Success of GST: GST has decreased tax incidence on the common man, reduced compliance burden and logistics costs for trade and industry, and enhanced revenues for central and state governments. To multiply GST benefits, efforts will be made to further simplify and expand the tax structure.
Customs Duties
Domestic Manufacturing and Export Competitiveness: Customs duty proposals aim to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation while considering public interest.
Rate Structure Review: A comprehensive review of customs duty rates will be undertaken to simplify trade, remove duty inversion, and reduce disputes.
Sector-Specific Customs Duty Proposals
Medicines and Medical Equipment:Full customs duty exemption on three additional medicines for cancer patients. Changes in BCD for x-ray tubes and flat panel detectors to align with domestic capacity.
Mobile Phones and Related Parts: Reduction of BCD on mobile phones, PCBA, and chargers to 15% due to the maturity of the Indian mobile phone industry.
Critical Minerals:Full customs duty exemption on 25 critical minerals, reduced BCD on two, to support strategic sectors like nuclear and renewable energy, space, defense, and high-tech electronics.
Solar Energy: Expanded exemption list for capital goods used in solar cell and panel manufacturing. Customs duty exemptions on solar glass and tinned copper interconnect not extended due to sufficient domestic capacity.
Marine Products: Reduction of BCD on broodstock, polychaete worms, shrimp, and fish feed to 5%. Exemption of customs duty on various inputs for shrimp and fish feed manufacturing to enhance competitiveness.
Leather and Textile: Reduction of BCD on real down filling material, additions to exempted goods list for export-oriented leather and textile manufacturing. Reduction of BCD on methylene diphenyl diisocyanate (MDI) for spandex yarn manufacturing from 7.5% to 5%.
Precious Metals: Reduction of customs duties on gold and silver to 6%, and platinum to 6.4%, to enhance domestic value addition in jewelry.
Other Metals: Removal of BCD on ferro nickel and blister copper. Continuation of nil BCD on ferrous scrap and nickel cathode, and concessional BCD of 2.5% on copper scrap.
Electronics: Removal of BCD on oxygen-free copper for resistor manufacturing and exemption on certain parts for connector manufacturing.
Chemicals and Petrochemicals: Increase in BCD on ammonium nitrate from 7.5% to 10% to support new and existing capacities.
Plastics: Increase in BCD on non-biodegradable PVC flex banners from 10% to 25%.
Telecommunication Equipment: Increase in BCD on PCBA of specified telecom equipment from 10% to 15% to incentivize domestic manufacturing.
Trade Facilitation: Extension of the export period for goods imported for repairs from six months to one year. Extension of the time limit for re-import of goods for repairs under warranty from three to five years.
Direct Taxes
Simplification and Tax Payer Services
Efforts to Simplify Taxes: Continued efforts to simplify taxes, improve taxpayer services, provide tax certainty, and reduce litigation.
Income-tax Act Review: A comprehensive review of the Income-tax Act, 1961, will be undertaken to make it concise, lucid, and easy to understand, reducing disputes and litigation.
Charities and TDS: Merging of two tax exemption regimes for charities into one. Reduction of TDS rate on e-commerce operators from 1% to 0.1%. Decriminalization of delay in TDS payment up to the due date of filing the statement.
Reassessment Simplification: Reopening of assessment only if escaped income is ₹50 lakh or more, with a maximum period of five years. Reduction of the time limit in search cases from ten to six years.
Capital Gains Simplification: Short-term gains on certain financial assets to attract a 20% tax rate. Long-term gains on all assets to attract a 12.5% tax rate. Increase in the exemption limit for capital gains on certain financial assets to ₹1.25 lakh per year.
Standard Deduction: Increase in the standard deduction for salaried employees from ₹50,000 to ₹75,000.
Revised Tax Rate Structure: New tax rate structure with reduced rates for various income brackets to provide relief to salaried individuals and pensioners.
Revenue Impact: The proposed changes will result in a total revenue forgone of about ₹7,000 crore annually.
Tax Payer Services
Digitalization of Services: Full digitalization of remaining services under Customs and Income Tax, including rectification and order giving effect to appellate orders, over the next two years.
Litigation and Appeals
Reducing Appeals Pendency: Deployment of more officers to dispose of the backlog of first appeals. Proposal of Vivad Se Vishwas Scheme, 2024, for certain income tax disputes.
Monetary Limits for Appeals: Increase in monetary limits for filing appeals related to direct taxes, excise, and service tax.
Employment and Investment
Investment and Employment Promotion: Abolition of angel tax for all classes of investors. Simplification of tax regime for foreign shipping companies operating domestic cruises. Provision of safe harbor rates for foreign mining companies selling raw diamonds in India. Reduction of corporate tax rate on foreign companies from 40% to 35%.
Deepening the Tax Base
Security Transactions Tax: Increase in Security Transactions Tax on futures and options of securities to 0.02% and 0.1% respectively.
Buy Back of Shares: Tax income received on buy back of shares in the hands of the recipient.
Social Security Benefits
National Pension Scheme (NPS): Increase in deduction of employer’s expenditure towards NPS from 10% to 14% of the employee’s salary.
