Indirect Tax Proposals of Union Budget 2022

INDIRECT TAXES

Remarkable progress in GST

• GST revenues are buoyant despite the pandemic - Taxpayers deserve applause for this growth.

Special Economic Zones

• Customs Administration of SEZs to be fully IT driven and function on the Customs National Portal - shall be implemented by 30^th September 2022.

Customs Reforms and duty rate changes

• Faceless Customs has been fully established. During Covid-19 pandemic, Customs formations have done exceptional frontline work against all odds displaying agility and purpose.

Project imports and capital goods

• Gradually phasing out of the concessional rates in capital goods and project imports; and applying a moderate tariff of 7.5 percent - conducive to the growth of domestic sector and 'Make in India'.
• Certain exemptions for advanced machineries that are not manufactured within the country shall continue.
• A few exemptions introduced on inputs, like specialised castings, ball screw and linear motion guide - to encourage domestic manufacturing of capital goods.

Review of customs exemptions and tariff simplification

• More than 350 exemption entries proposed to be gradually phased out, like exemption on certain agricultural produce, chemicals, fabrics, medical devices, & drugs and medicines for which sufficient domestic capacity exists.
• Simplifying the Customs rate and tariff structure particularly for sectors like chemicals, textiles and metals and minimise disputes; Removal of exemption on items which are or can be manufactured in India and providing concessional duties on raw material that go into manufacturing of intermediate products - in line with the objective of 'Make in India' and 'Atmanirbhar Bharat'.

Sector specific proposals

Electronics

• Customs duty rates to be calibrated to provide a graded rate structure - to facilitate domestic manufacturing of wearable devices, hearable devices and electronic smart meters.
• Duty concessions to parts of transformer of mobile phone chargers and camera lens of mobile camera module and certain other items - To enable domestic manufacturing of high growth electronic items.

Gems and Jewellery

• Customs duty on cut and polished diamonds and gemstones being reduced to 5 per cent; Nil customs duty to simply sawn diamond - To give a boost to the Gems and Jewellery sector
• A simplified regulatory framework to be implemented by June this year - To facilitate export of jewellery through e-commerce.
• Customs duty of at least Rs 400 per Kg to be paid on imitation jewellery import - To disincentivise import of undervalued imitation jewellery.

Chemicals

• Customs duty on certain critical chemicals namely methanol, acetic acid and heavy feed stocks for petroleum refining being reduced; Duty is being raised on sodium cyanide for which adequate domestic capacity exists - This will help in enhancing domestic value addition.

MSME

• Customs duty on umbrellas being raised to 20 per cent. Exemption to parts of umbrellas being withdrawn.
• Exemption being rationalised on implements and tools for agri-sector which are manufactured in India
• Customs duty exemption given to steel scrap last year extended for another year to provide relief to MSME secondary steel producers
• Certain Anti- dumping and CVD on stainless steel and coated steel flat products, bars of alloy steel and high-speed steel are being revoked - to tackle prevailing high prices of metal in larger public interest.

Exports

• To incentivise exports, exemptions being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes.
• Duty being reduced on certain inputs required for shrimp aquaculture - to promote its exports.

Tariff measure to encourage blending of fuel

• Unblended fuel to attract an additional differential excise duty of Rs 2/ litre from the 1^st of October 2022 - to encourage blending of fuel.

Also Read: Memorandum Explaining the Provisions in the Financial Bill 2022