While Budget is largely considered to be uneventful on the taxes front, there are certain items that would impact Exporters and Importers. Only those items that have strategic impact are being highlighted and briefly analyzed here:

1. Rationalising of Customs Exemptions: Government has been reviewing customs exemptions and has been rationalising them. This year 350 exemptions are being withdrawn. Further several concessional rates, that are otherwise unconditional will now be incorporated in the tariff itself. This will simplify customs rates and tariff structure and minimise disputes.

2. Project Imports: The duty exemption on several capital goods under specific exemptions have been available for capital goods for sectors like power, fertilizer, textiles. leather, footwear, food processing etc. 

Project import scheme also provided concessional or zero import duty on Industrial and other projects like that of power, rail, metro, airports etc. The scheme helped new Industrial and other projects reduce the capital cost and thus encourage them. However, owing to the pressures of local capital goods manufacturers, the Govt is now phasing out these benefits and is proposing to apply general rate of 7.5% on capital goods. 

3. Duty free import of goods for export, IGCR digitization: It has been a demand of a section of the Industry to provide duty free import of inputs for export purposes, without the complications of Advance Authorization scheme of Foreign Trade Policy. The Industry had suggested using a simpler system like that of Import of Goods under Concessional Rate of duty (IGCR) to ensure the end usage. It appears that the Govt is trying to test the same starting with some specific items like embellishments, trimming, fasteners etc.for textiles and leather sector. Further IGCR rules have been revised and end to end automation is being introduced in the entire process. This may be a pre-cursor to the end of Duty Exemption Scheme under FTP.

4. DRI officers are proper officers: Section 3 of Customs Act is being amended to specifically include the officers of DRI, Audit and Preventive formation in the class of Officers. This amendment has been made to remove any ambiguity as regards the class of officers of Customs. In addition, all actions taken by them earlier have been validated. 

It may be recalled that in a landmark judgement of Supreme court in the case of Canon India, it was held that officers of DRI are not the proper officer to investigate. This had brought a sense of relief to a lot of cases being investigated.

5. New lease of life to SEZs: Several SEZs that were developed in the country with much fanfare could not be fully utilized because of various reasons. Nonetheless a huge amount of infrastructure is available which is not being optimally utilized. The Govt is proposing to replace the SEZ Act with a new law and will cover other large existing and new industrial enclaves to optimally utilize available infrastructure. As per FM this will enable the states to become partners in ‘Development of Enterprise and Service Hubs’. Several questions however remain including whether all the benefits can be extended to other Industrial enclaves too, or SEZs will become only normal Industrial Enclaves.


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