“To multiply the benefits of GST, we will strive to further simplify and rationalise the tax structure and endeavour to expand it to the remaining sectors,” noted Nirmala Sitharaman while announcing the developments in the indirect taxes.
The Union Budget 2024 introduced measures aimed at simplifying the indirect tax regime, reducing compliance burdens, and fostering domestic manufacturing.
“My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation, while keeping the interest of the general public and consumers surmount,” the Finance Minister added.
Initiatives aimed at simplifying taxes, Rationalising duties, and supporting India’s key sectors
- The government reaffirmed its commitment to further simplifying and rationalising the Goods and Services Tax (GST) structure. This aims to broaden its coverage and maximize benefits for both consumers and businesses.
- To enhance ease of trade and minimise disputes, a comprehensive review of the customs duty rate structure is planned over the next six months.
- Several measures were introduced to promote domestic manufacturing, including reductions in customs duties on critical minerals, solar energy components, and electronics parts.
- The budget provided targeted relief to various sectors, including medicine, medical equipment, mobile phones, marine products, leather, textiles, precious metals, steel, copper, and chemicals.
- To support the domestic aviation and ship repair industries, the export period for imported goods for repairs has been extended from six months to one year.
Sector-Specific Tax Breaks and IncentivesThe government’s recent budget introduced several measures aimed at promoting domestic manufacturing across a range of sectors. For the medicines and medical equipment sector, customs duties were fully exempted on three additional cancer medicines.
Furthermore, changes were made to the Basic Customs Duty (BCD) on X-ray tubes and flat panel detectors to better align with domestic production capacities, fostering growth within the healthcare industry.
In the mobile phone sector, the BCD on mobile phones, mobile PCBAs, and chargers was reduced to 15%. This move is designed to bolster domestic manufacturing and reduce dependence on imports. Similarly, the government fully exempted customs duties on 25 critical minerals to encourage their processing and refining within the country.
The solar energy sector also saw significant changes, with the list of exempted capital goods for solar cell and panel manufacturing being expanded, while exemptions for solar glass and tinned copper interconnect were removed to support local production capabilities.
The budget also aimed to boost exports of marine products by reducing the BCD on broodstock, polychaete worms, shrimp and fish feed, and exempting customs duty on inputs for shrimp and fish feed. In the leather and textiles sector, reductions in BCD on real down filling material and additions to the exempted goods list were announced to enhance export competitiveness. Additionally, customs duties on gold, silver, and platinum were reduced to encourage domestic value addition in jewelry.
To support the electronics sector, BCD on oxygen-free copper was removed, and exemptions for connector parts were introduced to increase value addition. For the steel and copper sectors, BCD removal on ferro nickel and blister copper aimed to reduce production costs.
The chemicals and petrochemicals industry saw an increase in BCD on ammonium nitrate to support existing and new capacities, while the plastics sector faced a higher BCD on non-biodegradable PVC flex banners to curb imports. Lastly, BCD on PCBA of specified telecom equipment was increased to 15% to incentivize domestic manufacturing.
