The Union Budget 2024-25 sets the foundation for India’s transformation into a developed economy, emphasizing domestic value addition, technological adoption, and green transitions. Proposals focus on enhancing India’s manufacturing and export competitiveness while addressing tax certainty and trade facilitation.
Customs Duty Reforms: Boosting Domestic Value Addition
The budget proposes a comprehensive 6-month review of Customs rates, coupled with immediate duty reductions in priority sectors.
Key Sectors Benefiting from Rate Cuts:
- Mobile Handsets
- Energy Sector
- Critical Minerals
- Leather and Textiles
Trade Facilitation Measures:
- Digitization of Records: All Customs records will be digitized over the next two years.
- Self-Certification for FTAs: Importers can now use self-certification as proof of origin to claim concessional duty rates under Free Trade Agreements.
These reforms aim to reduce compliance burdens and enhance India’s integration into global supply chains.
GST Rationalization: Simplification and Expansion
The GST rate rationalization announced in the budget marks a significant change after seven years under the current multi-rate structure.
Impacts of GST Rate Rationalization:
- Simplified Compliance: Reduces classification disputes and litigation.
- Business Certainty: Simplified rates improve ease of doing business.
- Potential Anti-Profiteering Trigger: Businesses must align with rate changes to avoid profiteering penalties.
Inclusion of Natural Gas Under GST:
Bringing natural gas under GST could:
- Reduce end-user costs.
- Accelerate India’s transition to cleaner fuels.
- Support India’s net-zero emission targets.
This move, though understated, carries transformative implications for the energy sector and beyond.
Litigation and Amnesty Measures
To address pending litigation under GST, the budget introduces several measures:
Amnesty Scheme:
- Scope: Covers demand notices issued under Section 73 (non-fraud cases) for the first three years of GST (till FY 2020).
- Benefits: Offers conditional waivers on interest and penalties for settled tax dues.
Convergence of Time Limits:
- Fraud/suppression-related notices: Time limits for issuance reduced from 5 years to 3.5 years.
- Impact: Simplifies litigation timelines and reduces uncertainties for businesses.
GST Tribunals:
- Reduction in pre-deposit requirements for appeals.
- Empowerment of the Centre to notify dates for filing appeals.
These measures aim to lower litigation costs and enhance the efficiency of the GST ecosystem.
Focus on Domestic Manufacturing and Exports
The budget highlights the importance of domestic manufacturing in integrating India into global supply chains.
Policy Highlights:
- Push for domestic value addition through rate rationalization and sector-specific incentives.
- Expansion of green debt securities and infrastructure bonds to support renewable energy and smart manufacturing.
Conclusion: A Roadmap for Growth
Union Budget 2024 reinforces India’s commitment to:
- Achieving economic sustainability.
- Enhancing tax certainty and governance.
- Aligning policies with Make in India and Digital India visions.
By addressing trade facilitation, rationalizing GST, and reducing litigation, the budget sets the stage for India’s transition into a global economic powerhouse.
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