Feb 01: With an aim to promote exports, boost domestic manufacturing, enhance domestic value addition and encourage green energy and mobility, the Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman presented the Union Budget 2023-24 in Parliament today. She emphasised, “A simplified tax structure with fewer tax rates helps in reducing compliance burden and improving tax administration.”
The Finance Minister proposed to reduce the number of Basic Customs Duty (BCD) rates on goods, other than textiles and agriculture, from 21 to 13. This has necessitated minor changes in the basic customs duties, cesses and surcharges on some items including toys, bicycles, automobiles and naphtha.
Green Mobility
In order to avoid cascading taxes on blended compressed natural gas, the Finance Minister proposed to exempt excise duty on GST-paid compressed biogas contained in it. To further provide impetus to green mobility, she announced extending the customs duty exemption to the import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles.
IT & Electronics
Smt. Sitharaman proposed to provide relief in customs duty on the import of certain parts and inputs like camera lenses and continue the concessional duty on lithium-ion cells for batteries for another year in order to further deepen domestic value addition in the manufacture of mobile phones. The Minister stated that mobile phone production in India had increased from 5.8 crore units valued at about Rs. 18,900 crores in 2014-15 to 31 crore units valued at over Rs. 2,75,000 crore in the last financial year as a result of various initiatives of the Government, including the Phased Manufacturing programme.
She also proposed to reduce the BCD on parts of open cells of TV panels to 2.5% to promote value addition in the manufacture of televisions.
Electrical
The Finance Minister proposed an increase in the BCD on electric kitchen chimneys from 7.5% to 15% and a reduction on heat coils from 20% to 15%. This change would rectify the inversion of duty structure and encourage the manufacturing of electric kitchen chimneys.
Chemicals and Petrochemicals
To support the Ethanol Blending Programme and facilitate India’s endeavour for energy transition, the Minister proposed to exempt BCD from denatured ethyl alcohol. She also announced to reduction of BCD on acid-grade fluorspar from 5 % to 2.5% to make the domestic fluorochemicals industry competitive. The BCD on crude glycerin for use in the manufacture of epichlorohydrin was also proposed to be reduced from 7.5% to 2.5%.
Marine Products
The Finance Minister proposed to reduce the BCD on key inputs for the domestic manufacture of shrimp feed to enhance the export competitiveness of marine products. She stated that marine products recorded the highest export growth in the last financial year, benefitting farmers in the coastal states of the country.
Lab Grown Diamonds
The Budget proposed to nullify the BCD on seeds used in the manufacturing of Lab Grown Diamonds from the current 5%. The Finance Minister stated that India contributed about three-fourths of the global turnover by value in cutting and polishing of natural diamonds industry. With the depletion in deposits of natural diamonds, the industry is moving towards Lab Grown Diamonds.
Precious Metals
The Minister proposed to increase the duties on articles made from dore and bars of gold and platinum to enhance the duty differential. The customs duties on dore and bars of gold and platinum were increased earlier this fiscal. She also proposed to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum.
Metals
To facilitate the availability of raw materials for the steel sector, the Finance Minister proposed to continue the exemption from BCD on raw materials for the manufacture of CRGO Steel, ferrous scrap and nickel cathode. She also proposed to continue the concessional BCD of 2.5% on copper scrap to ensure the availability of raw materials for secondary copper producers who are mainly in the MSME sector.
Compounded Rubber
Smt. Sitharaman proposed to increase the BCD rate on compounded rubber from 10% to ‘25 per cent or Rs. 30/kg whichever is lower, at par with that on natural rubber other than latex, to curb circumvention of duty.
Cigarettes
The Finance Minister proposed to revise upwards the National Calamity Contingent Duty (NCCD) on specified cigarettes by about 16%. It was last revised 3 years ago.
Legislative Changes in GST Laws
Amendments to Sections 132 and 138 of the CGST Act are proposed to
- Raise the minimum threshold of tax amount for launching prosecution under GST from Rs. 1 crore to Rs. 2 crores, except for the offence of issuance of invoices without a supply of goods or services or both;
- reduce the compounding amount from the present range of 50% to 150% of the tax amount to the range of 25% to 100%;
- decriminalize certain offences specified under clauses (g), (j) and (k) of sub-section (1) of section 132 of CGST Act, 2017, viz.-
- obstruction or preventing any officer in the discharge of his duties;
- deliberate tempering of material evidence;
- failure to supply the information.
Smt. Sitharaman also proposed to amend Sections 37, 39, 44 and 52 of the CGST Act, 2017 to restrict the filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return/statement.
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