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Parliament passes Provisional Collection of Taxes Bill, 2023 for Immediate Customs and Excise Duty Changes

Last updated: 22 December 2023


In a significant legislative move, Parliament approved the Provisional Collection of Taxes Bill, 2023 on Wednesday, ushering in a mechanism for the provisional enforcement of changes in customs and excise duties as outlined in the Budget, effective from midnight. The bill, introduced by Finance Minister Nirmala Sitharaman, not only grants provisional authority for the collection of newly imposed or increased duties but also incorporates a provision for refunding taxes collected that have not been integrated into the Finance Bill.

Key Points

Parliament passes Provisional Collection of Taxes Bill, 2023 for Immediate Customs and Excise Duty Changes

Immediate Implementation of Budget Changes

The approved bill empowers the government to provisionally enforce changes in customs and excise duties announced in the Budget from midnight. This strategic move enables the swift implementation of fiscal adjustments crucial for economic policies outlined in the Budget.

Provision for Tax Refunds

A notable feature of the Provisional Collection of Taxes Bill, 2023 is its provision for the refund of taxes collected during the provisional period, particularly those not incorporated in the subsequent Finance Bill. This mechanism ensures accountability and rectification for any unintended financial implications.

Repealing the 1931 Act

The newly passed bill marks the repeal of The Provisional Collection of Taxes Act, 1931, signifying a modernization and streamlining of tax collection processes. Finance Minister Sitharaman emphasized this aspect while moving the bill for passage on Tuesday.

75-Day Provisional Levy Period

Finance Minister Nirmala Sitharaman clarified that the bill seeks parliamentary authorization for the provisional levy and collection of newly imposed or increased customs and excise duties for a period of 75 days. This timeframe allows for the evaluation and potential adjustment of tax policies as needed.

Distinction in Effective Dates

Sitharaman pointed out the distinction in the effective dates of changes in tax rates. While alterations in income and corporate tax rates, outlined in the February 1 Budget, take effect from April 1 or a notified date, most changes in customs and excise duty rates become effective immediately from midnight.

Conclusion

The successful passage of the Provisional Collection of Taxes Bill, 2023 underscores the government's commitment to agile fiscal governance. By allowing for the provisional enforcement of customs and excise duty changes, coupled with a provision for tax refunds, the bill not only facilitates the swift implementation of budgetary measures but also ensures transparency and accountability in the tax collection process. The repeal of the 1931 Act and the delineation of effective dates for tax rate changes further contribute to a more modern and responsive taxation framework.

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