Implications of Budget 2024 announcements on indirect taxes

Announcements on indirect taxes will help in ease of trade, removal of duty inversion and reduction in disputes.

The vision of ‘Viksit Bharat’ by 2047 has been the driving force for Finance Minister, Nirmala Sitharaman as she presented the budget 2024-25 which revolves around the theme to facilitate employment generation, skill development with prime focus on MSMEs. In line with the said vision, the budget kept its focus on 9 priority sectors which included manufacturing, services, energy security and infrastructure development.

The budget continues to promote ‘Make in India’ policy by supporting domestic manufacturing, deepening local value addition, promoting export competitiveness, and simplifying taxation. With this agenda, conditional exemptions/ concessional rates provided under Customs have been rationalized. The same will help in ease of trade, removal of duty inversion and reduction in disputes. Further, there have been certain sectoral specific exemptions and duty reductions in the field of medicine and medical equipment, mobile phones and parts, and critical minerals.

To provide ease of doing business, the government has provided relief to the long standing ask of the industry in terms of rules of origin which have been relaxed by enabling acceptance of different types of proof of origin provided in trade agreements in order to align it with new trade agreements which provide for self-certification. Other such measures include increase in time-period from 3 years to 5 years, of duty free re-import of goods exported out under warranty from India as well as increase in duration from 6 months to 1 years for export in the case of aircraft and vessels imported for maintenance, repair and overhauling.

The FM has emphasised in her speech that GST reforms continue to be a priority and has reinforced the government’s intention to further simplify and rationalize the tax structure and its endeavor to expand it to the remaining sectors. After the last GST council held in June 24, the current budget has implemented the recommendations that were announced therein by bringing in the changes in the finance act.

Overall, the Budget is focussed on boosting the manufacturing sector in India and improve the ease of business as well. While the budget has set its agenda right to move towards the path of developed economy by 2047, there needs to be an alignment of incentives to create the necessary ecosystem to further boost manufacturing in India.

(Inputs by Swati Saraf, Senior Tax Manager, EY.)

Views are personal and do not represent the stand of this publication.