Quick Byte from Smita Singh- Partner, Indirect Tax, Customs & Trade Group, Singh & Associates On Budget 2021
The Hon’ble Finance Minister vide the Union Budget 2021 has proposed to review more than 400 old customs Duty exemptions this year. There will be an enormous change in Customs Duty rate Structure by mid of this year as a revamped structure will be introduced by October 2021. Such changes are very clearly in line with the underlying theme of Aatmanirbhar Bharat which has seen a considerable push in the COVID stricken economy. This move will undoubtedly settle various interpretational and disputed issues on the Custom duty structure and rationalize it according to the global rate structure.
Further, as a protective measure, there is a hike on import of auto parts, solar equipments, cotton and raw silk to strengthen the domestic production and boost growth in these sectors, renewables and agriculture being one of the critical sectors in Government’s growth plan. On the other hand, Customs Duty on import of Naphtha, Copper, Steel Scraps, etc. has also been rationalized, which was previously 12.5%. These products are major raw materials and inputs used by domestic manufacturers in the chemical and iron and steel industry. Reducing customs duty on its import will reduce the cost of inputs and correction of inverted duty structure for these sectors. Thus, the Government clearly shows a focused step towards strengthening India’s indigenous market by taking protective measures or facilitating low-cost procurement of raw materials for exports to the global market.