The government may reduce the tax on inputs used in the production of medical equipment, electronic goods and footwear industries in the next Budget to promote domestic production, according to tax experts.
Deloitte India Partner, indirect tax, Harpreet Singh said the key demands from the Customs side from the 2025-26 Budget, which will be presented in Parliament on February 1, will be the justification of the rate, the simplification of the regime, and the control of cases and disputes.
“Along the lines of a phased production plan, we expect some job cuts in electronics, home appliances, health care products and pharmaceuticals.
These are the industries where the government wants to give a boost in terms of production, so, we will see raw materials come down in these sectors,” Singh told PTI.
Regarding the proposal to reorganize the excise duty created in the Budget in July 2024, Singh said that the sectors that could see rehabilitation are health care, medical equipment manufacturing, white goods, electronics, shoes and toys.
The 2024-25 budget announced that there will be a comprehensive review of the Goods and Services Tax Framework within the next six months to streamline and simplify it to facilitate trade, remove tax diversions and reduce conflicts.
To reduce class conflicts, the Budget announced revision of excise duty. Currently, there are more than a dozen tax slabs, and the government is looking to reduce the number of rate slabs to 4 or 5.
“The government may come out with different slabs for various products, depending on where they are placed in the value chain. Goods may be classified as Value added/primary and raw material/Intermediary, and accordingly, the slab prices may be adjusted,” it said. Anurag Sehgal, Managing Director at Price Waterhouse & Co. LLP.
The Executive Director of Nangia Andersen LLP, Indirect Tax, Sivakumar Ramjee said that there is a call to simplify the tax structure to reduce duplication of value, correct tax reform, if any, and reduce classification conflicts by clarifying and measuring activities in reuse and recycling. materials to support sustainable production processes.
“The more relaxed standards framework is expected to support domestic manufacturing and align with the ‘Make in India’ initiative,” Ramjee said.
Ramjee went on to say that the industry is waiting for the introduction of an amnesty program aimed at resolving long-standing disagreements.
With more than 40,000 cases in courts and tribunals, this system can reduce litigation and improve the ease of doing business.
A lot of money is still stuck in cases, and the government should wisely introduce a one-time dispute resolution system in the Customs Act to resolve the backlog of Customs disputes, which are increasing every year, he added.
Grant Thornton Bharat Partner Manoj Mishra said around Rs 50,000 crore is locked up in Customs disputes, and the amnesty program will help in resolving disputes.