In a marathon speech that stretched nearly an hour and a half, Finance Minister Nirmala Sitharaman took the stage to dissect the nation’s economic status and future prospects via the Union Budget. In her unprecedented seventh budget address, she suggested slashing customs duties across a range of items.
“We trimmed down customs duty rates in 2022-23. Following a review over the next six months, I plan to streamline them further,” she announced in the Lok Sabha
GST Expansion and Simplification
The government plans to further simplify and expand GST to include remaining sectors, ensuring a more uniform tax system.
Sector-Specific Customs Duty Proposals:
Medicines and Medical Equipment
- Cancer drugs Trastuzumab Deruxtecan, Osimertinib, and Durvalumab fully exempted from customs duty.
- Changes in Basic Customs Duty (BCD) on x-ray tubes and flat panel detectors for medical x-ray machines.
Mobile Phones and Related Parts
- BCD on mobile phones, mobile PCBA, and mobile chargers reduced to 15%.
Precious Metals
- Customs duties on gold and silver reduced to 6%.
- Duty on platinum reduced to 6.4%.
Other Metals
- BCD removed on ferro nickel, blister copper, ferrous scrap, and nickel cathode.
- Concessional BCD of 2.5% on copper scrap.
Electronics
- BCD removed on oxygen-free copper for resistor manufacturing, subject to conditions.
Chemicals and Petrochemicals
- BCD on ammonium nitrate increased from 7.5% to 10%.
Plastics
- BCD on PVC flex banners increased from 10% to 25%.
Telecommunication Equipment
- BCD on PCBA of specified telecom equipment increased from 10% to 15%.
Trade Facilitation
- Time period for export of goods imported for repairs extended from six months to one year.
- Time limit for re-import of goods for repairs under warranty extended from three to five years.
Critical Minerals
- 25 critical minerals fully exempted from customs duties.
- BCD on two critical minerals reduced.
Solar Energy
- Capital goods for manufacturing solar cells and panels exempted from customs duty.
Marine Products
- BCD on certain broodstock, polychaete worms, shrimp, and fish feed reduced to 5%.
- Various inputs for shrimp and fish feed manufacturing exempted from customs duty.
Leather and Textile
- BCD reduced on real down filling material from duck or goose.
- BCD on methylene diphenyl diisocyanate (MDI) for spandex yarn manufacturing reduced from 7.5% to 5%.
The government has taken efforts to simplify taxes, improve taxpayer services, and reduce litigation continue, contributing significantly to revenue.
Charities and TDS
- Two tax exemption regimes for charities merged into one.
- 5% TDS rate on many payments merged into 2% TDS rate.
- 20% TDS rate on mutual fund or UTI repurchases withdrawn.
Reassessment and Capital Gains
- Reassessment period extended to five years for escaped income of ₹50 lakh or more.
- In search cases, time limit reduced from ten to six years.
- Short-term gains on certain financial assets to attract a 20% tax rate.
- Long-term gains on all financial and non-financial assets to attract a 12.5% tax rate.
- Exemption limit on capital gains for certain financial assets increased to ₹1.25 lakh per year.
Taxpayer Services and Litigation
- Full digitalization of remaining Customs and Income Tax services within two years.
- ‘Vivad Se Vishwas Scheme, 2024’ introduced for resolving income tax disputes.
- Increased monetary limits for direct taxes, excise, and service tax appeals.
Employment and Investment
- Angel tax abolished for all investor classes to support start-ups.
- Simpler tax regime for foreign shipping companies to promote cruise tourism.
- Safe harbour rates for foreign mining companies selling raw diamonds.
- Corporate tax rate for foreign companies reduced from 40% to 35%.
Deepening Tax Base
- Security Transactions Tax on futures and options increased to 0.02% and 0.1%.
- Income from share buybacks to be taxed.
- Enhanced deduction for employer NPS contributions.
- Depenalization of non-reporting small movable foreign assets up to ₹20 lakh.
Other Proposals
- Equalization levy of 2% withdrawn.
- Standard deduction for salaried employees increased to ₹75,000.
- Family pension deduction for pensioners enhanced to ₹25,000.
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