Basic Customs Duty rates on Goods, other than Textiles and Agriculture, reduced from 21 to 13

• CUSTOM DUTY EXEMPTED ON IMPORT OF CAPITAL GOODS ANDMACHINERYFORMANUFACTUREOFLITHIUM-IONCELLS FORBATTERIESUSEDINELECTRICVEHICLES

• EXEMPTION IN CUSTOM DUTY ON VARIOUS PARTS OF IT & ELECTRONICS

• INVERSION OF DUTY STRUCTURE RECTIFIED FOR

NEW DELHI: 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. She emphasised, “A simplified tax structure with fewer tax rates helps in reducing compliance burden and improving taxadministration.”

TheFinance Minister proposed toreduce the number of Basic Custom Duty (BCD) rates on goods, other than textiles and agriculture, from 21 to 13. This has necessitated minor changes in the basic custom duties, cesses and surcharges on some items including toys, bicycles, automobilesandnaphtha.

Green Mobility

In order to avoid cascading of taxes on blended compressed natural gas, the Finance Minister proposed to exempt excise duty on GST-paid compressed bio gas contained in it. To further provide impetus to green mobility, she announced to extend the customs duty exemption to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.

IT & Electronics

Smt. Sitharaman proposed to provide relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries foranother year inorder tofurther deepen domestic value addition in manufacture of mobile phones. The Minister stated that the mobile phone production in India had increased from 5.8 crore units valued at about Rs. 18,900 crore 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.

Shealsoproposed toreducetheBCDonpartsofopencells of TVpanels to 2.5% to promote value addition inmanufacture oftelevisions.

Electrical

The Finance Minister proposed an increase in the BCD on electric kitchen chimney from 7.5% to 15% and a reduction on heat coils from 20% to 15%. This change would rectify inversion of duty structure and encourage manufacturing of electrickitchenchimneys.

Chemicals and Petrochemicals

To support the Ethanol Blending Programme and facilitateIndia’sendeavourforenergytransition, theMinister proposed to exempt BCD on denatured ethyl alcohol. She also announced to reduce 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 manufacture of epicholorhydrin was also proposed to be reducedfrom7.5%to2.5%.

Marine Products

The Finance Minister proposed to reduce the BCD on key inputs for domestic manufacture of shrimp feed to enhance the export competitiveness of marine products. She stated that the marine products recorded the highest export growth in the last financial year, benefitting farmers in the coastal statesofthecountry.

ELECTRICKITCHENCHIMNEYS

• DENATURATED ETHYL ALCOHOL EXEMPTED FROM BASIC CUSTOMS DUTY

• BIG PUSH TO DOMESTIC MANUFACTURE OF AQUATIC FEED

• NO CUSTOMS DUTY ON SEEDS USED IN THE MANUFACTURING OF LAB GROWN DIAMONDS

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 LabGrownDiamonds.

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 articlestoalignthemwiththatongoldandplatinum.

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 manufacture of CRGO Steel, ferrous scrap and nickel cathode. She also proposed to continue the concessional BCD of 2.5% on copper scrap toensure theavailability ofrawmaterials forsecondary copperproducerswhoaremainlyintheMSMEsector.

Compounded Rubber

Smt. Sitharaman proposed to increase 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 thanlatex,tocurbcircumvention ofduty.

Legislative Changes in GST Laws

Amendments to Sections 132 and 138 of CGST Act are proposedto

• Raise the minimum threshold of tax amount for launching prosecution under GST from Rs. 1 crore to Rs. 2 crore, except for the offence of issuance of invoices without supplyofgoodsorservicesorboth;

• reduce the compounding amount from the present rangeof50%to150%oftaxamounttotherangeof25%to100%;

• decriminalize certain offences specified under clause (g), (j) and (k) of sub-section (1) of section 132 of CGST Act,2017,viz.- o obstruction or preventing any officer in discharge of hisduties; o deliberatetemperingofmaterialevidence; o failuretosupplytheinformation.

Smt. Sitharaman also proposed to amend Sections 37, 39, 44 and 52 of CGST Act, 2017 to restrict filing of returns/ statements to a maximum period of three years from the due dateoffilingoftherelevantreturn/statement.