Customs duty cuts to cost govt Rs 6,300 cr

The government has forgone Rs 6,300 crore (Rs 63 billion) through cuts in customs duties announced since June 2006 to bring relief to the common man from high inflation, which stood at 4.8 per cent for the week ended June 2.

The government kitty, however, swelled by 27.59 per cent due to robust tax collections at Rs 4,65,144 crore (Rs 4,651.44 billion) during 2006-07, an official note has said.

The total collection was impacted by Rs 280 crore (Rs 2.8 billion) due to an abolition of 10 per cent import duty on pulses on June 8 last year, while a 10 per cent cut in duty on palm oil on August 11 took away Rs 650 crore (Rs 6.5 billion) from the government.

A two-and-half per cent cut in customs duty on various metals, capital goods, refractories and project imports coupled with a 12.5 per cent reduction in duty on cement announced on January 22 caused the government kitty to shrink by Rs 3,360 crore (Rs 33.6 billion).

A further 10-12.5 per cent duty reduction on palm oil had revenue implications of Rs 680 crore (Rs 6.8 billion), the note said.

In this year's budget, the government exempted all edible oils from additional four per cent duty while reducing duty on sunflower oils by 15 per cent. This had a Rs 780 crore (Rs 7.8 billion) impact on the total collection, it added.

The government announced three more measures in April -- abolishment of countervailing duty on cement, extension of concessional duty of five per cent on milk powder and an additional 10 per cent cut on palm oils, accepting a dip of Rs 550 crore (Rs 5.5 billion) in revenue collection, the note said.