In the economic corridors, taxation policies have always held an indomitable position. As the entire functioning of the Government is contingent upon these policies, they will empire us as long as the system of governance subsists. In India, the indirect tax structure simulates an obscuring experience in terms of multiplicity of taxes, tax rates, tax periods, threshold limits and endlessly diverse and exponentially multiplying provisions. While the much awaited GST is conceivably expected to bring in a uniform experience as well as simplicity to the existing herculean system, Budget 2017 was expected to be distinctly significant as 2017 is the transitional year.
The Finance Minister presented the Budget 2017 with a focus on themes of transform, energise and clean India. Broad announcement with respect to the GST was made to reiterate July 1 as the date for the landmark reform. While we expected the roadmap to be disclosed, the announcement with respect to the draft codes would have provided greater certainty to industry. Indirect tax rates have not been significantly changed as the transition to the GST appears to be on schedule.
Service tax exemptions have been provided to services provided by Army, Naval and Air Force group insurance funds with retrospective effect from 2004, services provided by IIMs by way of two year full time residential programs and in respect of viability gap funding payable to the selected airline operator. However, exemption has been withdrawn on import of technology as the Research and Development Cess Act, 1986 has been repealed.
The customs duty, as expected, has been reduced on various goods such as LNG, catalyst and resin, solar tempered glass, and articles thereof, micro ATMs and parts of these devices and miniaturized POS card reader, which form part of procurement for the domestic sector. In line with the expectations arising from the introduction of demonetisation process, promotion of cashless transactions, import and domestic manufacturing of related devices have received a significant boost in form of tax exemptions.
To promote the Make in India initiative, customs duty on certain raw materials, inputs and capital goods has been considerably reduced, while import of nickel has been exempted from basic customs duty. The reduction in duty has also been made on certain chemicals and petrochemicals materials. The renewable energy sector will see a boost from the reduction and exemption on CVD, BCD and SAD on multiple commodities.
In addition, changes in Customs and Excise/CVD have been proposed to address the problem of inverted duty structure in certain sectors. Duty on imports pertaining to certain food processing and electronics products has been increased to protect the domestic manufacturing industry. As with customs duty benefits, digital payment sector has received a boost in terms of excise duty benefits proposed for equipment. Further, excise duty benefits are extended to cast components of wind operated electricity generator, membrane sheet to manufacture reverse osmosis membrane for filters and solar tempered glass and parts thereof.
Interestingly, pending applications before the Authority for Advance Ruling (Central Excise, Customs and Service Tax) would now be transferred to that constituted under the Income Tax Act. While the budget is focused on stimulating growth, promoting digital economy and improving tax administration, it could have been a much better version. The need of the hour is to accelerate the economy and promote consumption, while paving the way for the much-touting reform of GST.
Source: firstpost.com