With regard to excise duties, the need to continue the stimulus package for manufacturing is a continuing one, given the macro economic indicators. Talk of economic recovery and ‘green shoots’ could be premature. Therefore, in the aforesaid stated trade-off, the government could leave the excise duty rate of 8 per cent untouched. Also, from a GST standpoint, it is now the common understanding that the aggregate rate of the dual GST on goods comprising the federal GST as well as the state GST would be in the range of 14 per cent to 16 per cent. If this understanding is correct, it would stand to logic that the federal GST rate on goods should be approximately 8 per cent. For this reason as well, it would be logical for the government not to consider an increase in the excise duty rate from the present 8 per cent. There is, of course, very little possibility of any further reduction in the excise duty rate.

Finally, with regard to the service tax, revenue buoyancy in the midst of the economic slowdown has been most noticeable in the area of service tax. It is a moot point therefore as to whether the economic slowdown has impacted the service sector as much as the manufacturing sector. If not, the government could consider an increase in the service tax rate as a measured response to the fiscal deficit problem. Here again, from a GST standpoint, it is logical for the government to consider an increase in the service tax rate. Since, as stated above, the aggregate rate of the dual GST on services and goods is expected to be in the range of 14 per cent to 16 per cent, given that there is presently no State service tax at all, the Central government could increase the service tax rate from the present 10 per cent to the erstwhile 12 per cent, as a signalling measure on the ultimate aggregate incidence of the service tax rate under the GST.