Budget 2017 – Changes to Indirect Taxes Before the GST Rollout

Amid high expectation on streamlining current indirect taxes for convergence toward Goods and Services Tax regime in union budget, no such announcements were made. It was highly anticipated that government will increase Services Tax Rate from 14% to 18% so as to be at par with GST, however no such amendments has been made.

This Budget has introduced minor changes to indirect taxes such as Customs duty and Excise Duty rates to promote use of Renewable Energy, LED Lights etc. Let’s explore all the amendments as introduced by Finance Minister in Budget 2017 in Indirect Taxes.

Indirect Tax Changes in Budget 2017

Reduction in Customs Duty

On the sidelines of incentivizing domestic value addition and promotion of “Make In India”, FM has made reduction in Custom duty on following inputs and raw materials to reduce costs :

  • Liquified Natural Gas from BCD@ 5% to 2.5% now
  • Machinery required for generation of renewable energy from 10% to 5%
  • Parts for use in production of LED lights, lamps etc limited to 5% from current level of 10%
  • Nil Duty on Solar tempered glass for use in manufacture of solar cells/panels/modules from 5% as applicable presently, CVD reduced to 6% from current level of 12.5%

Changes to Indirect Taxes in Budget 2017

Exemption from Customs Duty Levy of BCD, CVD, SAD

Also to promote cashless transactions and boost domestic manufacturing of devices used thereof, government has exempted such devices and parts, components from duty levy of BCD, CVD and SAD. These devices include:

  • Miniaturized POS card reader for m-POS (mobile phones and tablet computer not included)
  • Micro ATM as per standards version 1.5.1
  • Finger Print Reader / Scanner, and
  • Iris Scanner
  • Parts and Components for manufacture of above.

Increase in Excise Duty

Further to keep a check on Public Health, government has increased the excise duty levy on Cigar, Cigarettes and other tobacco substitutes. This levy has been increased from Rs. 3755 per thousand to Rs. 4006 per thousand.

For  Paper Rolled Biris this levy has been increased to Rs. 78 per thousand from Rs. 21 per thousand presently.

Want to learn more? Click here to access our extensive guides on Goods and Services Tax, GST compliances, regulatory procedure, and more.

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