Union Budget 2021: Here’s how this budget may impact your pocket post hike in customs duty rates

Union budgetNow is a excessive time when authorities ought to work on rationalizing the GST tax charges too

By Rajat Mohan

On February 1st, 2021, Finance Minister Nirmala Sitharaman in her third Budget speech, introduced no modifications in tax slabs for particular person taxpayers on the direct tax entrance, which is able to give stability to the general tax construction. On the opposite hand, a lot of objects will now develop into dearer resulting from a hike in customized responsibility charges, and on the similar time, some will develop into cheaper resulting from customs responsibility rationalization.

Taxpayers must pay extra for sure objects resembling Chargers, Mobile telephones, Boring Machine, leather-based, cotton, silk, alcohol, and others resulting from a hike in customized responsibility charges. However, sure objects resembling metal & alloy merchandise, Copper scrap, nylon chips, nylon fiber, gold, silver, and others will see a rationalization of customized duties.

Threadbear dialogue round as what may see a change in costs for a retail buyer are as given under:

There is an immediate must develop the agricultural sector to provide extra, promote extra, and earn extra. The customs responsibility charge on Cotton, Cotton waste, De-oiled rice bran, Silk yarns, and so forth. has been hiked in view that the home market of such objects will increase and generate income for the farmers. However, in brief run, this step will push the costs of such merchandise because the compensatory enhance in manufacturing will take atleast an agricultural cycle to answer the stated modifications.

Specified auto components like ignition wiring units, security glass, components of signaling tools, and so forth may also a see a steep rise in customs responsibility with the intent of selling the home manufacturing for these things. From now on, buying this stuff from the international market might be costlier for the importers. This will result in an insignificant enhance in the auto-industry prices that the companies may not plan to roll over to the ultimate clients.

We are conscious of the truth that photo voltaic power has huge potential for India. Building up and selling home aptitude/ manufacturing customized responsibility charges has been raised for Solar Inverter & Solar Lanterns. Besides, exemption to all objects of equipment, devices, home equipment, parts or auxiliary tools for preliminary establishing of solar energy technology venture or facility has additionally been eliminated as of now. Theoretically talking, evidently stated withdrawal of advantages for photo voltaic power will not be a inexperienced initiative. However, little analysis would inform us that Indian authorities had an preliminary goal of 20 GW capability for 2022, which was achieved 4 years forward of schedule. State of Karnataka, Rajasthan, Andhra Pardesh and Telengana are the entrance runners in the photo voltaic power initiative. Solar inverters have now virtually reached the grass-root degree atleast in city society, and rising import duties on the identical wouldn’t arrest the momentum of the identical.

Alcoholic Beverages like Vermouth, wine of recent grapes, Cider, Perry, Mead, sake, Brandy, Bourbon whiskey, Scotch, and so forth. are some of the consumed commodities in our nation. These commodities have comparatively inelastic demand, thereby growing customized responsibility charges will generate substantial income for the federal government and likewise assist in the expansion of the financial system.

Anti-Dumping Duty and Countervailing responsibility is being briefly revoked for the interval commencing from February 2, 2021, until September 30, 2021, on imports of sure specified objects from a couple of nations like Republic of China, Brazil, Germany, and Vietnam. These merchandise on which duties have been revoked embrace Straight Length Bars and Rods of alloy-steel, High-Speed Steel of Non-Cobalt Grade and Flat-rolled product of metal, plated or coated with an alloy of Aluminum or Zinc. Anti-dumping responsibility on Cold-Rolled Flat Products of Stainless Steel of width 600 mm to 1250 mm and above 1250 mm of non-bonafide utilization imported from Republic of China, Korea RP, European Union, South Africa, Taiwan, Thailand, and the United States of America has been discontinued upon expiry of the anti-dumping responsibility hitherto.

Per se no rationalization has been provided for the stated withdrawal of anti-dumping duties, nevertheless, it’s believed that it might have been executed in order to regulate the sudden spike in home costs of such uncooked materials, that are not directly hitting the job-creation in small and mid-sized manufacturing corporations. Although companies are anticipated to query the federal government’s geopolitical stand on banning Chinese apps on the one hand and easing bulk commerce in choose chrome steel classes on the opposite to favour Chinese corporations, whereby unfair commerce practices have been proved in 2017 itself.

Any imposition of recent cess is at all times to be seen with warning. The authorities has launched ‘Agriculture, Infrastructure and Development Cess’ on import of few specified items, together with Gold bars, Silver bars, Alcoholic drinks , Crude palm oil, Crude soyabean and sunflower oil, Apples , Coal, lignite, Specified fertilizers, Bengal Gram/Chick peas. Although the federal government has promised that there could be no extra burden on the patron on most of this stuff, as they’ve lowered the equal customs duties on such merchandise.


Goods & Service Tax (GST) is working in its fourth 12 months, and it has been noticed that no GST tariff-related modifications have been made in the budget launched, but whereas many variations have been made in the Custom responsibility charges. This 12 months the budget was aimed toward boosting incomes of the MSME Sector and small taxpayers, particularly startups and enhancing buying energy. Due to the worldwide pandemic Covid 19, the financial system continues to be on the sliding ledge.

Starting July, a resilient V-shaped restoration is properly underway, as demonstrated by the restoration in GDP progress and the sustained resurgence in essential indicators like energy demand, E-way payments, GST assortment, infusion of FDI, metal consumption, and so forth.

Now is a excessive time when authorities ought to work on rationalizing the GST tax charges too. It may begin with merging two totally different tax slabs of 12% and 18% into a brand new class of 15%, which was additionally pegged because the revenue-neutral tax charge by the Chief financial advisor earlier than the implementation of GST in 2017.

(Rajat Mohan is a Senior Partner at AMRG & Associates. The views expressed by the writer are his personal.)

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