This is the second post in the our new blog series on the Budget 2018. Following our two-part post (here and here) on the impact of the Budget on the Direct Tax regime, this piece focuses on the amendments proposed under this Budget in the Indirect Tax space. We hope you enjoy reading this as much as we have enjoyed putting this together.
With the Indian economy recovering from a transitional slump post the implementation of the Goods and Services Tax (GST) of July 01, 2017, the Union Budget 2018 (Budget), tabled in the Lok Sabha on February 01, 2018, reinforces the commitment of Central Government to its “Make in India” and “Digital India” initiatives.
Though the Budget does not propose any significant changes in GST legislation, it recommends changes on the customs front, with a clear intent to vitalise the domestic manufacturing sector, while maintaining investor interest. The key amendments proposed to customs law are detailed below:
Tariff – For the first time in over a decade and a half, the government has increased customs duty rates ostensibly with a view to boost domestic manufacturing in terms of the “Make in India” initiative. The sectors impacted are electronics, automobile, medical devices, packaged food, cosmetics, textile, etc. The duty hike on mobile phones, smart watches, perfumes, fruit juices, television parts such as printed circuit boards and cabinets, cosmetics, silk fabrics, etc. is expected to create a push for suppliers to manufacture or source components in these sectors, locally.