Nihal Kothari, Executive Director; Abhishek Rastogi, Partner and Rashmi Deshpande, Associate Partner
Budget 2017 – Nihal Kothari – Executive Director ( Indirect Tax Expert)
The FM in his speech has shown government’s determination to introduce the GST at the earliest in 2017 and therefore, no major changes have been propose in the existing indirect taxes. However, inverted rate structures in customs and excise duties has been eliminated.
As a boost to digitisation of economy, government has announced exemption from excise and customs duty on manufacture or import of equipments used in such processes. Paradigm shift in the tax administration and make them accountable. The extent to which the above objective will be met is yet to be seen on the implementation of the budget proposal.
In view of hardening of crisis of petroleum the customs duty on LNG is reduced from 5% to 2.5%.
Quote from Abhishek A Rastogi, Partner, Khaitan & Co.
Interestingly Budget 2017 kept the agenda surrounded by themes of transformation, energisation and clean from corruption. As expected, only broad announcement with respect to the GST has been made by the Finance Minister in the Budget Speech today. July 1 has been reiterated as the date for the landmark reform and certainly there is not much scope for extension now. While the roadmap looks clear, the announcement with respect to the draft codes would have provided greater certainty to industry.
The Service tax has not been changed but plethora of changes to abatements and exemptions are expected. This is justified as the transition to the GST is evident. The key exemptions which have been trimmed down need to be looked closely.
Due to the global economy slowdown, there were fears of various goods been dumped into India and accordingly the customs duty was expected to be increased on several goods. Further, with an objective to boost the manufacturing, excise duty concessions were expected. However, changes to the indirect tax rates have been kept minimal.
While the budget was based on lot of data analysis and an element of wit, it was on an overall an average one.
Quote from Rashmi Deshpande, Associate Partner
After launching a war against black money, it is time for another disruption on the indirect tax front in form of the tectonic GST reform. In his Budget speech, the Finance Minister made it amply clear that in light of the upcoming GST implementation, no major changes in the indirect tax structures were made. In addition, the FM ensured that digitalization of the economy was on its way by providing substantial boost to the digital infrastructure devices by providing exemptions from indirect tax.
As against common beliefs, there was no increase in the indirect tax rates which came as a surprise. This indicate that there is still no clarity on the rates even at the Government’s end. The industry should now gear up for a complete shift in their systems to be in line with the upcoming reform.