Budget Taxation Changes
The recent budget introduces significant taxation changes aimed at boosting local manufacturing, enhancing trade, improving ease of business, and providing taxpayer relief.
Objectives
- Promote value addition in domestic manufacturing.
- Enhance exports.
- Provide relief to common taxpayers.
Customs Duty Rationalization
- Customs duties rationalized across 8,500 tariff lines, reducing the average rate from 11.65% to 10.66%.
- The tariff structure now includes 12,500 lines with a focus on lower bandwidth rates of 0%, 2.5%, 7.5%, and 10%.
- Majority of tariff lines fall within these lower brackets.
- An equivalent Agriculture Infrastructure and Development Cess (AIDC) imposed to prevent industry disruption.
- Gradual tapering off of AIDC is indicated.
Focus on Critical Manufacturing Items
- Adequate availability ensured for critical minerals and manufacturing items.
Direct Taxation Approach
- Shift towards a participative, trust-based tax administration.
- Updated returns window extended from two to four years, generating ₹8,500 crore from 9 million filings in two years.
- Rationalization of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) provisions.
- Decriminalization of specific offenses to enhance tax compliance.
'PRUDENT' Framework
- Proactive and professional
- Rule-based
- User-friendly
- Data-driven
- Enabling environment
- Non-intrusive administration
- Technology with transparency
