The big bang announcement of huge capital investment spending by the government, coupled with private investments supported by advance technology in tax compliances can help enhance domestic manufacturing, value addition, exports, green energy and mobility. This can also will provide an overall cushion against global headwinds of recession thanks also to the vast domestic market. All budget proposals are aimed at showcasing India as a preferred investment/manufacturing destination.
The budget proposals are in the direction of promoting local manufacture by providing a kind of tariff protection from global competition to Indian manufacturers. The customs duties on import of finished goods are rising where as duty on capital goods, parts and components are reduced. On GST side, the thrust of the budget is to finetune the provisions that can reduce litigations, plug the loopholes and enhance revenue collection.
The FM and team kept the promise of de-criminalizing GST law by removing some of the arbitrary penal provisions. However, despite buoyancy in revenue, instead of removing restrictions on ITC, the government’s action to further restrict input credit, is little disappointing. Riding on the buoyant GST collections, the government could have extended the Package Linked Incentive Schemes to more sectors or announce amnesty scheme for Customs disputes, which would have further lifted the industry sentiments. Focus on promoting cutting edge technology such as 5G, semiconductors, artificial intelligence, research & development is reflected in the indirect tax proposals. Gold and silver could become costly due to rationalization of customs duty.
This budget cannot be branded as a populist budget despite the impending parliament election next year. Its indeed a growth budget and it shows the confidence of the government that people of India will support its development agenda.
(The author is a partner and head of indirect tax at KPMG in India)