GST, CUSTOM REFORMS AND DUTY CHANGES

Hailed as a landmark reform by GoI, Goods and Services Tax (GST) challenges came to the fore once again in Union Budget 2022-23. The FM lauded the GST council for enabling the GoI to overcome an initial set of challenges and building a fully ITdriven and “progressive” GST regime, she admitted, that challenges remain. Resorting to overcome them in 202223, the FM lauded the buoyant growth in collections and hailed taxpayers for their cooperation. Claiming to have struck the right balance between facilitation and enforcement, the FM, credited it for resulting in better compliances. Hailing the customs’ reforms for their contribution in domestic capacity creation, providing a level playing field to MSMEs, easing the raw material supply-side constraints, enhancing the ease of doing business and being an enabler to other policy initiatives such as PLIs and Phased Manufacturing Plans, the FM moved on to customs side proposals in her speech. She proposed to phase out the concessional rates in capital goods and project imports in a phase-wise manner, applying a “moderate” tariff of 7.5 per cent. On advanced machinery, she added, that certain exemptions within the country shall continue. Claimed to have leveraged extensive consultation, the FM proposed a gradual phase-out of 350 exemption entries especially on products where domestic capacity is deemed sufficient. She also committed to simplifying the customs rate and tariff structure. She pinned her hopes on the removal of exceptions on items that can be manufactured locally and on raw materials used for the manufacturing of intermediate products. On fuel blends, the FM cited it as a priority of GoI. Aimed at incentivising blending of fuel, the FM announced that unblended fuel would be subjected to an additional differential excise duty of rupees two per litre with effect October 01, 2022.