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NEW DELHI (Lampe):- With an aim to
rationalize custom duty structure, ease compliance and give impetus to domestic
manufacturing, the Union Budget 2021-22 has several indirect tax proposals. The
Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman tabled
the Union Budget 2021-22 in Parliament today.
FURTHER SIMPLIFICATION
OF GST
Smt. Sitharaman, in
her budget speech, said that record GST collections have been made in the last
few months. She said several measures have been taken to further simplify the
GST. The capacity of the GSTN system has been announced. Deep analytics and
Artificial Intelligence has been deployed to identify tax evaders and fake
billers, launching special drives against them. The Finance Minister
assured the House that every possible measure shall be taken to smoothen the
GST further and remove anomalies such as the inverted duty structure.
CUSTOM DUTY
RATIONALISATION
On the issue of custom
duty policy, the Finance Minister said that it has the twin objectives of
promoting domestic manufacturing and helping India get on to the global value chain
and export better. She said that the trust now has to be on easy access
to raw materials and exports of value-added products. In this
regard, she proposed to review 400 old exemptions in the customs duty structure
this year. She announced that extensive consultation will be conducted
and from 1st October 2021, a revised custom duty structure
free of distortions will be put in place. She also proposed that any new custom
duty exemptions henceforth will have validity up to the 31st March following 2 years of the date of its issue.
ELECTRONIC AND MOBILE
PHONE INDUSTRY
The Finance Minister
announced the withdrawal of a few exemptions on parts of chargers and sub-parts of
mobiles. Further, some parts of mobiles will move from “NIL” rate to a moderate
2.5 percent. She announced reducing custom duty uniformly to 7.5 percent on
semis, flat, and long products of non-alloy, alloy, and stainless steel. The
Minister proposed exempting duty on steel scrap for a period up to 31st March 2022. Smt. Sitharaman also revoked ADD and CVD on
certain steel products. She announced a deduction in duty on copper scrap from 5
percent to 2.5 percent.
TEXTILE / CHEMICALS /
GOLD AND SILVER
Mentioning the
need to rationalize duty on raw material inputs to man-made textile, the
Finance Minister announced bringing nylon chain on par with polyester and other
man-made fibers. Announcing uniform deduction of the BCD rates on caprolactam,
nylon chips, and nylon fiber and yarn to 5 percent, the Minister said this will
help the textile industry, MSMEs and exports too. She also announced the calibration of customs duty rates on Chemicals to encourage domestic value
addition and to remove inversions. The Minister also announced the rationalization of custom duty on gold and silver.
RENEWABLE ENERGY
The Finance Minister
said that a phased manufacturing plan for solar cells and solar panels will be
notified to build up domestic capacity. She announced raising duty on
solar inverters from 5 percent to 20 percent and on solar lanterns from 5 per
cent to 15 percent.
CAPITAL EQUIPMENT
The Finance Minister,
in her Budget speech, said that there is immense potential in manufacturing heavy
capital equipment domestically. She said that the rate structure will be
comprehensively reviewed in due course. She proposed to withdraw exemptions on the tunnel boring machine. It will attract a customs duty of 7.5%; and its parts a
duty of 2.5% while raising customs duty on certain auto parts to 15% to bring
them on par with the general rate on auto parts.
Also Read: Central Board of Indirect Taxes and Customs celebrates International Customs Day
MSME PRODUCTS
The Budget proposes
certain changes to benefit MSMEs which include increasing duty on steel screws,
plastic builder wares, and prawn feed to 15%. It also provides for
rationalizing exemption on import of duty-free items as an incentive to
exporters of garments, leather, and handicraft items. It also provides for
withdrawing exemption on imports of certain kinds of leathers and raising custom
duty on finished synthetic gemstones.
AGRICULTURE PRODUCTS
To benefit farmers,
the Finance Minister announced raising custom duty on cotton to 10% and on raw
silk and silk yarn to 15%. She also announced withdrawing end-used based
concessions on denatured ethyl alcohol.
AGRICULTURE
INFRASTRUCTURE AND DEVELOPMENT CESS
The Minister proposed
an Agriculture Infrastructure and Development Cess (AIDC) on a small number of
items. She said, “While applying the cess, we have taken care not to put
additional burden on consumers on most items”. On the customs side, the items
covered under AIDC are gold, silver, alcohol beverages, crude palm oil, crude
soybean, and sunflower oil, apples, coal, lignite, and peat specified
fertilizers, peas, Kabuli chana, Bengal gram, lentil, and cotton overall there
would be no additional burden on the consumer on most of these items.
On the excise side,
AIDC of Rs. 2.5 per liter has been imposed on petrol and Rs. 4 per liter on
diesel. However, Basic Excise Duty (BED) and Special Additional Excise Duty
(SAED) rates on petrol and diesel have been reduced in the budget so that
overall consumer does not bear any additional burden. Unbranded petrol and
diesel will attract BED of Rs. 1.4 and Rs. 1.8 per liter respectively while
SAED on them will be Rs. 11 and Rs. 8 per liter respectively.
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