, iron and steel, cement etc. which account for over 90 per cent of excise duty collections fall under this category. The excise duty reduction will also bring down landed prices of imports as the countervailing duty leviable on them (equivalent to the excise duty on domestically manufactured goods) will also stand reduced by 2 per cent in most cases. All manufactured goods will now attract 8 per cent excise duty.

Consumers will benefit by more than the 2 per cent reduction announced since most products are also liable to value added tax. Manufacturers are expected to pass on the benefits to consumers.

The cuts announced will cost the central exchequer INR 291 billion (INR 29,100 crores) of which service tax accounts for INR 140 billion, excise duty for INR 85 billion and customs revenue for INR 66 billion. The cuts will increase the fiscal deficit for the next financial year by 0.48 per cent of the GDP taking it to almost 6 per cent as against the budgeted figure of 5.5 per cent.

The duty cuts have not been factored in the revised estimates for the current financial year because the Government had not anticipated any reductions in indirect taxes as part of the pre-Budget exercise. However, Central Board of Excise and Customs (CBEC) chairman P. C. Jha said, “The department is hopeful of achieving the revised excise duty target of INR 108,000 crores for the current fiscal.” In the revised estimate, the government has cut the target by INR 29,000 crores from the budgeted estimate of INR 137,000 crores.

Packaging South Asia — An authentic, impactful, and influential 20-year-old !

An English-language packaging industry B2B platform in print and web, Packaging South Asia is in its 20th year of publication. Without claims about being the best, most widely read, or most influential, our Google analytics have doubled in the past year. If you are interested in impactfully targeting the Indian and South Asian markets to sell equipment, technology, software, and consumables, we can help.

We can assess your potential and addressable markets in light of the competition with research and discuss marketing, communication, and sales strategies for market entry and growth. [www.ippstar.org]

With a strategy and budget for targeted marketing, you can discuss optimal use of our hybrid print, web, video, and social media channels for brand recognition linked to market relevance. Our platforms and channels are differentiated by hands-on domain practice and experience. We understand of business and financials, and our team, including some of the best globally recognized technical writers, is ready to meet you and your customers for content.

Get our 2026 media kit and recalibrate your role in this dynamic market. Enhance visibility and relevance to turn potential customers into success. Ask for a sample copy of our print monthly or our two weekly packaging eZines.

For editorial info@ippgroup.in — for advertisement ads1@ippgroup.in and for subscriptions subscription@ippgroup.in

Naresh Khanna – 12 January 2026

Subscribe Now

NEWSLETTER

Subscribe to our Newsletter