What The Budget Had In Store From An Indirect Tax Perspective
With a historic seventh Budget presentation, all eyes were on the FM to lay the tracks for the Indian growth engine to navigate the next five years, if not the next decade. On the investment and capex side, the outlay has been quite wide with a focus on job creation and infrastructure upgrade. The announcement on setting up of industrial parks around 100 cities, upskilling of youth, internships, stipend, one month salary for first time employees are all keeping in mind the youth of the country and focussing on the professionals entering the workforce.
As has been the case for the last decade, manufacturing is the word of the day and therefore, a lot of the indirect tax proposals on the Customs side have been to support the manufacturing sector and create new opportunities and avenues for widening the same. The Finance Minister announced a comprehensive review of customs duty structure which will be done over a period of next six months to rationalize and simplify the rate structure for ease of trade, removal of duty inversion and reduction of disputes.
A similar announcement was also made after the 53rd GST Council Meeting. With this intention and objective, rate rationalisation will have a significant impact across various industries like electronics, gems and jewellery etc. While this is a welcome initiative, it is incumbent on the trade and industry associations to represent their concerns in respect of rate disputes/duty inversion so as to avail the benefit of such a measure proposed vide this Finance Bill.
However, one may also note that the reduced income tax rates of 15% for new manufacturing units which existed till 31.03.2024 has lapsed and has not been extended, which is a dampener.
