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Finance Minister Nirmala Sitharaman in her Budget Speech 2024-25 on Saturday proposes to remove seven tariff rates (over and above the seven tariffs removed in 2023-24)
Finance Minister Nirmala Sitharaman. (Image: PTI)
Finance Minister Nirmala Sitharaman in the Budget presented on Saturday made several changes to the customs tariff or Basic Customs Duty (BCD).
While the FM increased basic customs duty on flat panel display from 10% to 20%, she has cut customs duty on open cell to 5%. Thirty-five additional capital goods for EV battery manufacturing have been exempted from the duty
TARIFF RATES
The FM proposed to remove seven tariff rates. This is over and above the seven tariff rates removed in 2023-24 budget. After this, there will be only eight remaining tariff rates including ‘zero’ rate.
Sitharaman also proposed to broadly maintain effective duty incidence except on a few items, where such incidence will reduce marginally. She announced the plan to levy not more than one cess or surcharge, and proposed to exempt Social Welfare Surcharge on 82 tariff lines that are subject to a cess.
THE EXEMPTIONS, SUPPORT
- IMPORT OF DRUGS/MEDICINES: To provide relief to patients, particularly those suffering from cancer, rare diseases and other severe chronic diseases, 36 lifesaving drugs and medicines have been added to the list of medicines fully exempted from Basic Customs Duty (BCD). Six lifesaving medicines have been added to the list attracting concessional customs duty of 5%. Full exemption and concessional duty will also respectively apply on the bulk drugs for manufacture of the above. Specified drugs and medicines under Patient Assistance Programmes run by pharmaceutical companies are fully exempt from BCD, provided the medicines are supplied free of cost to patients. I propose to add 37 more medicines along with 13 new patient assistance programmes.
- CRITICAL MINERALS: Cobalt powder and waste, the scrap of lithium-ion battery, Lead, Zinc and 12 more critical minerals have been fully exempted. This will help secure their availability for manufacturing in India and promote more jobs for our youth.
- TEXTILES: To promote domestic production of technical textile products such as agro-textiles, medical textiles and geo textiles at competitive prices, two more types of shuttle-less looms have been added to the list of fully exempted textile machinery. The BCD rate on knitted fabrics covered by nine tariff lines have been changed from “10% or 20%” to “20% or ` 115 per kg, whichever is higher”.
- ELECTRONIC GOODS: The BCD on Interactive Flat Panel Display (IFPD) has been increased from 10% to 20%, while the BCD has been reduced to 5% on Open Cell and other components.
- LITHIUM ION BATTERY: Thirty-five additional capital goods for EV battery manufacturing, and 28 additional capital goods for mobile phone battery manufacturing have been added to the exempted list.
- SHIPPING SECTOR: The exemption of BCD on raw materials, components, consumables or parts for the manufacture of ships for another ten years shall continue.
- TELECOMMUNICATION: The BCD has been reduced from 20% to 10% on Carrier Grade ethernet switches to make it at par with Non-Carrier Grade ethernet switches.
- HANDICRAFT GOODS EXPORTS: To facilitate exports of handicrafts, the time period for export has been extended from six months to one year, further extendable by another three months, if required. Nine items have been added to the list of duty-free inputs.
- LEATHER SECTOR: BCD on Wet Blue leather has been fully exempted to facilitate imports for domestic value addition and employment. Crust leather has been exempted from 20% export duty to facilitate exports by small tanners.
- MARINE PRODUCTS: To enhance India’s competitiveness in the global seafood market, BCD has been reduced from 30% to 5% on Frozen Fish Paste (Surimi) for manufacture and export of its analogue products. BCD has been reduced from 15% to 5% on fish hydrolysate for manufacture of fish and shrimp feeds.
- DOMESTIC MROS FOR RAILWAY GOODS: To promote development of domestic MROs for aircraft and ships, the FM had extended the time limit for export of foreign origin goods that were imported for repairs, from six months to one year and further extendable by one year. The same has been extended for railway goods.
TRADE FACILITATION
Time limit for Provisional Assessment: Presently, the Customs Act, 1962 does not provide any time limit to finalize Provisional Assessments leading to uncertainty and cost to trade. As a measure of promoting ease of doing business, a time-limit of two years, extendable by a year, will be fixed for finalising the provisional assessment.
Voluntary Compliance: A new provision will enable importers or exporters, after clearance of goods, to voluntarily declare material facts and pay duty with interest but without penalty. This will incentivise voluntary compliance. However, this will not apply in cases where department has already initiated audit or investigation proceedings.
Extended Time for End Use: For industry to better plan their imports, the time limit for the end-use of imported inputs in the relevant rules has been extended from six months to one year. This will provide operational flexibility in view of cost and uncertainty of supply. Further, such importers will now have to file only quarterly statements instead of a monthly statement.
