The Union Budget 2023 is going to be announced on 1 February. (File photo of Finance Minister Nirmala Sitharaman)
Expectations from Budget 2023 will accelerate the country’s economy and encourage new investments
The countdown to the Union Budget 2023 has begun. This will be the last full budget of the current government before the general elections due next year. Government’s determination to continue growth in the economy in the next financial year despite global pressures will be a driving factor and hence expectations from the Budget remain reasonably high. Expectations from the budget will be to give a boost to the country’s economy and encourage new investments. Some of the expectations from indirect tax would be as follows:
Expectation #1: Widening the introduction of a Production Linked Incentive (PLI) scheme or Phased Manufacturing Plan (PMP) for new products
The PLI scheme advocates incremental production-based incentives and has the potential to enhance India’s exports and expand exports in line with the government’s drive to strengthen the ‘Make in India’ initiative. The intention of the government has been to expand the PLI scheme and identify more emerging industries (leather, toys, chemicals, shipping containers, etc.). Taking into account India’s sustainability goals, the new PLI schemes could potentially have additional incentives for investment around green technologies and satellite communications. It is expected that the Union Budget 2023 may extend the PLI scheme or introduce the PMP scheme for new products and potential upcoming industries.
Expectation # 2: Simplification of Customs Duty Tariff Structure
In the last Union Budget, the government simplified the customs tariff structure by removing several exemption notifications. However, there remains a good scope for further simplification to avoid variation at the field level. It is expected that the government may further simplify the tariff structure to ensure less interpretational issues which will help in reducing undue litigation for businesses.
Expectation #3: Amnesty Scheme for Customs Litigation and Other Customs Requirement
amnesty scheme for customs litigation
In the Union Budget 2019 and 2020, the government introduced amnesty schemes for Central Excise and Service Tax disputes and Income Tax disputes, respectively, providing an opportunity to resolve past disputes and reduce the burden of litigation. It is expected that the one time amnesty scheme to resolve old disputes relating to customs matters may be looked at to reduce customs litigation.
Introduction of the Development of Enterprises and Service Centers (DESH) Bill 2022:
With a view to overhauling the existing Special Economic Zones (SEZ) Act of 2005, the government proposed reforms in the DESH Bill to revive interest in SEZs and develop more inclusive economic hubs. It is expected that the government will expedite the introduction of the DESH Bill.
Easier compliance rules for imports under Free Trade Agreements (FTAs) to avoid future litigations
FTAs make trade between the contracting countries hassle-free. In the Indian context, FTAs have favored imports from contracting countries over the years, with a shocking reduction in tariffs and an increase in trade volumes. Certain requirements under section 28DA and CAROTAR 2020 are onerous and challenging for importers, even if such compliance is not envisaged in the FTA between the contracting countries. It is expected that the government may bring suitable changes in the upcoming budget by amending section 28DA and CAROTAR 2020 to provide relief to the importer and avoid future litigations.
The government has taken steps to improve indirect tax compliance by using modern technology and automation such as analytics, artificial intelligence, etc. It is expected that the compliance and filing procedures especially for GST may also be simplified to broaden the tax base and predictability in the tax system to ensure better compliance and thereby ease of doing business. Is.
Hardik Gandhi is Partner with Deloitte Haskins and Sells LLP, Mayur Dharanidharka is Senior Manager with Deloitte Haskins and Sells LLP, Lakshita Shah is Manager with Deloitte Haskins and Sells LLP
Disclaimer:The views expressed in this article are the author’s own and do not represent the stand of this publication.
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