Union Budget 2023: It’s a budget with a focused balance on fiscal prudence and Indian growth story

Overall, the Union Budget 2023 lays out a progressive plan for making the most of India's resources, including its demographic advantages, in the face of global uncertainties

The Budget 2023-24 continues to focus on India’s growth momentum by laying emphasis on ‘Make in India’, ‘Exports’ and ‘Digital India’. The Budget maintained a fine balance between various facets/ targets including anticipations of global slowdown and need for a push to made in India.

Backing its Make in India programme launched in 2014 and correspondingly supporting the Atmanirbhar Bharat plan, the Government has come out with the various measures such as Viability Gap Funding, concessional duty benefits, etc. for the certain goods.

To fix potential loopholes in policies advocating manufacturing of solar modules and cells in India with curbing imports through higher import duty structures, exclusions of solar power projects have been proposed in the ‘Project Import Regulations’; thereby plugging any such circumventions.

The Government had embarked on the mission to review the various conditional customs duty exemptions and thus, review the extension of customs duty once in two years. In this Budget, the Government has withdrawn more than thirty one such entries in the customs exemption notifications such as goods required for setting up refinery, fertilizer plant etc., and thus, the same will be subject to customs duty.

However, on other side, nurturing the already launched Phased Manufacturing Programme with further backward integration, customs duty relaxations have been proposed on camera lens, parts of camera modules, parts for manufacture of open cell of TV panel and some others. To ensure garnering the full potential of earlier launched PLI’s, duty structure changes have been proposed to curb imports of goods for which PLI Schemes were announced, like increased customs duty on import of electric vehicles.

Certain amendments like restriction of input tax credit on CSR expenditure and increased tax base for online information and database access or retrieval services could entail higher tax costs for businesses and augmented revenues for the Government
Retrospective prescriptions for non-taxability of certain supplies like outside taxable territory movements, supplies before clearances for home consumption, etc. should help bring to rest a bunch of litigations, thereby instilling confidence of national and global communities.

The industry was hopeful of an amnesty scheme for resolving past litigations. With a dispute resolutions only being announced for certain contractual disputes with Government and Government undertakings, the larger industry is slightly disheartened.

All in all, the Union Budget 2023 announcements has pinned a progressive vision for capitalizing India’s resources including demographic advantages amid global uncertainties with a focused balance on fiscal prudence and Indian growth story.

The author is Partner and Head, Indirect Tax, KPMG in India

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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