The Union Budget 2024-25, delivered by Finance Minister Nirmala Sitharaman on July 23, 2024, included an extensive list of upgrades and adjustments to GST and indirect taxes. To further simplify the tax regime and promote economic growth, the government implemented several steps to improve the efficiency and efficacy of the GST system.
These changes are projected to have a profound impact on businesses, consumers, and the whole economy. This article will look at the union budget update on GST and indirect taxes, analysing the possible implications and advantages for various parties.
Here are the key highlights:
GST Rates: Impactful Adjustments Across Sectors
The Union Budget 2024-25 brought significant changes to GST rates, aiming to simplify the tax structure and boost various industries. In the electronics sector, mobile phones, PCBA, and chargers will now face a 15% Basic Customs Duty (BCD).
However, to promote domestic manufacturing, 25 critical minerals essential for this industry are fully exempt from customs duties. The agricultural sector also saw adjustments, with shrimp and fish feed inputs either reduced to 5% or completely exempted.
The budget also focused on luxury goods, with reduced BCD rates on real down filling material for leather and textile products. Precious metals saw adjustments as well, with BCD for gold and silver reduced to 6%, and 6.4% for platinum.
Additionally, to stimulate industrial growth, BCD on ferro nickel and blister copper used in steel and copper production was removed. The electronics industry also benefited from the removal of BCD on oxygen-free copper.
Read more: 2024 Budget highlights for Infrastructure sector in india
The budget also addressed other sectors, with the BCD on ammonium nitrate reduced from 10% to 7.5% and extensions of export periods for domestic aviation and boat/ship MRO to 1 year. These changes highlight the government’s commitment to fostering economic growth through strategic tax reforms.
| Sector | Item | GST Rate Change |
|---|---|---|
| Electronics | Mobile phones, PCBA, chargers | 15% BCD |
| 25 critical minerals | 0% customs duty | |
| Agriculture | Shrimp and fish feed inputs | Reduced to 5% or exempted |
| Luxury Goods | Real down filling material | Reduced BCD |
| Precious Metals | Gold, silver | 6% BCD |
| Platinum | 6.4% BCD | |
| Industrial Production | Ferro nickel, blister copper | 0% BCD |
| Oxygen-free copper | 0% BCD | |
| Chemicals | Ammonium nitrate | 7.5% BCD (from 10%) |
| Other | Domestic aviation, boat & ship MRO | Export period extended to 1 year |
Indirect Taxes Changes
The Union Budget for the fiscal year 2024-25 has unveiled a significant reliance on indirect taxes for revenue generation. Here’s a quick snapshot of the key figures:
- GST: The Goods and Services Tax is projected to contribute 18 paise out of every rupee earned by the government, solidifying its position as the largest source of indirect tax revenue.
- Excise Duty: This tax on the manufacture of goods is expected to bring in 5 paise for every rupee collected.
- Customs Levy: The tax on imported goods is estimated to contribute 4 paise per rupee.
In total, indirect taxes are anticipated to account for 27 paise of every rupee in government revenue. This highlights the crucial role of indirect taxes in funding public expenditures and supporting the nation’s development initiatives. It also emphasizes the need for continued efforts to enhance the efficiency and effectiveness of the GST system to maximize revenue collection and promote economic growth.
Conclusion
The union budget update on GST and indirect tax reforms signal a clear intent to stimulate economic growth, support domestic industries, and streamline the tax regime. While the GST and customs duty adjustments may present both opportunities and challenges for businesses, understanding and adapting to these changes is crucial. Staying informed, seeking expert advice when necessary, and strategically planning financial decisions will empower businesses and consumers alike to navigate the evolving landscape of indirect taxes in India. By keeping a close watch on government announcements and policy updates, stakeholders can ensure they are well-prepared for the potential impact of these reforms on their financial well-being and overall business operations.
As India’s economic landscape continues to evolve, the GST and indirect tax framework will undoubtedly play a pivotal role in shaping the nation’s growth trajectory. The Union Budget 2024-25 serves as a steppingstone towards a more transparent, efficient, and growth-oriented tax system, paving the way for a prosperous future.
A product manager with a writer's heart, Anirban leverages his 6 years of experience to empower MSMEs in the business and technology sectors. His time at Tata nexarc honed his skills in crafting informative content tailored to MSME needs. Whether wielding words for business or developing innovative products for both Tata Nexarc and MSMEs, his passion for clear communication and a deep understanding of their challenges shine through.
People are not looking happy with this year budget. Small medium businesses are pushed to take more loans in the name of help. They want to run money which is collected in form of GST.
A helpful tip for those affected by these GST updates: make sure to revise your pricing strategies to reflect the new tax rates. Whether you’re in manufacturing or retail, these adjustments could impact your bottom line, so review your cost structures ASAP.